What did you think when you first stepped into the trading world, honestly? Maybe it felt like it was all about buying low and selling high. Pretty simple, right? But then you open a trading platform and see options like forex pairs, indices, stocks, or gold and suddenly, it’s not so simple anymore. You’re left wondering where to begin. These are all CFD instruments you’ll be trading with.
Each CFD instrument or asset has its own unique behavior in the market. Some move fast, some take their time. Some react to global news, while others respond to tech earnings or oil prices. The better you understand how each one works, the more confident your trading decisions become.
So, if you're feeling overwhelmed by all the options, don’t worry. Today we’re talking about each instrument: how they work, the types, trading hours, and everything you need to get started.
What are CFD Instruments?
CFD instruments are tradable markets offered through a CFD broker that let traders go long or short, use leverage, and profit from price movements, all without owning the asset. Simply CFD instruments refer to underlying financial markets for CFD trading. Popular instruments include forex, stocks, indices, commodities, and crypto.
CFD instruments are the financial products or assets you can trade using Contracts for Difference. You don’t own the asset; you’re just speculating whether the price will go up or down. If your speculation is right, then you make a profit; otherwise, you lose.
Types of CFD Instruments
There are 6 main types of CFD instruments that traders commonly use:
- Forex (Currencies)
- Stocks (Shares)
- Indices (Market Groups)
- Commodities (Gold, Oil, etc.)
- Cryptocurrencies (Bitcoin, etc.)
- ETFs (Exchange-Traded Funds)
Let’s discuss briefly the CFD instruments.
Forex (Foreign Exchange)
Forex (Foreign Exchange) is the global market where people trade one currency for another. For example, buying Euros by selling US Dollars. It's the largest and most liquid financial market in the world. Most traded currencies are major pairs such as USDEUR and USDGBP.
Characteristics
- 24/5 Market
- High Liquidity
- Currency Pairs
- Volatility
- Leverage Available
- Tight Spreads
- Global Market
- No Central Exchange
In Forex trading, currencies are always paired. The base currency is listed first, and the quote currency comes second. The pair shows the rate at which one unit of the base currency can be exchanged for the quote currency. The currency pairs help traders decide whether to buy or sell based on how they expect the value between the two to change.
When you trade forex, you always trade currency pairs like EUR/USD. That means you're buying the first currency (EUR) and using (selling) the second one (USD). If you think the Euro will get stronger against the Dollar, you "go long" (buy). If you think it’ll weaken, you "go short" (sell).
Types of Currency Pairs
Most popular currency pairs: majors, minors, and exotics.
Major Pairs: There are 8 major currencies in Forex trading. When 7 of them are paired with the US Dollar, they form the major currency pairs, such as USDEUR. These pairs are the most traded in the world and offer high liquidity with tight spreads.
8 major currencies are.
- USD – US Dollar
- EUR – Euro
- JPY – Japanese Yen
- GBP – British Pound
- AUD – Australian Dollar
- CAD – Canadian Dollar
- CHF – Swiss Franc
- NZD – New Zealand Dollar
Minor Pairs: Minor currency pairs are made by pairing major currencies with each other, but without the US Dollar. They are also called cross-currency pairs and usually have slightly wider spreads than majors.
Examples:
- EUR/GBP
- GBP/JPY
- AUD/NZD
Exotic Pairs: Exotic pairs are formed by combining one major currency with the currency of a developing or smaller economy. These pairs have low liquidity, higher volatility, and wider spreads.
Examples:
- USD/TRY (US Dollar / Turkish Lira)
- EUR/THB (Euro / Thai Baht)
- USD/ZAR (US Dollar / South African Rand)
Trading Hours
Forex is open 24 hours a day, 5 days a week, from Monday to Friday. The market is active during 4 main sessions:
- Asia Session (Sydney + Tokyo)
- London Session
- New York Session
You can trade anytime, but the London and New York overlap is the busiest.
Who Are the Liquidity Providers?
Forex has very high liquidity, which means you can easily buy or sell currencies without waiting. That also keeps trading costs (called spreads) low, especially in major pairs.
The big players in the Forex market are,
- Banks (like JPMorgan, Citi, HSBC).
- Liquidity Providers (LPs) – companies that supply prices to brokers.
- Central Banks – like the US Federal Reserve or European Central Bank.
- Hedge Funds and Institutions.
- Retail Traders – like you via brokers.
Indices
Indices represent the performance of a group of selected stocks from a particular market or industry. Instead of trading individual company shares, you trade the overall performance of a stock market segment. Think of it as trading the “mood” of a market.
You’re not buying the actual stocks inside the index; you’re speculating whether the entire group will go up or down.
Indices are popular CFD instruments because they let traders diversify risk and follow big-picture market trends.
Characteristics
- Each index tracks a group of selected stocks, often representing a country’s top companies or a specific sector.
- Market sentiment indicator
- Diversification: one index gives you exposure to multiple companies
- High Liquidity
- Lower Volatility than Individual Stocks
- Leverage Available
- Trade Both Directions
An index is calculated using the prices of selected stocks. Some are price-weighted (higher-priced stocks have more influence). Others are market cap-weighted (larger companies have more influence).
You don't trade the index directly. Instead, you use CFDs to trade on its price movements. For example, if you believe the US stock market is going up, you might trade the S&P 500 index.
Types of Indices
Indices can be grouped based on what they track:
National Indices: Reflect the overall market of a country (e.g., S&P 500, DAX 40).
Sector Indices: Track specific industries like tech, energy, or banking.
Global Indices: Cover international companies across countries or regions
Popular Indices to Trade
Here are some of the most traded indices in the world:
- S&P 500: Top 500 US companies (USA)
- NASDAQ 100: 100 biggest tech stocks (USA)
- Dow Jones (DJ30): 30 major US companies (USA)
- FTSE 100: Top 100 companies in the UK (UK)
- DAX 40: Top 40 companies in Germany (Germany)
- CAC 40: 40 big companies in France (France)
- Nikkei 225: Top companies in Japan (Japan)
- Hang Seng: Major companies in Hong Kong (Hong Kong)
- ASX 200: 200 largest firms in Australia (Australia)
Trading Hours
Each index follows the trading hours of its local stock exchange:
Who Are the Liquidity Providers?
The big players in Index trading are,
- Hedge Funds: Trade large positions based on market outlook
- Investment Banks: Use index futures and CFDs for hedging
- Institutional Investors: Invest for long-term exposure
- Retail Traders: Use brokers to trade indices as CFDs
- Market Makers & Brokers: Provide prices and manage liquidity
Commodities
Commodities are raw materials or natural resources that can be bought and sold in global markets. They’re the building blocks of the economy, like gold, oil, silver, and wheat. When you trade commodities as CFDs, you're not buying the physical goods. You're simply speculating whether the price will rise or fall.
Commodities are popular with traders because of their strong connection to global events, supply-demand shifts, and inflation trends. Example: Trading Brent Crude through CFDs.
Characteristics
- Physical assets. These are real-world items like energy, metals, and crops.
- Global demand-supply driven.
- No ownership with CFDs. You don’t need to store barrels of oil or bars of gold.
- High volatility
- Diversification: commodities don’t always move with stock markets.
- Leverage Available
When you trade commodities as CFDs, you’re trading the price difference, not the product itself. For example, if you expect the price of oil to rise, you go long. If you think it’ll fall, you go short. Prices are usually quoted in USD.
Main Types
There are two main types of commodities:
Hard Commodities: Natural resources (e.g. oil, gold, silver)
Soft Commodities: Agricultural products (e.g. coffee, wheat, cotton)
Popular Commodities to Trade
Trading Hours
Commodity markets operate in different time zones. With CFDs, brokers usually offer extended trading hours based on futures markets.
- Gold & Silver: 23:00 – 21:00 (next day)
- Crude Oil (WTI): 23:00 – 22:00
- Natural Gas: 23:00 – 22:00
- Coffee, Sugar: 09:15 – 18:30
- Corn, Wheat: 01:00 – 13:20 & 13:30 – 19:20
(Exact times vary by broker and product.)
Who Trades Commodities?
The big players in commodities trading are,
- Producers & Farmers: Hedge price risk through futures contracts
- Large Institutions: Diversify investment portfolios
- Hedge Funds: Speculate on price swings
- Retail Traders: Trade CFDs for short-term profits
- Brokers & Market Makers: Provide pricing and execution
Cryptocurrencies
Cryptocurrencies are digital currencies powered by blockchain technology. They are decentralized, meaning no government or central bank controls them. When trading crypto With CFDs, you don’t own the actual coin; you simply speculate on whether the price will go up or down.
Crypto markets are known for their high volatility, 24/7 trading, and growing popularity among retail traders.
Characteristics
- Digital assets exist only online.
- Decentralized. Not issued or controlled by any central bank or authority.
- Blockchain-based. Each coin runs on its own blockchain
- Secure digital ledger.
- You don’t need a crypto wallet. With CFDs, you’re just trading the price.
- Highly Volatile
- Trade anytime, 24/7, weekends, holidays, day or night.
- Leverage Available
With CFDs, you're trading the price difference between entry and exit, not buying real crypto.
If you think the price of Bitcoin will rise, you go long. If you think it’ll drop, you go short. You can avoid wallet security risks, exchange hacks, or storing private keys.
Cryptocurrencies run on decentralized blockchain networks, meaning they don’t rely on banks or middlemen. People can send and receive money directly. This makes the system more transparent, secure, and harder to control or block. It gives users more power over their own money and lets them be part of a global, open financial system.
Types of Crypto CFDs
There are mainly three types of Crypto CFDs,
Major Coins: Popular coins like BTC and ETH
Altcoins: Alternative coins like SOL, ADA, and XRP
Crypto Pairs: Coins traded against each other or against fiat currencies (like ETH/BTC or BTC/USD)
Popular Cryptocurrencies to Trade
Trading Hours
Crypto is unique.
- Open 24/7
- 365 days a year
- No sessions, no breaks
Who Trades Cryptos?
- Retail Traders: Volatility and round-the-clock action
- Hedge Funds & Institutions: Increasing crypto exposure
- Crypto Enthusiasts: Speculate on new coins or long-term potential
- Short-Term Traders: Use CFDs to profit from quick price moves
- Brokers: Provide crypto CFD access without needing real coins
ETFs (Exchange Traded Funds)
ETFs are investment funds that track the performance of a group of assets, like a stock index, sector, commodity, or currency. They are traded on stock exchanges just like individual stocks.
When you trade ETF CFDs, you don’t buy the actual fund. You’re simply speculating on its price movement, whether it’ll go up or down.
ETFs give traders a way to access diversified exposure with one trade, making them ideal for managing risk.
Characteristics
- Bundled assets. Hold a mix of assets, such as stocks, bonds, or commodities.
- Traded like stocks
- Track a theme or index
- No ownership with CFDs
- Lower volatility than single stocks
- Leverage available
ETF prices move based on the performance of the assets inside the fund. For example, if an ETF tracks the S&P 500 and those stocks rise, the ETF's price will rise too.
With CFDs, you can profit from these movements without buying or selling the actual ETF. You can go long if you think it’ll rise or go short if you think it’ll fall.
Types of ETFs
Check out the types of ETFs available.
Index ETFs: Track indices like S&P 500, Dow Jones, NASDAQ
Sector ETFs: Focus on sectors like energy, finance, or healthcare
Commodity ETFs: Track physical commodities like gold or oil
Bond ETFs: Invest in government or corporate bonds
Currency ETFs: Follow major currency baskets
Thematic ETFs: Cover trends like AI, clean energy, or tech innovation
Popular ETFs to Trade
Trading Hours
Since ETFs are listed on stock exchanges, their trading hours follow the stock market of the country they belong to.
- US ETFs (e.g., SPY, QQQ): 9:30 AM – 4:00 PM (New York)
- European ETFs: 9:00 AM – 5:30 PM (London/Frankfurt)
- Asian ETFs: 9:00 AM – 3:00 PM (Tokyo/Hong Kong)
CFD brokers may offer extended hours for some ETFs.
Who Trades ETFs?
- Retail Traders: For theme-based and diversified exposure
- Portfolio Managers: To manage risk and adjust exposure quickly
- Swing Traders: To catch broader market moves
- Hedge Funds: Use ETFs to hedge or amplify exposure
- CFD Traders: For shorter-term speculation without owning the fund
How to Choose the Right Trading Instruments
If you do not want to lose your money, you must have a deep understanding of the CFD instruments. But how to know which instrument is right for you to trade? Here we are sharing some basic criteria that can help you to choose the right instrument.
Risk Tolerance
Before choosing any instrument, ask yourself how much loss you’re mentally and financially okay with. Every instrument's characteristics are different. So, trading something outside your risk comfort can cause panic decisions.
If you do not want to take much risk, stick to less volatile assets like major forex pairs. If you can handle higher risk, crypto or exotic pairs may suit you.
Market Volatility
Volatility means how much the price of an asset moves. Some traders love fast price movement for quick profits. Others prefer slower, steadier markets.
So, when you are trading CFD instruments, you choose how you want to trade. Higher volatility can mean bigger rewards, but also bigger losses if you're not ready for it.
Trading Style
Your trading style matters a lot. If you're a day trader, you’ll want instruments with strong intraday movement. For example, NASDAQ or GBP/JPY. Swing traders prefer indices or gold, which hold trends for days.
Long-term traders can go for ETFs or stock CFDs. Choose instruments that align with how often you trade, how long you hold, and how actively you manage positions.
Liquidity
Liquidity is how easily you can enter or exit a trade. Highly liquid markets like EUR/USD or S&P 500 let you trade quickly. There are tight spreads, even during busy times.
Illiquid assets, like some exotic pairs, can have wider spreads and slippage. If you’re new or trading with smaller capital, sticking to liquid instruments keeps your costs lower.
Capital Size
Not all instruments fit every budget. Trading expensive stocks or gold may need more margin. But forex pairs can be traded with smaller capital. Some instruments also carry higher overnight costs. This can eat into smaller accounts. Make sure you choose something that fits your available funds without risking too much.
Leverage Impact
Leverage lets you trade bigger positions with less money. Also, it can lead to bigger losses.
For example, 1:500 leverage on forex can boost profits fast. Or wipe out your account if the market moves against you. If you're new or still learning, choose instruments that offer moderate leverage and more price stability.
Familiarity
Trade what you understand deeply. If you're comfortable analyzing economic news, forex may suit you.
If you follow tech trends, NASDAQ or crypto is a better match. The more familiar you are with how an instrument acts, the easier it is to make smart decisions.
Trade CFD Instruments With FNmarkets
Now that you’ve got a solid understanding of CFD instruments, it’s time to put that knowledge into action. But to trade confidently, you need more than just market insights. You need a broker you can trust. That’s where FNmarkets steps in.
At FNmarkets, we offer fast execution, high leverage, and a seamless trading experience backed by 24/7 real human support. Yes, an actual person anytime you need help. Whether it’s day or night, we’ve got your back.
You can choose from three flexible account types; Standard, Raw, and Islamic, so you can trade in a way that fits your style and values.
So why wait? With FNmarkets, everything’s set up to help you trade smarter, faster, and with full support. Open your account and start trading today.
