1.1 Overview

Hello Traders and Welcome to our Traders Education Centre.

Today’s topic is going to be what is the Financial Markets. The Financial market and just the overview of them is in this video (next sub-modules will be much more in detail). The Financial market is any market place where securities are traded.

What are Securities?

Securities are any Financially Tradable Asset, which can then be further categorised into three different categories. Before going onto the categories, let me explain what is a Financially Tradable Asset. A lot of financial jargons.

Now let’s break it down. Tradable means exchanging one product for another. Now for example is our most common economic transactions, we usually exchange paper cash for a product. That product can be a laptop. If you walk into a PC store you can exchange currency and get a laptop right. As such, in the financial marketplace, using similar concept, is basically where we exchange for tradable assets. For example, I take my cash and buy some stocks or bonds, which I am buying from someone else. This is what we call a Financial Tradable Asset. I hope that makes it clearer.

The securities can then be further categorized. Broadly they can be put into three categories.

  1.  Debt securities – They can be anything like Treasury notes, bonds or you may call them “I Owe You”. Basically, it means that we loan money from someone and have a contractual term with them where they get the paper to say that they got to pay me back the money plus interest as well.

  2. Equities securities– They are like stocks

  3. Derivatives securities – They are anything to do with Futures and Options, which we will be going much more in detail later on as well.

Finally, where can we go on to trade them; and what kind of markets can we trade them? We will look into them in the next sub-modules.

The different types of markets are:

  1. The Equities or Indices market:

    • Equities – Stock

    • Indices – Cumulative part of this whole stock market

  2. The Foreign Exchange market where we exchange currencies.

  3. Crypto market, which is more recently introduced and has more virtual currencies.

  4. Commodities market

  5. Bonds market

  6. Derivatives markets

We will go much more in detail in each of the sub-modules in the next videos. I trust that you have enjoyed this one we will see in the next following modules.

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