Becoming a skilled trader is not just about strategies and indicators. It’s also about understanding what you’re trading. That’s where trading instruments come in.
Trading instruments are the financial assets you buy and sell. Each one behaves differently. Knowing how these instruments work will help you make better decisions, reduce risk, and improve your chances of success — especially when trading with funded capital.
Let’s break it down.
What Are Trading Instruments?
A trading instrument is any financial asset that can be traded in the market with the goal of earning a profit.
These can include:
- Currencies
- Cryptocurrencies
- Commodities
- Indices
- Futures, and more
Depending on your strategy and the prop firm you work with, you may have access to a big range of instruments or only a few.
At Falcon Funded, we provide traders with access to many of the most popular and profitable instruments across multiple markets. Traders need to understand how each of them works to build a successful funded trading career.
Types of Trading Instruments
Let’s explore the most common trading instruments you’ll encounter:
1. Forex (Foreign Exchange)
Forex trading involves buying and selling currencies in pairs, like EURUSD or GBPJPY. It’s the largest and most liquid market in the world, with 24/5 access.
Why traders love it: High volatility, tight spreads, and frequent opportunities
Typical users: Day traders, scalpers, and those who thrive in fast-moving markets
What to watch: Central bank news, inflation data, interest rate decisions
2. Indices
Indices track the performance of a group of companies, offering a way to trade the overall market rather than individual stocks.
Common symbols: US30 (Dow Jones), NAS100 (NASDAQ), SPX500 (S&P 500)
Why it matters: Indices can show strong momentum during economic events
What to watch: Market sentiment, earnings reports, macroeconomic releases
3. Commodities
These include physical goods like gold, oil, and natural gas. You’ll typically see them listed with symbols like XAUUSD (gold) or WTI (crude oil).
Why traders like them: Commodities often move in response to global events
Great for: Swing traders or those using macroeconomic strategies
Watch for: Supply chain issues, geopolitical risks, and inflation trends
4. Crypto
Cryptocurrencies like BTCUSD (Bitcoin) and ETHUSD (Ethereum) are digital assets known for their volatility and 24/7 trading availability.
Why it’s popular: Huge price swings and potential for big gains
Remember: Crypto is high-risk with unpredictable moves
Best for: Traders who understand the crypto space and can handle rapid shifts.
5. Futures and CFDs
Some instruments at Falcon Funded may be traded via Contracts for Difference (CFDs.) These let traders speculate on price movements without owning the underlying asset.
Used for: Indices, commodities, and more
Benefit: Flexibility and leverage
Reminder: Always check your platform’s symbol list and specifications
How to Choose the Right Instrument for Your Strategy
Not all trading instruments suit all trading strategies. Here’s how to narrow it down:
- Scalpers may prefer forex or indices due to their tight spreads and constant movement
- Swing traders often look to commodities or crypto for larger multi-day moves
- Fundamental traders might choose instruments tied to macroeconomic trends, like gold or major currency pairs
- New traders may start with just one or two instruments to build confidence and consistency
Ultimately, your choice should depend on your time commitment, risk tolerance, and trading approach. Spreading yourself too thin across markets can reduce your focus and how well you will perform.
Falcon Funded Supports Access to Trading Instruments
At Falcon Funded, we offer access to the most widely used and relevant trading instruments in prop trading. We believe traders perform best when they’re not limited by outdated rules or rigid platforms. That’s why our challenge models and funded accounts allow flexibility in choosing your preferred markets.
Tips for Trading Multiple Instruments
If you’re trading more than one type of instrument, keep these tips in mind:
- Start with one or two instruments and build expertise before branching out
- Track your performance by asset class to identify strengths and weaknesses
- Watch for key news events using an economic calendar (especially those that impact multiple markets)
- Understand margin and leverage requirements (Remember that all these vary by instrument)
The more familiar you are with your trading instruments, the easier it becomes to manage risk and trade with intention.
Master the Instruments, Master the Market
Understanding trading instruments is a foundational skill for any serious trader – especially in prop trading, where your ability to manage risk and capture opportunity directly affects your funding status.
At Falcon Funded, we give you the freedom to choose the instruments that align with your strategy and the funded capital to trade them confidently. Ready to start trading? Join a funded challenge and show us what you’ve got.
