What are Financial Markets
Understand where trading profits come from
The market is simple
A financial market is a place where assets are bought and sold: currencies, stocks, commodities, cryptocurrencies. Just like a regular market, but instead of vegetables, there are money and assets. Imagine a bazaar. A seller wants to sell higher, a buyer wants to buy cheaper. When they agree, a transaction occurs. In the financial world, this is called "placing an order" (or "executing an order"). The main difference from a regular store: the price here is NOT fixed. It changes every second depending on how many people want to buy and how many want to sell.
4 main markets
Forex
The currency market. Exchanging currencies — EUR/USD, GBP/JPY. Daily turnover of $7.5 trillion. The largest and most liquid market in the world. Open 24/5.
Stock Market
Company shares — Apple, Tesla, Amazon, Google. You buy a stake in a business. Runs on exchange schedules (NYSE, NASDAQ).
Commodity Market
Raw materials: oil (Brent, WTI), gold (XAU/USD), silver, gas, wheat. Heavily influenced by geopolitics and seasonality.
Cryptocurrencies
Bitcoin, Ethereum, Solana. The most volatile market. Open 24/7 with no days off. High risk — high reward.
How price is formed
The price of any asset is determined by one fundamental law: supply and demand. Demand is the number of people ready to BUY an asset at the current price. Supply is the number of people ready to SELL. When there are more buyers than sellers → demand grows → the price goes UP. When there are more sellers than buyers → supply grows → the price goes DOWN. This is the only law that moves EVERYTHING in trading. All indicators, patterns, and strategies are just ways to predict where the balance will shift.
How price moves
Drag the sliders and watch how the price changes
Who trades in the market
There are different participants in the market with different "strength":
Market participants
| Who | Influence | What they do |
|---|---|---|
| 🏦 Central banks | Enormous | Set interest rates, print money. A single tweet from the Fed chair moves markets by hundreds of points. |
| 🏢 Commercial banks | Large | Exchange currency for clients and their own operations. JP Morgan, Goldman Sachs. |
| 🦈 Hedge funds | Medium-large | Aggressive speculators with $1-100 billion in capital. Use algorithms and insider analytics. |
| 📱 Brokers | Medium | Intermediaries. Give you access to the market. Pocket Option, Binomo, IQ Option. |
| 👤 Retail traders | Minimal | You and me. There are millions of us, but individually none of us moves the price. |
How to profit from price movements
There are three main ways: 1. Buy low — sell high (classic) 2. Sell high — buy low (short selling) 3. Predict the direction — binary options In classic trading (Forex, stocks), you buy an asset and wait for it to appreciate. In binary options, you simply predict: up or down. It's simpler — but the risks are different. More details on this in the next lesson.
Remember the main thing: the market is not a casino. It is an arena where the one who analyzes data best wins. Without learning and strategy, there is no chance.
Test yourself
4 questions. You need 3+ correct to pass the lesson.