The financial market is a comprehensive system of monetary relationships that enables investors to buy, sell assets, and borrow from other participants. It plays a significant role in the global economy and can impact inflation levels, interest rates, and other economic indicators. It is regulated by supervisory bodies, which helps prevent fraudulent activities and protect the rights of depositors.
This structure is constantly changing and evolving, so it is always important to keep track of the latest news and trends. NFG Finance, as a broker, publishes up-to-date data and regularly updates the economic calendar, allowing informed investment decisions to be made.
There are many important concepts related to this complex system:
- Market capitalization. This is the overall value of stocks available on the exchange. It can be used to assess the overall market condition or specific companies.
- Indices. Numeric indicators reflecting changes in stock prices in a particular segment.
- Risk and return on investment.
- Market analysis. The process of studying data that allows for forecasting future changes and understanding the current state of the market. It involves evaluating financial reports of companies, economic conditions, and other factors that influence asset prices.
This global system allows companies to obtain financial support and investors to achieve returns on their investments.
Broker NFG Finance on the structure
The financial market can be divided according to the type of instruments:
- Stocks. Here, companies sell securities issued to raise capital. Investors receive dividends or sell them at a higher price;
- Bonds. Governments, companies, and other organizations can issue debt securities, and depositors receive a specified percentage upon purchase;
- Derivatives. Here, trading is done with derivative instruments such as options, futures, swaps. They allow investors to hedge their assets against price fluctuations;
- Currencies. This is the market where operations with monetary units of different countries can be conducted;
- Commodities. Here, trading is done with gold, oil, grains, metals, etc. Investors can buy and sell assets to hedge investments against rapid price changes;
- Real estate. Operations involve the sale/purchase of residential, commercial, etc. properties.
There is also a market for financial services, which includes banks, insurance companies, pension funds, and other structures. In this segment, services such as loans, deposits, access to investment products, etc., are offered.
Broker NFG Finance on the basic functions
The financial market can fulfill several functions:
- Access to capital. Companies and government organizations receive funds for business development or program implementation;
- Providing investment opportunities. Funds can be invested in various assets to generate income;
- Risk management.
- There are also other significant functions. The financial market deals with price formation, information gathering and distribution, ensuring liquidity and trade efficiency.
Who are the participants? Forex NFG Finance will tell you
Anyone can be considered a participant in this global system. There is a generally accepted classification, depending on a specific segment. It is assumed that there is a simplified form, namely the relationship between two categories of participants (sellers and buyers). The third party are brokers, such as Forex NFG Finance.
Here are the participants in the market:
- Investors. Individuals and organizations that invest their funds in various assets to make a profit. These can be institutions (pension funds, insurance companies, etc.) or private individuals;
- Traders. Participants who engage in buying/selling assets. They work on both the buy and sell sides;
- Banks. They provide loans, offer storage of funds, process payments, and serve customers. They also participate in transactions;
- Brokers. Participants who act as intermediaries in transactions. Forex NFG Finance is licensed, secure, reliable, and you can open an account and trade here with pleasure. Plus, they offer bonuses, fixed commissions, and the conditions are clear and transparent. They cooperate with European banks and popular payment systems;
- Regulators. Organizations (governmental, international) that oversee activities in the financial market. They protect the interests of customers and ensure the stability of the system;
- Issuers. Companies (and sometimes governments) that issue stocks, bonds, bills, and indexes. They use these assets to raise additional funds and repay debts.
Credit rating agencies are also considered market participants. They assess the creditworthiness of issuers and their instruments.
Important indicators or recommendations for traders from Forex NFG Finance
Most traders use an economic calendar, which is available for free. It is a convenient supplement in the form of a list that displays all important events. It serves as an informational tool for fundamental analysis. However, the experts at NFG Finance do not recommend relying solely on it as the main tool for building strategies.
Here's how to analyze indicators:
- GDP. If it increases, it can be expected that the country's currency will also rise in the near future;
- CPI. If the consumer price index increases, the currency tends to decrease;
- Nonfarm Payrolls. If the indicator rises, it indicates that the exchange rate will be higher;
- Increase in interest rates. The central bank tries to strengthen the national currency this way;
- Unemployment rate. It negatively affects the economy and the currency exchange rate;
- Retail sales. If it increases, it indicates growth in the domestic currency.
These criteria should be taken into account immediately as they can lead to increased volatility in the financial market.
This article was written with the support of experts from Forex NFG Finance.