Financial markets: history, types and how to make money
By Yuriy Bishko Updated November 11, 2022
Financial markets are place where players (people or companies) can exchange money, services and products. For example, if you want to buy cryptocurrency, you need a place where you can buy it, and someone could sell it.
The place where you can buy and sell something is the market, and by depositing money on the stock exchange and buying cryptocurrency or stocks, you automatically become a market player.
How did financial markets appear? The history of creation.
In general, markets have existed since antiquity, but the first full-fledged financial markets began to appear in the 13th century in the Netherlands. Why in the Netherlands? This country was a world leader, controlling most of the sea routes, which were very important at the time.
The first stock exchange was officially opened in 1787 in Amsterdam. Instead of electronic boards and special applications, they used ordinary inscriptions on wooden boards, and instead of cryptocurrencies and stocks, they traded in wood, spices, gold, and grain.
You need to know this to understand the processes of financial markets. Over time, nothing has changed except the convenience and speed of exchange in less than 0.01 seconds with a player from anywhere in the world.
Types of Financial Markets
- Cryptocurrency markets. The newest type of markets where you can buy and sell cryptocurrency. Cryptocurrency markets include: exchangers, exchanges, wallets, where you can buy, sell, or store cryptocurrency. How to start trading cryptocurrencies? Read in our article!
- Stock markets. Every big company wants to grow and looks for investors. People (traders or investors) look for an opportunity to make a profit. In order to do this, a stock market was created, where you can buy part of the company (a share) and make a profit from it in the form of rising share prices and dividends.
An IPO (initial public offering) is also conducted in this market. This is the purchase of shares that are not yet traded on the stock exchange. After their listing (publication on the stock exchange), you can earn a profit of up to 100% or more.
- Foreign exchange markets (FOREX). These markets exist in order to exchange one currency for another. For example, if a foreign company has to pay for a cargo of oil, it needs currency that it can buy in the foreign exchange market. Many traders use the foreign exchange market (FOREX) to trade. How to trade in the foreign exchange market? You can read in our article.
- Commodity markets. They are created to buy various resources such as oil, metals, wheat, wood.
- Bond market. Every state or company wants to invest in its own economy. In order to do this, it takes a loan (bills, bonds) from investors. The bond market is designed to help companies and countries raise funds.
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- What is trading and how to make money on it?
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