In today's world economies globally are interconnected and modern economic systems heavily dependent on financial markets. Be it stock markets, futures markets, currency exchange or crypto markets. In grand scheme of things they are all interconnected.
Financial crisis of 2008 in the US, has proven how economies of the world are deeply interconnected and interdependent. That crisis caused pain across the globe, even remote villages that had nothing to do with any financial institutions. Our lives directly or indirectly connected to this global financial mechanism.
For this reason, it is important for everybody to have some kind of understanding how markets work. This understanding, however little it may be, will empower average people to take certain actions to protect their finances, livelihood, and well-being of their families, communities.
Simply because you are not an investor or trader, doesn't mean you should ignore what goes on markets. Lacking knowledge of market in general makes us all vulnerable to events that might happen because of the changes in market conditions. As a simple example, average people in the streets can experience devaluation of their wealth, currency inflation, price increases on daily necessities such as food, clothing, utilities, etc. All of this happens due to the changes in market in one way or the other.
What is market ?
Market is a place where buyers and sellers meet. This doesn't have to be a physical place. Nowadays, most of the markets operate electronically. Billions of transactions, trillions of dollars flow through the markets daily. We see shifts of assets from one sector to another. Today, there are so many resources available for people to get educated about any given topic.
This article's intention is not educate you about the details of various markets and how they behave, but rather remind you why it is important to have at least a basic understanding markets so you can protect your assets and be prepared for possible financial turbulence. Moreover, having some knowledge will give tools to take advantage of new opportunities.
For example recent emergence of bitcoin cash(BCC or BCH) created a nice opportunity for some bitcoin holders. @robert-call made a post saying "don't sell your bitcoin cash" and @hilarski made a post saying "don't buy bitcoin cash". Both of them were right at the timing and the content of their messages. Those who sold right away, missed an opportunity when bitcoin cash reached as high as $800. Then @hilarski warned about not buying because people with private wallets didn't move their assets to exchanges to dump yet. Sure enough next day bitcoin cash started going down and now sitting at around $250.
At first glance both of their messages seem to be contradictory, but once their reasoning is understood, their messages become complementary of each other. I would like to applaud them both for good predictions. I don't where the price will go from here, because it doesn't really matter anymore for me since I sold them now. Point is knowing a bit about markets and utilizing information at times will create opportunities.
For those who seek to become investors or traders it is highly recommended to get educated first, otherwise it becomes pure gambling. Simplest route would be to acquire few books or e-books and reading them. There are plenty of good books out there. Some of the basic ones I like is by Michael Sincere, books like "Understanding Stocks", "Understanding Options", etc. One of the best classics on the the topic of market I like is book by Jesse Livermore, titled "Reminiscences of a Stock Operator".
One common thing for all markets direction of prices. There only three: going up, going down, going sideways. Professional investors and traders find ways to take profit in any of these conditions. Engaging in market is part science and part art. Science part in my opinion is the fundamental data about certain asset, which art part in my opinion is technical analysis. Everybody analyzes charts in various way and come up with different conclusion. It takes reading, experiences and time to master technical analysis.
Don't be intimidate by market. Get educated, read some books, reflect on it, observe. I am not encouraging anybody to get into investing or trading. My intention is simply create awareness of markets and how they have effects in our lives. I am encouraging people to learn and acquire more knowledge. Those who don't often times pay hefty tuition fee when they blindly get involved in investing or trading.
In conclusion, I find reading books to be most efficient and productive way of learning on any subject. Watching video lectures and reading articles are useful and should be used as well. But solely relying on them as learning the subject can become a mistake, because books tend to be more comprehensive on the topic.
Everything presented in this blog post is my opinion, and shouldn't be taken as advice to invest or trade