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In the subject of economics, a financial market is an organized system that facilitates the buying and selling of financial commodities like stocks, bonds etc, physical commodities for the physical market and the like. So you should always try to go for analyzing the financial market.
Markets are of two types:
Both the general markets and specialized markets are very important for the economy of a country. Markets are a meeting place for several buyers and sellers and they work by coordinating the activities of buyers and sellers for their collective gain and the greater gain of the economy is also taken care of at the same time. Thus, markets are one of the most contributing places in an economy. Any systematic economic entity that is inclined to be a mediator between the buyers and the sellers is known as a market economy. On the other side, there are other economies that exist as well. They are classified as command economies, non market economies and also something known as a gift economy.
In the vast world of finance, financial markets help in the following ways:
In capital markets, they help in raising the capital
In derivative markets, they help in transferring the risks
In the currency markets or international markets as they are also commonly known, they help in promoting international trade
It forms a fine ratio between the requirements of capital to the possession of capital in the market.
Various kinds of financial markets:
There are many different kinds of financial markets, viz
1) Capital markets: These markets again consist of 2 sub types which are:
a) Stock markets: Stock markets deal with the buying and selling that is the total and complete trade of stocks and shares
b) Bond markets: Bond markets deal with the buying and selling of bonds. In other words, bond markets deal in the total and complete trade of bonds.
2) Commodity markets: These markets deal in the trade of commodities
3) Money markets: These markets deal in the business of debt consolidation, financing and investments on debts.
4) Derivatives markets: Derivatives markets are considered the most risky among financial markets. They also help in the proper tackling of any financial risks.
5) Futures Market: These markets deal in the trade of futures.
6) Insurance market: These markets deal in the business of insurance and demarcation, classification and handling of risks.
7) Foreign exchange market: These markets deal in the trade of FOREX or foreign exchange.
Now, there are two types of capital markets. They are:
a) Primary markets: These markets deal in the business of new bonds, stocks and securities
b) Secondary markets: These markets deal in the sale of already owned bonds, stocks and securities
The most studied factor in the financial market analysis is the factor of time. Time is money! A lot of analysis has been done by famous finance experts on the possible prediction of the financial market pattern. They have intensely studied the effects of timing on the financial markets. It is very difficult, as they have found out, to make predictions of the way a market will head in the future. But it is not impossible to arrive at a near perfect result, if an accurate and time tried study is made. A lot of years, possibly decades if not centuries, have been spent in trying to understand the financial market, if not make it more predictable. But predictable it never is and will never be! Plus our studies and concerns are also, nowadays, not limited to the domestic market alone. There is always a strong influence that comes from the many international markets. So it is very important that we as experts should also study the international markets to understand their effect on our domestic markets.
These are nothing but a few beginners’ pointers to analyzing the financial market. So always try to make a good study of the different stocks so that you can get to choose the best stocks for you without any problem or worries. Unless you try to analyze it very carefully you would never be able to get good profits from the market.
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