Diving into the Sea of Financial Markets Amidst Coronavirus
First of all, I would like to say thank you for reaching this part as this is my first story to share with you. I hope that I could give you more ideas about financial markets and how to get started with it.
As we are currently dealing with the crisis caused by this persistent pandemic virus namely, COVID19, a lot of people right now are asking about these questions:
“What to do with my investments?”
“Should I still expect a return of investment after this pandemic?”
“Or is there any other way that we could earn money while at home?”
Necessary questions to ask, right?
As our daily life gets interrupted by this virus thing outside our humble houses, I have this weekend project which I’m going to write up all the information that I know about the financial markets and hoping that it could be helpful to all you out there seeking opportunities right now.
What are Financial Markets?
According to Investopedia, Financial markets refer broadly to any marketplace where the trading of securities occurs, including the stock market, bond market, forex market, and derivatives market, among others. Financial markets are vital to the smooth operation of capitalist economies. It also provides the platform to sellers and buyers of the financial assets to meet and trade with each other at a price as determined by market entities.
Yeah, I know this explanation is kinda generic but for a much specific explanation, you can refer to *Google* for that as Google knows everything.
Some of the well-known financial markets right now are (these are the markets that I have some solid idea somehow and which I will discuss with you one by one) :
- Stocks Market — refers to the collection of markets and exchanges where regular activities of buying, selling, and issuance of shares of publicly-held companies take place. (Investopedia)
- Forex Market — is the largest, most liquid market in the world, with trillions of dollars changing hands every day. There is no centralized location, rather the forex market is an electronic network of banks, brokers, institutions, and individual traders (mostly trading through brokers or banks). (Investopedia)
- Commodities Market — is a physical or virtual marketplace for buying, selling, and trading raw or primary products. There are currently about 50 major commodity markets worldwide that facilitate trade in approximately 100 primary commodities. Commodities are split into two types: hard and soft commodities. Hard commodities are typically natural resources that must be mined or extracted — such as gold, rubber, and oil, whereas soft commodities are agricultural products or livestock — such as corn, wheat, coffee, sugar, soybeans, and pork. (Investopedia)
- Cryptocurrency Market — A market where you could buy digital currencies could cryptocurrencies. Crypto is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology — a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation. (Investopedia)
We have some other markets like bonds, derivatives, spots market, and futures but it’s too deep I might get myself drown together with you because of too much information. *smiley*
How do we earn in the Financial Markets?
If you’re able to do some selling stuff when you are a kid like selling bond papers to your classmates every time there’s an exam or selling out your favorite candies in your class, you are already got yourself into the financial market without you knowing it.
You got the entrepreneur blood flowing in you. *Good job*
Now, Let me give you an example of how other people earn money while we are in this dangerous situation:
It’s too dangerous outside and safety is our priority. People are now demanding for more items to get themselves protected from the virus. You have a friend who sells facemasks at a very, very low price. You now got the idea that you can invest in that and sell it but with a bit higher markup.
Which part of the sequence enables you to earn money? isn’t it because there are demand and supply? Because you have the supply (The product you’re selling) and there’s a demand (The people want your product), you can add up a markup with the original buying price and sell it at a much higher price.
You’ve earned profit at the difference in the prices and that is the same principle that we should remember when we are dealing with any kind of financial market.
In the next chapter, We will discuss first the largest market of them all, FOREX. Cheers!