How to better understand the finance world
The world of finance can be a confusing place for many people, with fast-paced trading, global markets, and numbers with more zeroes than you can count. For those that put in the time to learn how they work, however, finance can be fascinating.
Here’s where to start your journey:
This may seem obvious, but the easiest way to grasp a better understanding of the financial world that underpins global trade is to keep up-to-date with the news. Reading the financial section on your favourite news website will give you a decent start, but really you will be best off learning from finance-focused outlets like The Economist or the Financial Times (FT) as they tend to offer some of the most well-researched coverage of the markets. Both offer significant discounts for students and are available at all good newsagents, so should be pretty easy to find.
Try and avoid the hype-blogs and websites that write effervescent”news” about how this stock or that is going to perform. Their tips rarely come true and much of the “news” they offer is just regurgitated press releases, and you will do much better staying with outlets that have earned their reputation for diligence and reliability.
Find an industry you’re interested in
Finance underpins every industry on earth, and it can be difficult to know where to start. Rather than try and absorb all the information at once, try to drill down to a specific industry that interests you and then follow it closely through the ebbs and flows of the year. You will start to notice patterns, such as which companies are winning and which are losing, or the direction the industry is heading.
If you pick an industry that already interests you then making sure to stay up-to-date with the comings and goings of that sector should prove easier. If you are a gamer then maybe follow high-tech stocks, or media stocks for those that prefer film or music, or even maybe agriculture stocks for those that prefer the great outdoors.
Don’t forget the impact of politics
Politics seems to have impacted every part of our lives at the moment, with Brexit and Trump dominating the headlines. Whilst the intricacies of politics may not interested you, there is no doubt the impact decisions made by our politicians have on the financial markets. Brexit has caused the pound to slide and car manufacturing to collapse in the UK, whilst Trump’s fights with China have added significant friction to global trade, pushing prices up for various consumer goods.
Try out a demo
For those really interested in the financial system, then it might be interesting to try out a demo account to see how trades are made and currencies bought and sold around the world without the risk of actually investing your money. Whilst there are various games that try to replicate the experience, a demo will give you access to real data and market information, although your free access will only last around a month.
Photograph by PIX1861