Financial markets are places where people and companies come to buy and sell assets like stocks, bonds (debt), commodities and other products. Once the financial markets were the preserve of big banks, finance houses and very wealthy individuals, but no longer. The financial markets have grown bigger and faster over the years. More and more people are now able to get access to these markets.
How people trade financial market? Generally, there are two ways to trade the financial markets:
On-exchange - In the past, brokers would be met in some specific buildings to buy or sell shares in companies, or other assets, like corn or livestock. Now, most trading on exchanges takes place online, with orders being placed from all over the world. Trading on an exchange means that contracts are standardised with a clear guidance on the quality, quantity and when you will receive the goods.
Over-the-counter- Two parties agree to buy/sell to each other directly, without trading on an exchange.
Asset Classes in Financial Markets
In Olikriet Capital, you can find out all kinds of Forex instruments to trade
What affects the markets? Market prices are driven by the supply and demand for goods which can be affected by a broad range of factors. Here are some of the most common:
News: Many market participants keep tabs on news in real-time; bad news affecting a company or a country will drive prices down, for example. Even political news can have a wide-reaching effect on markets
Central bank policy: Central banks make decisions such as setting interest rates, and these can have a profound effect on the flow of money around the world, and will have a big impact on markets
Company results: Companies listed on stock exchanges will release regular results which will encourage investors to buy or sell their shares
Government data: Governments will release data which will move markets, like unemployment information or inflation data for example
Product trading advantages