In this interconnected world, where the money evolved from salts(commodity) to coins, and from coins to Paper money, even it has become invisible to us in this modern world that is Bitcoin. Money is now in different forms which allows from individuals to institutions to fill up their pockets and to earn more and more. Although before the age of this modern Digital Era, money in different forms were traded like bartering, exchanging in the form of I.O.U’s etc [as you have read in the topic History of Money] But with the passage of time, Money evolved with thoughts & different contributions of humans. Now beside getting money in the exchange of our work we can make it by trading it in different Markets. You will be surprised to know that all the rich people have their money in different assets likely in Money Markets. But do you know that there are how many forms of Financial Markets? Why they exist? How money flows into the market? How People make it? Before diving into the ocean of this market let me introduce you with;
What is meant by Financial Market?
Financial Markets are the physical or digital platforms where people trade (buy or sell) their assets in exchange of other assets or money.
Types of Financial Markets
Now we will read about different types of financial markets where money flows or traded by investors or traders. And we will know exactly what it is and how it works in easy wording.
[Note: We will not go deeper in every market explanation, will explain it later keep yourself updated with this website but I am 99% sure that this brief description will clear your concepts.]
1. Stock Market – where companies sell their journey
Imagine a place where companies sell their stories – and you can be part of these stories. This is the stock market started in 1600s. When a company wants to develop, it sells its shares (some percentage of company’s total valuation) to the public. As an investor, you become the owner of this percentage. If the company’s journey goes well, your share also increases. But there is not only a profit but also the danger – because the end of every story is not necessary to be pleasant. This is the charm of this market: every day a new high, new low, every collision is a new story. The famous stocks are Apple Inc. (AAPL), Microsoft Corporation (MSFT), Tesla Inc. (TSLA) etc.
Do u know; In 2010, there was a “flash crash” in which the Dow Jones Industrial Average fell 1,000 points in minutes, but it quickly recovered — due to automated trading algorithms.
2. Bond market – when governments and companies ask for a loan
Imagine, you lend someone a loan, and they give you a fixed interest every month. The bond market is similar. Here governments and companies raise money from investors – in return they promise to pay a fixed interest. People come to this market for stability and expected returns. But there is also risk if the bond issuer defaults. Still, conservative investors like it first due to safe heaven by Valuable companies. The famous bonds are U.S. Treasury Bonds, Apple Inc. Corporate Bonds, Euro Bonds etc.
Do u know; In 2021, the Global Bond Market size was $119 trillion while the Global Stock Market stands at $117 trillion. That’s the reason what matters the most in the market – TRUST.
iii. Foreign Exchange Market (Forex) – where rupees, dollars and euros dance
When you buy something online in the market, there is a possibility that you will have to deal in dollars. The Forex market is the largest financial market in the world where currencies are traded. Billions of rupees are exchanged every second – USD to JPY, Euro to Pound etc. Traders take advantage of price fluctuations(movements) in this market, but there is also a lot of volatility. One wrong move or right analysis, the decision is yours.
Do u know; More than 170 currencies are traded in Forex market but only 7 currency pairs consist of 85% market valuation that are EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD, NZD/USD.
iv. Commodity Market – Gold, Silver and Oil Market
Somewhere an investor is buying gold – not to wear or hold – just to make a profit. The commodity market is where raw materials such as gold, silver, oil and wheat are traded. This market is affected by global supply, demand, politics and even the weather. People hedge against inflation in it. But price fluctuations are common here – a tweet or a storm can shake up rates. Unlike Physical gold, silver or oil etc. we can buy some percentage of it in digital form like Gold ETFs(exchange traded funds) from digital trading platforms where it is traded.
Do u know; In US, Bitcoin has been officially declared a commodity by the CFTC (Commodity Futures Trading Commission), similar to gold or silver, and it sounds crazy(a big deal in future)
v. Derivatives Market – Where prices are sold at higher than they really are
Have you ever seen a shadow? Derivatives are just that – a contract for a real asset. Here people make deals by estimating the future price – on stocks, commodities, currencies or interest rates. This is for market experts: to manage risk and also for speculation. But a small mistake or wrong bet can make you lose money. This market requires strategy, not emotion. Just understand it like a betting on cricket player whether he will make some run on next ball or out. But you will say that what does it mean by strategy or emotion in this(cricket player example) it all depends upon future – Yeah, you are right it’s totally future prediction and so it is called derivative market. But let me clear, here strategic analysis means prediction on the past performance of that player and emotion means prediction with no data.
Do u know; Just 5 banks – JPMorgan Chase, Goldman Sachs, Citibank, Bank of America, and HSBC – control over 90% of transactions in the global derivatives market! These banks are such huge market makers that if they were to close, the entire derivatives system could come to a standstill(jam). Their network is so powerful that they have the power to decide the price themselves!
vi. Insurance Market – Where people turn fear into money
Life is uncertain – and this uncertainty is inevitable(confirmed). In the insurance market, people sell their risk (death, accident, loss of health) to companies. They pay a premium in return. This market has become not only a name for protection but also a major source of investment (life insurance, ULIPs). But it is important to understand – every policy has a hidden line of circumstances. The Famous Insurance markets are Berkshire Hathaway(GEICO), United Health Group, LIC (Life Insurance Corporation) etc.
Do u know; The first concept of insurance came from Islamic trade. In 14th-century, Muslim merchants introduced a mutual protection system called “Takaful” – considered a Sharia-compliant (Under Islamic rules of Prophet Muhammad) version of today’s modern insurance.
vii. Real Estate Market – A Market of Buildings, Rentals and Dreams
Every house is a story – and an investment too. In the real estate market, people invest money in land, houses and commercial properties. One gets the long-term stability and satisfaction of a physical asset. Rent and appreciation of value are its main advantages. But liquidity is low – when someone wants to sell, there is no immediate buyer. Still, it is an emotional and wealth-generating market.
Do u know; There are over 50 million empty homes in China! They were bought only for investment, not for living – that’s why these areas are called “ghost cities“
viii. Cryptocurrency Market – Gambling or Magic of the Digital World?
A digital coin, no government guarantee, and yet it is worth millions – this is the crypto market. Bitcoin, Ethereum, and other cryptocurrencies have challenged traditional finance. People are drawn to decentralization and instant profits. But price swings, hacks, and regulations make it risky. This market is exciting, but also confusing for new investors. In this market, you don’t hold it like Physical currency rather it is stored on Blockchain(a de-centralized technology specially designed for Crypto) and you can access it anywhere in the world by just some random keywords by writing it in the digital wallets like Trust Wallet, Meta mask etc.
Do u know; The top cryptocurrency ‘Bitcoin’ is becoming popular in the world so fast, but unlike other Physical currencies which governments can print of their own choice, Bitcoin has limited supply of only 21 million. Nobody can create more bitcoin than 21 million And due to its store of value it makes itself most valuable.
ix. NFT Market – When Art, Tweets, and Memes Start Selling
Can you imagine a meme or digital painting selling for millions? NFTs (Non Fungible Tokens) have made it possible. This market is a new chapter in digital ownership — where art, music, tweets, and even virtual land are sold. Each NFT is unique, secured on the blockchain. It’s a revolution for young people and creators, but a bubble for critics. This game of hype and value is still in its infancy. For example, “CryptoPunks” a 10,000 unique pixel art characters from which one #5822 was sold out for $23.7 million, “Bored Ape Yacht Club(BAYC)” a 10,000 distinct hand-drawn monkey like Apes with different traits from which one #8817 was sold out for $3.4 million.
Do u know; In November 2024, Justin Sun just bought a banana fitted on the wall for $6 million in the Maurizio Cattelan’s “Comedian” banana artwork, which he ate right at that time in the press – It shows the interest of investors in the NFT art market.
Final Words:
Market Warrior Mentality says
Understanding the battlefield is more important than fighting every war.
Which means It’s not necessary to play into all the markets, but you must know the side effects of all the markets whether it is right or wrong. Best of Luck and Hardwork!
