What is the financial market?
Education
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The financial market is part of the global ecosystem and generally refers to any market where financial assets are bought and sold.
There are physical stock exchanges in major financial centers such as London, New York, Chicago, Tokyo, Sydney, Moscow, etc. Trading sessions are held during the local business hours of these cities Monday through Friday.
Trading can consist of physical asset purchases or through derivatives, both exchange-based and over-the-counter (OTC), which allow investors from around the world to buy and sell various currencies and commodities through online platforms.
Trading can consist of physical asset purchases or through derivatives, both exchange-based and over-the-counter (OTC), which allow investors from around the world to buy and sell various currencies and commodities through online platforms.
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There is a wide range of assets available for trading:
FX currencies of the world, paired together (for example, you can buy euros for dollars by trading on EUR/USD)
Stocks of major companies (Apple, Facebook, Coca-Cola, etc.)
Energy (such as oil and natural gas)
Metals (gold, silver, platinum)
Indexes (Dow Jones, Dax, S&P 500, etc.)
Futures, contracts for future delivery of products (for cotton, soybeans, wheat, etc.) Traders (sellers and buyers) make trades among themselves. About 85% of them are speculative traders who do not need physical barrels of oil or bags of wheat: they seek to profit from the rise or fall of asset prices.
Stocks of major companies (Apple, Facebook, Coca-Cola, etc.)
Energy (such as oil and natural gas)
Metals (gold, silver, platinum)
Indexes (Dow Jones, Dax, S&P 500, etc.)
Futures, contracts for future delivery of products (for cotton, soybeans, wheat, etc.) Traders (sellers and buyers) make trades among themselves. About 85% of them are speculative traders who do not need physical barrels of oil or bags of wheat: they seek to profit from the rise or fall of asset prices.
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To trade, they use online platforms such as Metatrader or cTrader, which provide live prices, multiple order types and analytical tools.
When traders believe the price of an instrument will rise, they place a "Buy" trade, hoping to make money as the price rises and close the trade at a profit. When they believe the price will fall, they place a "Sell" trade in hopes of making a profit while the price falls.
If the transaction goes in the opposite direction of the trader's prediction, they will suffer a loss. When the trade is closed, the profit or loss will be added or subtracted from the account balance. The price (quotation) of an instrument changes constantly, often updating every second, reflecting the supply and demand for the product around the world.
If the transaction goes in the opposite direction of the trader's prediction, they will suffer a loss. When the trade is closed, the profit or loss will be added or subtracted from the account balance. The price (quotation) of an instrument changes constantly, often updating every second, reflecting the supply and demand for the product around the world.
When there are a lot of people in the market who want to buy an asset (currency, stock, metal), the demand increases as a result.
When demand begins to rise, the price also rises. This happens because bidders become so interested in opening a buying position that they are willing to accept a higher price.
Conversely, when demand for a product is low, prices generally fall because more and more traders are selling, and this forces buyers to agree to prices that are not ideal for them.
It is important to note that while global supply and demand has a significant impact on the price of the asset itself, the pricing of the speculative market (CFD) comes from the price of the asset and is not influenced by the demand/supply for the CFD product.
When demand begins to rise, the price also rises. This happens because bidders become so interested in opening a buying position that they are willing to accept a higher price.
Conversely, when demand for a product is low, prices generally fall because more and more traders are selling, and this forces buyers to agree to prices that are not ideal for them.
It is important to note that while global supply and demand has a significant impact on the price of the asset itself, the pricing of the speculative market (CFD) comes from the price of the asset and is not influenced by the demand/supply for the CFD product.
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Factors affecting the listed price of an asset include:
News: Negative data for any country leads to a decline in the value of its national currency. Positive data, on the other hand, can lead to an increase.
Central bank policy: Interest rate decisions and statements by central bank officials.
Central bank policy: Interest rate decisions and statements by central bank officials.
Corporate reports: companies whose shares are listed on the stock exchange regularly publish their financial results. This data can have a significant impact on the price of shares, especially if they differ significantly from analysts' expectations.
Government data: These include the unemployment rate, inflation levels and trade balance reports. Markets closely follow not only these numbers, but also any comments on changes in monetary policy.Now let's find out who the main financial market participants are. Now let's find out who the main financial market participants are.
Government data: These include the unemployment rate, inflation levels and trade balance reports. Markets closely follow not only these numbers, but also any comments on changes in monetary policy.Now let's find out who the main financial market participants are. Now let's find out who the main financial market participants are.
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Major banks
UBS, Deutsche Bank, JPMorgan Chase, Citibank and Goldman Sachs conduct a huge number of foreign currency and FX derivative transactions every day, both for their own purposes and on behalf of their clients (corporations, governments, hedge funds, large private investors).
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Set Stop Loss & Take Profit levels
The main representatives of this type are the European Central Bank, the Federal Reserve System, the Bank of Japan and the Bank of England, which are responsible for managing the exchange rate of the national currency and control the presence of other banks in the market.
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Small banks, commercial companies and hedge funds
Participate in the sale of products, exchanging one physical currency for another (they may also be involved in speculative transactions).
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Brokerage firms
These are intermediaries between private traders and the financial market. Using an online CFD broker, you can trade online from anywhere.
Let’s recap the important points from this lesson:
The financial market consists of buyers and sellers. Transactions can take place on a physical exchange or through OTC derivatives via online platforms that allow speculation on price movements.
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A wide range of assets are available, including foreign exchange rates, precious metals, stocks and indices, futures and more.
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Investors buy to make money when the price rises and sell to make money when it falls. Investors suffer losses when a transaction goes in the opposite direction of their forecast.
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Supply and demand significantly influence price movement, as well as market news, central bank policies, financial results releases and macroeconomic data reports.
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Financial market participants include major and central banks, governments, small banks, hedge funds and brokerage firms.
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Henderson Digital Assets is a subsidiary of Janus Henderson Horizon Fund regulated by Financial Conduct Authority (FCA) of the United Kingdom under registration number 144111. Both companies are part of Janus Henderson Investors Europe S.A. Regulated by Financial Sector Supervisory Commission of Luxembourg (CSSF) under registration number B22848.
CFDs, FX, Crypto and any other leveraged products are complex instruments and come with a high level of risk of losing money due to the leverage used in these products. You should consider whether you understand how any product you trade or invest in is suitable for you, and whether the risk involved in trading or investing into these products is acceptable. It is important that you understand that with trading and investing, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to trade and invest with Henderson Digital. If you are still unsure if investing is right for you, please seek independent advice.
CFDs, FX, Crypto and any other leveraged products are complex instruments and come with a high level of risk of losing money due to the leverage used in these products. You should consider whether you understand how any product you trade or invest in is suitable for you, and whether the risk involved in trading or investing into these products is acceptable. It is important that you understand that with trading and investing, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to trade and invest with Henderson Digital. If you are still unsure if investing is right for you, please seek independent advice.
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