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The topic of this text will be the financial market, structure and participants such a large-scale economic system. I will go deeper into detailing all the processes, reveal the terminology, and also answer the following questions that are often asked by novice investors:

  • what is the financial market;
  • who are the main bidders;
  • what brokers stand out on Russian platforms;
  • how complex the structure of the financial market is.

This concept, even on a global scale, is usually associated with the direct exchange of a commodity for money. That is, one party gives something material, and the other pays liquid funds for it. However, in fact, money can also act as a commodity. It sounds strange, and even imagining such a process is somewhat problematic. But it is precisely this principle that is the basis on which the world and domestic financial markets are built.

So that the theory does not remain a simple set of abstract phrases for you, I propose to understand this topic in more detail. I'll start by deciphering the basic terms that any investor comes across on a daily basis. Anyone can make money on the financial market by registering on the website of a forex robot Abi.

What is the financial market in simple words

financial market structure and participants

The financial market is a specific economic system in which the main subject of trade is money itself, as well as its equivalent. The exchange of resources between the participants takes place through it: companies, investors, the state.

There are many different types of relationships on the market. They are formed at the expense of a whole range of interests. Today there is one very important condition that is valued more than others - timeliness. Supply in the financial market is born precisely due to demand. Therefore, if someone is in dire need of money and is able to pay more than face value for it, then he will be given the opportunity to acquire funds. Sometimes this happens because there is a prospect of a multiple increase in income in the future.

The domestic economy is characterized by capital activity. In fact, it resembles the process of blood circulation. If the body is completely healthy, it runs freely through the veins and oxygenates every organ that needs it. So in an economically developed country, liquid funds move as quickly as possible between owners, satisfying their needs. Due to the active redistribution of capital, a balance of supply and demand is formed, distortions in one direction are eliminated.

Now with might and main it is talking about the globalization of the market. And this is logical, since the period of the "Iron Curtains" is deep in the past, and no state can exist in complete isolation from other countries. Now even national funds go beyond the domestic economy, forming the very world financial market.

There are many different definitions of this structure. And each of them can be considered relevant due to the complexity and versatility of the project itself. Another one calls the world financial market a well-organized system of interaction between international and national platforms, where capital moves across the entire planet.

The reallocation of resources is based on healthy competition. The parties are countries, as well as industries and state regions. I will give a couple of illustrative examples of capital movements to make it easier for you to understand the process of the financial market:

  • In the first case, let us turn to the needs of small and medium-sized businesses.

The entrepreneur has a furniture production facility, which he planned to expand. However, it is not possible to do this here and now, since there are no available funds in the required amount. His business is in the form of PJSC. In this case, it is possible to issue additional shares.

Seeing that production is working steadily, investors believe in the entrepreneur's success and buy securities, as they expect their rate to rise. The business owner receives the finances necessary for further development and purchases the long-awaited equipment. The production is expanding, the volumes of furniture production are growing, the profit, accordingly, also increases. As a result, stocks become more expensive. Investors sell them profitably and make a profit.

  • In the second case, we will touch upon the banking sector, since credit institutions are also participants in the financial market.

Starting a business requires a lot of start-up capital. A person who does not have that kind of money now goes to the bank and makes an application for a loan. The organization, in turn, is a commercial enterprise and provides loans to the population at a certain percentage. She takes the finances from the Central Bank. The central bank also does not give funds just like that, setting its own conditions on them, but already more loyal. As a result, a commercial credit institution receives income from the difference between interest rates.

Here it is worth deciphering the concept of financial instruments, without which the market cannot exist. This is money in an unusual form for a common man in the street: securities, obligations, options, futures, currency.

What are the financial markets

I deciphered the common base. The main object of trade in this case is money itself. However, finance is a rather vague concept. Their role can be played by precious metals, foreign currency, company shares, and debt obligations. The type of capital determines the presence of nuances in the trading operations themselves.

The global financial market is not a monolithic, but a structured system. It is split depending on the needs of the participants and the types of trading operations. I will give the generally accepted structure in the form of a table.

Market

Description

Example

Credit

It is an economic space in which money moves to those in dire need of money from those who can provide finance for a fee. The main thing of any transaction is to profit from the assigned interest. These operations are very popular not only among legal entities, but also individuals.

A person takes a mortgage and draws up a loan agreement at a bank. The organization immediately provides the applicant with all the amount necessary for the purchase of real estate. The borrower undertakes to return it to the bank plus the assigned interest.

Currency (Forex)

Here the payment turnover between states is ensured. This type of market unites all participants in the global trading platform. Foreign currency is used as a commodity. The exchange rate of each currency is determined by supply and demand at the moment.

A bank client buys / sells currency at a set rate. On the territory of Russia, such operations are allowed to be carried out only with the participation of credit institutions that have an appropriate license.

Stock

This is a separately building economic and legal structure, in the context of which various securities are issued, put into circulation and sold: bond, stock, bill, check, option, futures and others. In this case, the cash is transferred to the financial instrument.

An investor buys shares in Gazprom to wait for their price increase and then sell them at a higher price.

Investment

It is mainly based on long-term capital investments. You can invest in various property (movable and immovable), land, objects of private (copyright) law.  

When one company does not have enough funds to develop production or master a new branch of the industry, it issues shares into circulation. If they are liquid (popular in the market), securities are bought by private or legal entities in order to make a profit after they are sold at a higher price. This is how capital is redistributed.

Insurance

This is a type of money management based on insurance coverage. It can be aimed at working capacity, risks in entrepreneurship, a person's life, as well as his health.

The company, with the help of insurance, protects itself from possible production downtime associated with any natural disaster or fire (as one of the many options).

Gold

All transactions in gold bars (both wholesale and retail).

This precious metal is also used for settlements between states.

Financial market participants

participants in the financial market

According to the generally accepted definition, they can be brokerage companies, stock and foreign exchange Exchange, banks, manufacturing and foreign trade firms, insurance and investment funds, financial and monetary organizations.

The main goal of any participant is to obtain material benefits. As an exception, individual investors can act who follow patriotic impulses and invest in the development of, say, domestic astronautics, only to feel pride in the achievements of their native state. But these are literally isolated cases.

Let's study the participants in the financial market in more detail. They all fall into two broad categories:

  • intermediaries;
  • buyers and sellers (one person can occupy both niches, so I combined them).

The second category uses only their own means and acts exclusively in their personal interests. This is where the concepts of trading and trader apply. However, the global financial market is very difficult system. She needs the presence of one more layer - intermediaries. Basically, they play the role of a kind of connecting link between the seller and the buyer of the goods. The mediator can become the official representative of the latter or offer advice on transactions.

Depending on the form of the market, the names of the categories may vary: insurers and policyholders, borrowers and lenders, issuers (issue shares) and investors. Here I will linger a little to tell you about each of the participants.

Who is a trader

More often than not, you probably imagine a kind of person in a strict business suit, closely following the indicators on several monitors and studying different schemes mixed with complex graphs. And more often than not, the image turns out to be surprisingly true. Only here the costume is generally optional. Modern trader has long gained access to trading through high technology. With the help of Internet platforms, he receives all the information necessary for concluding transactions.

This person monitors changes in exchange rates, stock indices, studies economic news. For him, discipline and endurance are extremely important. You need to have strong nerves in order to wait for the required indicator and not break off prematurely. In general, a trader's job consists of two parts: analyzing and executing a trade.

These market participants can be both professionals and amateurs. The first have a highly specialized education, work in brokerage companies, various analytical centers, banks. Moreover, they definitely need a license to carry out their activities. Such a document is issued by the Central Bank of the Russian Federation.

The profession of a trader is associated with enormous risks and is a very responsible job. Any failure (accidental or deliberate) threatens the company with massive losses. I can give you one such illustrative example. In 2011, the Swiss bank UBS instantly lost a little more than $ 2 billion due to the fault of its specialist Kveku Adaboli, who made unauthorized transactions and hid it from his superiors.

There are 4 types of traders, whose activities are somewhat different from each other, since they pursue different goals when performing trading operations:

  • speculators;
  • arbitrageurs;
  • hedgers;
  • investors.

Amateurs represent everyone who wants to make money on stock trading in assets. The main condition is the availability of start-up capital. But education in this case fades into the background. As a rule, beginners turn to professionals for help or trade through intermediary firms.

Who are brokers and what do they do

Brokers are companies that represent the interests of their clients on the exchange for a fee. In other words, they are precisely the financial intermediaries in the market.

The broker must also have an appropriate license from the Central Bank of the Russian Federation (permission to trade in securities). Now on the Internet there is a huge number of offers from such firms offering their services to the common man in the street. Anyone wishing to earn extra money in the financial market can register a personal account on the official website of the intermediary, open a trading deposit, get acquainted with video tutorials or try their hand at a demo account.

Usually a trader chooses a broker based on the size of the commission and the size of the choice of assets. The trading brokerage platform can have both browser and mobile versions. For example, MT4 or 5 works fine on a full-fledged PC and on a simple smartphone.

Remember one important rule. A quality broker puts the success of its client first, because only in this way the intermediary will receive his reward. The financial result of trading mainly depends on the savvy of the trader, therefore many firms offer their clients training in the intricacies of trading.

What are dealers and dealing companies

I have already told you what the financial market is in simple words. I pass on to the next participants. These are also intermediaries, but more independent in comparison with brokers who do not own assets. Dealers, on the other hand, put instruments on the balance sheet, and the business is carried out exclusively at their own expense. According to Russian laws, this market participant can only be a legal entity: a fund, a bank, an insurance organization and others.

Main brokers of the Russian financial market

So that you can immediately appreciate all the features and advantages of these companies, I will present them in the form of a table.

The name of the company and the year of its foundation

Direction of activity

Advantages

Broker opening, 1995

Stock and foreign exchange markets

Leader in terms of the volume of transactions performed in the context of the securities market according to 2015 data. The highest degree of reliability.

Alpari, 1998

The focus is on Forex, but there are other financial instruments.

Very popular. A large number of training webinars for beginners. 3 world licenses at once. Well-developed system of accounts.

The popularity and reliability of any broker can change. I advise you to regularly monitor the latest ratings of the intermediary companies. They are compiled on the basis of the votes of the traders themselves, so they perfectly reflect the current situation.

The world's largest financial markets

The work of these giants is followed by traders from all over the world. Several national exchanges stand out against the general background with their volumes, connections with international economic structures and competent management:

  • New York Stock Market (NYSE Euronext). In 2007, it merged with the European Exchange. This is a truly successful and powerful financial project, which for many years has not been inferior to anyone else in terms of capitalization. It is also worth mentioning the NASDAQ over-the-counter securities market. Shares of companies operating in the high-tech industry are traded on it.
  • Tokyo Stock Exchange. Second only to the US market. It is one of the oldest organizations since it was founded back in the 19th century. It comprises approximately 80% of the total market turnover in Japan.
  • London Stock Exchange (London Stock Exchange). Half of the trade is directed internationally. Differs in a high degree of internationality. It is the oldest financial market in the world, since it was organized in the 16th century.
  • Moscow Exchange (MICEX). A large system, but I would not yet include it on a par with the previous giants of the world of finance.

The Russian project was organized in 1992 and was originally supposed to become a platform for foreign exchange auctions. But 19 years later, the exchange merged into the RTS and received its current name. The previous one is indicated only by the MICEX indices broadcast on the news, with the help of which the market behavior can be seen in the context of the average value of the change in the value of securities.

Now the opportunity to make money on the exchange attracts an increasing number of amateur traders. However, I do not advise you to immediately rush into all the bad and invest a lot of money without knowing all the intricacies of market trading. Start with theory, improve your skills and boldly master a new profession.

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