What Are The World's Biggest Trading Markets?
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What Are The World’s Biggest Trading Markets?

According to the International Monetary Fund’s outlook report, the global economy is projected to grow by 4.9% in 2022, compared to its previous 6.0% projected growth for 2021. This forecast reflects pandemic developments and changes in policy support. Part of what determines how well the global economy performs are the financial trading markets, which have experienced increased volatility since 2020.

Robust financial markets contribute to the health and efficiency of an economy, as smoothly operating markets efficiently direct the flow of savings and investments. These in turn, facilitate the accumulation of capital and the production of goods and services. Moreover, trade and market openness go hand-in-hand with improved economic performance, providing new opportunities for workers, consumers, and firms around the world. Here are four of the world’s largest trading markets:

Stock market

The stock market is a marketplace for buyers and sellers to trade financial instruments and long-term securities, including stocks, bonds, mutual funds, exchange-traded funds, and derivatives. Stock markets bring suppliers and capital-seekers together, and minor ripples in one corner of the market can cause major waves elsewhere. The total value of global equity trading on Statista reached $37.7 trillion in the second quarter of 2021, making it one of the biggest trading markets available to investors. Among all stock exchanges, the largest one is the New York Stock Exchange, with a market capitalization of $24.49 trillion owing to its list of the world’s top blue-chip stocks.

Forex market

The foreign exchange (forex) market, also known as the currency market, allows people to convert one currency to another for financial gain. The modern era and the Internet upgraded the forex market to heights previously unimaginable, with FXCM highlighting how the forex market has 24/7 real-time trading regardless of time-zones. The average daily trading volume on foreign exchange exceeds $5 trillion, making it the largest and most liquid market in the world. Major forex pairs include EUR/USD and GBP/USD, although other pairs allow you to take advantage of macroeconomic events in specific international markets.

Commodities market

The commodities market is a marketplace for buying, selling, and trading raw materials or primary commodities. Materials are split into broad categories of hard or soft commodities. Hard commodities are natural resources that have to be mined or extracted, such as gold, rubber, or oil; these are thought to be a good hedge against inflation. On the other hand, soft commodities include agricultural products or livestock like corn, coffee, sugar, soybeans, wheat, and pork. As commodity prices tend to move in opposition to stocks, traders tend to rely on commodities during periods of market volatility. In fact, a report from Reuters indicates that commodities outperformed other assets in 2021, and are due to remain competitive in 2022.

Cryptocurrency market

The cryptocurrency market is not necessarily one of the largest markets around, but it is growing at a rapid pace. Its market size is expected to increase from $1.6 billion in 2021 to $4.94 billion by 2030. Cryptocurrency markets are decentralized, so the coins aren’t issued or backed by a central authority like a government. Instead, they run across a network of computers and exist only as a shared digital record of ownership called a blockchain. As we discussed in our post called ‘What is Cryptocurrency?’, many people are starting to invest in cryptocurrencies as they would with other assets. They are also using these coins to buy traditional goods and services, which may further propel crypto into the mainstream. While it is a novel asset class, it is also young and requires a lot of research to mitigate risks.

Written by Alyson Ashley Clarke
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