How people Make money from financial markets - Alldamoney

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How people Make money from financial markets

To gain a full understanding of how to make money from the financial markets it is important to understand how the market really work. The "financial markets" are markets used to raise money by both private and public sectors. Financial market is divided into money market for a short-term basis usually for assets up to one year and capital market for long term assets  with about a maturity period greater than one year.

The financial instruments used in capital markets are stocks, bonds, derivatives and futures, while the instruments used in the money markets are deposits, collateral loans, acceptances and bills of exchange. Institutions operating in money markets are central banks, commercial banks and acceptance houses etc., while for capital markets is both corporations government institutional investors and retail investors.
Because will be discussing on how to make money from the market by private individuals we will focus on the “capital market”

The capital market is divided into the primary market where new securities are bought or sold at initial offerings. And the secondary markets where investors mostly retailers buy and sell existing securities. The buying and selling in primary markets is between issuers and investors while secondary market transactions exist among investors.These  market categories are where traders and investors buy and sell assets such as shares, commodities, bonds, etc.

Investors use the stock markets, bond market, derivative market, currency market and futures market based on their investment motive and risk preference. Generally, it’s important to understand the dynamics of the market on which you are investing so as to speculate the future direction more effectively so as to have a fruitful investing experience.
One important factor of effective investing is the ability to analyze and research factors that could affect future price movement of the chosen asset, For example, let’s say an investor owns shares in Facebook, but the company reports weaker earnings than expected, most investors holding Facebook shares would sell it off and this would result in an increase of Facebook shares in the market if there are no buyers responding to the selloff. Facebook shares will decrease in value which would definitely result in a loss for the investor; this scenario should be analyzed vice versa to make money.

Categorically the supply and demand equilibrium changes impact on the price of any financial asset

Finally, in investing one should pay close attention to factors which might be economic, industrial or corporate that would impact on future price of the asset 

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