Introduction to Financial Markets
1. What is a Financial Market?
A financial market is a place where buyers and sellers trade financial instruments such as stocks,
bonds, currencies, and commodities. These markets help people and companies raise money and
invest their savings. Financial markets play an important role in the economic development of a
country.
2. Types of Financial Markets:
• Stock Market – Where shares of companies are bought and sold.
• Forex Market – Where currencies are traded globally.
• Commodity Market – Trading of goods like gold, silver, oil, etc.
• Bond Market – Governments and companies borrow money from investors.
3. Importance of Financial Markets:
Financial markets help in price discovery, liquidity, and capital formation. They allow businesses to
expand and create employment opportunities.
4. Basic Trading Concepts:
• Supply and Demand – Price increases when demand is higher than supply and decreases when
supply is higher than demand.
• Risk Management – Always manage risk using stop-loss and proper position sizing.
• Discipline – Successful trading requires patience and emotional control.