What is the capital trading market?

The capital trading market, as its name implies, is a place for capital transactions.

Usually refers to places where capital transactions are conducted, such as stock exchanges, commodity futures exchanges, financial futures exchanges, and foreign exchange markets.

What is capital?

According to Marx’s political economics, capital is a value that can bring surplus value.

According to the perspective of modern economics, capital generally refers to all tangible and intangible capital invested in the reproduction process; financial capital and human capital.

In other words, capital is an investment that can bring returns.

What is a transaction?

Trading originally meant bartering, but now it generally refers to the buying and selling of all commodities.

What is a commodity?

In traditional economics, commodities refer specifically to labor products produced for exchange, and have the dual nature of use value and commodity value.

In modern economics and modern sociology, commodities generally refer to all items and matters that can be bought and sold in the market.

What is a market?

In the traditional sense, a market is a place where goods are traded.

In modern society, the market is still a place for commodity transactions, but because the concept of commodities has changed, the concept of modern capital market and the concept of commodity market in the traditional sense are different both in form and There is a big difference in content.

The core functions of the capital market are financing, risk avoidance and value discovery.

"Financing" uses the language of economics to express the function of the market. If we put it in layman's terms, it is also two words: "borrowing money". This is a nice way of saying it, but a bad way of saying it. It is: "circling money"!

Financing is the most basic function of the capital market, and other functions are derived from this basic function. The beauty of financing through the capital market is that it can obtain a large amount of private capital without risk, and the risks of corporate investment and operation can be skillfully transferred to the majority of investors. If financiers make profits from their investment and operations, the biggest beneficiaries will naturally be the financiers and operators, and those being financed may also get a share of the pie. However, in fact, it is difficult for us market investors to obtain operating profits, and we can only rely on profit expectations. It mainly relies on the value discovery of stock securities; if the financier fails and causes losses, the most unlucky person will be the investors. Not only will there be no hope of investment income, but they may not even get their principal back.

Investors originally wanted to make money in the capital trading market, but accidentally lent capital to those financiers whom we did not know very well. We have no confidence in their moral standards and creditworthiness. , business capabilities and other very important information, basically nothing is known. Investing in the capital market not only does not provide the safety of principal and fixed interest, but also the possibility of losing all your money. Therefore, before making such a trading decision, investors should really take a closer look at the eye-catching slogans that must be found in every market: The market is risky, so investment must be cautious! Think about it: What does this mean?

Another core function of the capital trading market is to be used as a hedging tool. For example, the futures market is a typical place for hedging investment risks in the spot market and hedging. Since someone wants to release the risk, someone naturally needs to absorb the risk. Therefore, there are two main types of traders in the market. One is risk releasers, such as hedgers in the futures market, hedge funds and listed companies in the securities market. The other type is risk absorbers, such as speculators in the futures market and ordinary investors in the securities market.

If you are not a manufacturing enterprise, financial group or investment institution that hedges risks, then you must be an investor and speculator who absorbs risks.

The core functions of the market: financing, avoiding risks and discovering value.

Types of market transactions: investment, hedging, speculation (arbitrage)

Market transactions? Positioning: investors, hedging, speculators (arbitrage)

Investors: Aim to increase investment value and pursue long-term stable interests.

Value preserver: To avoid risks and release risks for the purpose of preserving value.

Speculators: Aiming to make profits, discover prices and absorb risks.

Taking risks in the financial capital market is the inherent responsibility of investors (speculators). To reduce and avoid market risks as much as possible is the most important task of investors (speculators), in fact it is also the only task. The essence of the game for investors (speculators) is actually to shirk their risk responsibilities as much as possible.

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