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Before you start reading and learning from financial markets blogs, you need to understand what financial markets are and what its relevance is on the internet today. A financial market is a marketplace that provides a hub or a platform to buyers and sellers from across the globe to meet and trade assets at prices that are determined by demand and supply needs. There are no limitations to what the assets are. If you’re a seller or a buyer, chances are you’ll find whatever you’re looking for (whether it’s shares, bonds, currencies, etc.).
The internet has spread around the world, connecting people who share similar interests and trade from one corner of the globe to the other. The internet has not only limited buyers and sellers to trades, but it has also given them a platform to share their feedback and experiences – from scratch to the top of the leading boards. On the internet, you’ll find millions of people who have created their own blogs that are there to share the knowledge of financial markets, providing you guidance as to what the current trends of the market are and where you can make the best investments with the best turnovers.
However, if you’re a newbie to financial markets, then you could feel overwhelmed by the amount of information these blogs can throw at you. Following are some key points to help you get started.
Types of Financial Markets
By now you’re already aware of the term “financial markets,” but ask yourself if you really know what it means. This term is just a general terminology and is just a tip of the iceberg. A good blog that wants to publish quality content and attract quality visitors will give you the information about the many types of financial markets there are that can help you run your own markets/platforms and earn you popularity in the internet community. You’ll find almost every financial markets blog thoroughly explains the following five types of markets:
1. Bond Market
Also known as the credit market or debt market, this market provides its participants the opportunity to issue new debts (commonly known as the primary market), as well as buy or sell debt securities (commonly known as the secondary market). Mostly, this is dealt through bonds but does not limit itself to bonds as it can also be dealt in forms such as bills or notes, etc. with a primary goal of facilitating the public with long-term funding and private expenditures. Bond market can be further divided into
Issued by companies with the goal to raise money for financing operations, opening up new manufacturing services, or expanding product lines. These bonds serve as longer term debt mechanisms providing a maturity of at least a year.
These bonds are issued by the government in order to attract buyers by paying them the face value given on the bond certificate once the bond has reached the agreed maturity date. During the period, the buyers are also entitled to any interests payments that take place until the maturity date.
These bonds are issued by municipal authorities locally such as states, cities, school districts, publicly-owned districts, seaports, etc. to those seeking to raise funds for various projects.
2. Money Market
Being one of the most common and oldest mechanisms among its competitors, money markets need no introduction. As the name suggests, it refers to the mechanism, allowing businesses, banks, and government to lend money to borrowers so they can meet their short-term needs and in return, provide easy liquidity to the lenders. Money markets are typically focused in the trade of products consisting of highly liquid short-term maturities. These short-term maturities are also characterized as bringing in low interest returns compared to a high level of security.
If we look further into money markets, we find that at the wholesale level, it enables merchants and organizations to initiate large-scale trades, while on the retail level, it comprises of money market mutual funds that are bought by individual investors and money market accounts that are opened and managed by bank customers. Money markets also allows individuals to invest in the form of short-term deposit certificates, treasury bills, or municipal notes. Additionally, you can gather information and insights from blogs with respect to money market participants, functions, and instruments that you would find extremely useful.
3. Over-the-Counter Market
This refers to the market that does not have any physical locations and the trade is conducted electronically – directly between the two counterparts without the involvement of a third party broker or mediator. This market exists to handle and expedite the exchange of stocks being traded publicly which are not listed on the NASDAQ, NYSE, or the American Stock Exchange. Simply put, it’s mainly small companies that trade in the over-the-counter market as this market’s utilization cost is less as are the regulations than those of the companies that trade and function on primary markets.
While going through the over-the-counter (OTC) market, it’s recommended that you get well familiar with factors such as participants, off-exchange, stocks, contracts, counter-party risks, and the importance of over-the-counter derivatives in modern banking, which give the over-the-counter market its importance today.
4. Insurance Market
Being one of the most sophisticated as well as successful markets in the world, the insurance market is in place to transfer the loss of one entity to another, where the transferring entity is the insured and the one guaranteeing to take the loss is the insurer (i.e., policyholder). In the insurance market, both parties come together to agree to the conditions pre-decided by the policyholder and the client (insured), who is primarily doing this to avoid a monetary loss against an uncalled for disaster or situation.
The insurance market is truly very diverse as it provides coverage for almost every risk such as auto, health, income protection, life, casualty insurance, and more. However, every insurance policy has its own terms and conditions for claims.
5. Forex Trading Market
Also known as Foreign Exchange trading, Forex trading enables participants to buy, sell, exchange, and speculate on currencies. It’s one of the most active trading markets in the world and only seems to be getting bigger by the day. Currently, Forex trading oversees an average of $5 trillion worth of trading volume per day, making it the most liquid market in the world as it deals directly with cash, which is the most liquid of assets out there in the financial markets. Simply put, if you ever had the opportunity to travel abroad, there are high chances that you have made a Forex transaction, meaning you converted your currency to the local one for traveling and shopping.
Even though there is a lot of foreign exchange currently taking place in the world for practical needs, the majority of the Forex trading takes place with aims of making high profits through currency conversion. As a result, the amount of currency conversion every day can drive price movements of some currencies a lot, making them extremely volatile. This is one of the main reasons why Forex trading attracts such a large number of investors on a regular basis. Everyone wants to make hefty profits with even small amounts of money, but the higher number of people is directly proportional to the amount of risk it involves.
Similar to the over-the-counter market, the Forex trading market is also decentralized and is comprised of a worldwide network of computers, banks, commercial companies, and brokerages that are there to help invest your money and get the ball rolling, aiming to bring in more and more profits. Furthermore, the Forex trading market is also divided into the Spot Forex market, Forward Forex market, and Future Forex market, and it’s worth taking the time to study each.
One of the most critical points to keep in mind while trading in the Forex market is to be aware of global events as these are the main drivers in the rise and fall of any currency and have the power to make you either the richest or the poorest person in the Forex market.
With this knowledge, you can begin reading financial blogs, like the NeuerCapitalReview Blog (https://neuercapitalreview.net/) that provide visitors with insights and up-to-date information about trending financial markets and tips to differentiate a genuine trading platform from a fake one.