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Delta-X Academy

What You Can Trade: An Overview

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free8 min read

An instrument is the specific tradable product you buy or sell, and the major classes, futures, currencies, crypto, shares, and the derivatives built on them, differ in how they are structured, priced, leveraged, and settled. Choosing what to trade is a decision distinct from, and as consequential as, how you analyse it.

Target audience: New traders who picked an instrument by accident and want to understand the full menu and how the classes differ.

Learning objectives

  • ✓Distinguish spot ownership from leveraged derivatives.
  • ✓Name the major instrument classes and their conventions.
  • ✓Explain why the instrument shapes the trade as much as the analysis.
  • ✓Treat instrument choice as a primary decision.

Definition

An instrument is the specific tradable product you buy or sell, and the major classes, futures, currencies, crypto, shares, and the derivatives built on them, differ in how they are structured, priced, leveraged, and settled. Choosing what to trade is a decision distinct from, and as consequential as, how you analyse it.

Why it matters

Two traders running the identical strategy can get very different results on different instruments, because the instrument sets the leverage, the cost per trade, the hours, and the size of the moves. Understanding the landscape, and how the classes differ, lets you pick a market that fits your capital, your schedule, and your risk tolerance rather than defaulting to whatever you happened to see first.

Spot versus derivatives

There are two broad ways to get exposure to a market. Spot means buying or selling the actual asset, a share or a coin, and owning it outright. A derivative is a contract whose value derives from an underlying asset, a future, a contract for difference, an option, without owning the asset itself, and it is usually leveraged. The distinction matters from the first day, because derivatives add features that spot ownership does not: built-in leverage, an expiry or financing cost, and the possibility of losing more than you put in.

The major classes at a glance

The main classes you will encounter are futures, standardised contracts traded on an exchange; forex, the buying and selling of one currency against another; crypto, which trades both as spot coins and as perpetual contracts; shares, ownership stakes in companies listed on exchanges; and contracts for difference, which give synthetic, leveraged exposure to many of the above without ownership. Each has its own conventions for contract size, leverage, cost, and trading hours, which the rest of this path works through one at a time.

The instrument shapes the trade

The same chart pattern behaves very differently from one instrument to another. On a deeply liquid, tightly-spread futures contract during active hours it may fill cleanly and move smoothly; on a thin, wide-spread instrument in a quiet session the same pattern can slip badly and whipsaw. The instrument sets the leverage you carry, the cost you pay to enter and exit, and the volatility you are managing, so which instrument you trade is a primary decision that interacts with everything else, not a detail to settle after the strategy.

Worked examples

Example 1: Same setup, two instruments

Two traders take the same breakout setup on the same day. One trades a liquid index future with a tiny spread and deep order book; the breakout fills at the expected price and the cost of entering is negligible. The other trades a thinly-traded instrument with a wide spread; the same breakout fills several ticks worse, the spread eats a chunk of the move, and an exit in the fast part of the move slips further. The analysis was identical; the instrument decided how much of the move each trader actually kept.

Common mistakes

Defaulting to the first instrument you encountered without considering fit.

Ignoring that derivatives add leverage, expiry, or financing that spot does not.

Assuming every instrument behaves like the one you learned on.

Treating instrument choice as less important than the strategy.

Overlooking that some instruments are restricted in your jurisdiction.

Myth vs reality

Myth

That the instrument is interchangeable as long as the analysis is good.

Reality

No paired reality note provided.

Myth

That owning spot and trading a derivative on it are the same thing.

Reality

No paired reality note provided.

Myth

That one instrument suits every trader and account.

Reality

No paired reality note provided.

Risk considerations

  • Leverage and cost vary enormously across classes, so risk per trade is instrument-dependent.
  • An instrument that suits one account or schedule can be unsuitable for another.

Practice exercises

1. Map the menu

Lay out the instrument classes and note how each would fit your account and schedule.

  1. List the major classes: futures, forex, crypto, shares, CFDs.
  2. For each, note whether it is spot or a leveraged derivative.
  3. Note which are available to you in your jurisdiction.
  4. Mark which roughly fit your capital and the hours you can trade.

Quiz

Q1. What is the difference between spot and a derivative?

Q2. Why can the same strategy give different results on different instruments?

Q3. Why is instrument choice a primary decision?

Next lesson

Futures Contracts Explained

Continue to next

This lesson is educational content only and is not financial advice or a recommendation to trade any instrument. Contract specifications, leverage limits, costs, and availability vary by broker, exchange, and jurisdiction, and some instruments are restricted or banned for retail traders in some regions; any figures here are illustrative, so verify the exact specs with your own provider. Leverage amplifies losses as much as gains and can result in losing more than your initial deposit. Markets carry substantial risk. Trade only with risk you can afford to lose.

What You Can Trade: An Overview · Academy · Delta-X