At the end of the day we are looking at the complex mathematical calculations that specifically relate to the value of gold as an investment opportunity. This means that the permutations will be challenging but some people prefer hands-on approaches to their investment even if it means that they have to work a lot harder than they originally planned. That is how the cookie crumbles.

The internet has some automated tools that help people to negotiate these calculations. They also have the advantage that the person does not need to be checking the different variables on a regular basis. The computer will do it automatically with the advantage that the accuracy levels will be very high. In a market where the figures for trading can run into billions you need accuracy in order to ensure that the customers are not losing millions out of the negligence of the people that are running the outfit. In working with the different complex mathematical calculations that specifically relate to the value of gold as an investment opportunity, the investors will be looking to find the mix that best minimizes the risks associated with gold market.

One of the most frustrating things about gold investment is the fact that the prices are often determined by factors that are outside the control of the individual players in the mix. For example the economy might fall thus leading to a great deal of changes in the buying patterns that people experience. This can mean that the complex mathematical calculations that specifically relate to the value of gold as an investment opportunity start getting inaccurate returns or that the picture drops. The investors then become jittery and they continue to support the failure of the project. It is one of those things that happen to the very best of us. One has to ensure that they have the right figures before they approach gold investing field.

Traditionally gold investments have been associated with the rich and powerful. However gold can come from a number of sources, not just directly from mines around the world. Recent trends have seen many people selling broken gold or unwanted gold items such as gold bracelets to dealers that then melt and reshape gold into bars. This means that all types of people can invest in gold. It is only now that we are beginning to realize the value of gold investing.

For example we look at the different elements that go into the use of gold and then the economies that they are supporting and realize that there is a lot of potential in this precious metal. Unfortunately many of the countries that have gold in abundance are political stable. This also causes problems when you are trying to rely on the complex mathematical calculations that specifically relate to the value of gold as an investment opportunity. You have to realize that there is no consistency in the way that you get the figures from one day to the next.

The rights issue will then become an area of great concern for the senior managers because once you open the shares up to the public then you have the accompanying scrutiny that will constantly determine the value of your shares.

In this article I will look at how the interaction and implication of market capitalization and the securities industry which could possibly affect the day to day operations of the company in question. We have to bear in mind the fact that many organizations have no choice as to whether to capitalize or not. The market conditions in which they are operating will always be the determining factor and as we all know this is not always a favorable position.

The decision as to whether to issue more securities in the aid of market capitalization will ultimately be taken by the chief executive team on the advice of specialist assistants who will be able to explain the main issues that will be involved. However even if the senior management team does not want to issue shares, it may be forced to do so if the cash requirements of the business are such that an alternative action would be disastrous. Anyone who has been in business for a long time will be keenly aware of the impact of letting share holders into the company. I have watched when what appears to be an economically viable decision is repeatedly set aside by the share holder lobby.

Other people begin to control the company
The loss of company control will obviously be a major concern to those who are thinking of issuing shares. The shareholders rightly feel that they should be involved in the company and will not accept the secondary position of mere observer. They demand that they retain the power to veto any policy decisions that have been made and this includes whether to expand the securities base.

For senior management this can be a bitter pill to swallow especially if they believe that they are in the best position to decide the direction of the company. However money talks and the people who are bailing out the company deserve some recognition in terms of the work that they are doing and the prospects for influencing company policy.

What then of the decision to balance capitalization requirements with investor phobia ? In the majority of cases the need to capitalize will out any other consideration. What the company has to then do is find ways of mitigating some of the more negative aspects of the capitalization program.

For instance, some securities shares will put very harsh restrictions on what the shareholders can do. They have to make the choice of either trusting the company or refusing to invest altogether. Quite surprisingly there are many investors who will respond to this type of ultimatum. They have securities that give them minimum control yet they are in effect funding the growth of the company in question.

Unlike other property or assets, stock doesn’t fluctuate both in quantity and value. At the time of business formation, a stock can be divided into shares.  A person who buys share automatically becomes a fraction of the ownership to that business and he will be termed as one of the share holders of that business.

Though share holders are termed as fractional owners, they don’t have rights to use the company’s equipments, property or benefit schemes. Thus share is an atomic unit of stock. The share holders take a percentage of the company’s profit depending upon the number of shares. The share holder also has the right to sell the stock to some other person. Usually, stock traders buy shares and they will sell the stocks if the market price of the share increases.

The company pays a percentage of its profit to its share holders and this amount is called as dividend. This dividend can either be paid to the share holders in cash or it can be re-invested on the same company in such a way that the share holder gets additional shares for the dividend amount. It is not necessary for a founder of the business to get the total investment on the business. Part of the investment can be taken in shares. Total number of shares and the stock should be declared at the beginning.

Equity is one of the words which we hear in the finance world. Equity can be stated as a claim over an asset. For example, if X is starting a business worth 1000 rupees. They can sell out shares for raising 1000 as 10 shares. If a person buys 2 shares worth 100, then the person is said to have 10% of equity in that business.

When a company first enters the stock market, the initial value of each share is known as the face value or the par value. The founders of the business create ownership rules and the share values. When a stock is issues, it is the responsibility of that business to issue the stock certificate. The stock certificate is the documentation of the shares and other details.

There are two types of stocks: common stock and preferred stock. Common stock holders get the basic voting rights based on the business’s decision. Though preferred stock holders don’t have voting rights, they can receive minimum guaranteed dividend. Common stock holders get their dividend only after the preferred stock holders are paid.

Stock market always has a certain amount of risk involved in it. The price of the stock keeps on fluctuating depending on the company’s performance. So, before buying the stock, one should closely watch the market and should invest in the right company.

A trend can be termed as a pattern. Trends usually have a desired direction at a desired time. Financial markets also have their own form of variation and this is called as financial market trend. Though these markets are highly unpredictable, experts have done intensive investment analysis and have come up with various facts from the past history.

Basically, market trends are classified into three types based on the time frame involved. They are: Secular trends, which are used for long time frames, primary trends – used for medium time frames and secondary trends for short time frames. Trending helps traders very much in multiplying their profits. But, this requires lots of technical and fundamental analysis. A framework should be designed based on market trend which should predict the price taking into various other factors like time and economy.

In financial market, two words namely bull market and bear market are commonly used. Bull market refers to the market where investors invest with confidence and the price of the shares continues to increase. Bear market refers to the market where there is a price decrease for over a certain time interval. In this market, investors have fear and the confidence level decreases pessimistically. In simple words, bull market means upward trend and a bear market means downward trend.

Secular Trends:
This type of trends can happen over a long time which could be somewhere between 5 and 25 years. A secular bull market means the financial market is growing upwards at that particular time period. The time period between 1983 and 2000 can be termed as a secular bull market for United States.

Similarly, Secular Bear Markets means the financial market is moving downwards at that particular time period. Gold market had a secular bear behavior from 1980 to 1999. Gold markets have invariably been the most consistent and secure form of investment. Gold prices are currently at record levels, so it is a good time to sell broken gold. Gold markets have seen steady growth and not too many significant fluctuations in comparison with the stock markets around the world.

Primary Trends:
This type of trend takes place for one year or so. It involves broad support for the whole market. Like secular trend this market also has primary bull and primary bear based on the growth or downfall of the financial market at that time period.

Secondary Trends:
Here, the duration is very low. It could be a few weeks or a few months. Market correction is one of the secondary trend markets. Market correction in a financial market means a decrease of 5 to 20% in the price. Bear market rally is another type of secondary trend. This refers to markets which have price rise of about 10 to 20 %. Dow Jones share had this behavior during 1920’s.

Though there are many expert comments on financial market trending, the general feeling among people is that these are inconsistent and the price movements are very unpredictable.

As per statistics till May 2008, the total capital of its listed companies is around 28.5 trillion dollars. NYSE Euronext is a firm which operates NYSE. Euronext is a profit corporation which operates security exchanges. This was formed by 2007 merger.

Euronext had the concept of adopting innovative trading technologies and moving into electronic stock exchange. By digitizing share buying and selling activities and other financial activities, it greatly improves efficiency across the trading platform .

Before NYSE came into electronic age, it supported only floor trading. Stock brokers visited the exchange on behalf of traders and it has been the most happening place of the city. It had four rooms to facilitate the trade. NYSE had its first centralized room at 40, Wall Street.

Mostly known as historical event, the room was rented for 200$. Unfortunately, this room got damaged in the Great fire of New York. After that it got moved to another temporary location. But, after the advent of computers and communications, most of the people started buying and selling shares through personal computers.

May 17, 1792 is the day when NYSE was established where 24 stock brokers form the Wall Street signed the ‘Buttonwood Agreement’. This organization got renamed to ‘New York Stock and Exchange Board’ on March 8, 1817. Anthony Stockholm was the person to be elected as the first president of NYSE.

1896 to 1901 had its highest development where the stock trading volumes increased six fold. Since the volume of traders kept on increasing, NYSE started looking for a large building. A design competition was announced where six top architect designers participated. George B.Post’s design was selected and a new building which costs around 4 million dollars was constructed.

It was opened on 1902, April 22  , being one of the largest stock exchanges in the city with the dimension of 109 x 140 feet.  In 1922, a new building was added with a trading floor named as Garage. Later, other trading floors named ‘Blue room’ and ‘Extended Blue room’ were added.

The latest trading floor added was the ‘Bond room’ in 2000. But, due to recent advancements in the trading system, most of the trading floors were not required. So, some of the floors were closed as the people turning out the floors decreased.

There were lots of activities which happened around NYSE. Some of the most remarkable are: A bomb explosion outside the NYSE killing 35 people in 1920, the ‘Black Thursday’ crash which happened on 1929, registering of NYSE with national securities exchange in 1934 and formation of non-profit corporation with twenty-five board members in 1971.

The NYSE operates on week days between 9:30 am to 4:00 pm ET. Trading will be closed on national holidays. Starting with a base value of 50 points, NYSE now has a very high composite index and it is believed that it would continue doing its best to the stock market.

Financial market also supports trading of products which involves low transportation cost. In other words, financial market can be defined as an aggregation of buyers and sellers. The concept of financial market stared many years before. It has also gone through lots of improvements and innovative products such as derivative trading. Financial market comprises both general markets and commodity market.

In General market many of the commodities are traded while in specialized market a particular commodity is being traded. Gold market is a specific example of specialized market.

Financial market has the following three main facilities:

• Provides opportunity for business people to raise funds for expanding their business or for setting up new business.
• Transferring risks.
• Facilitates currency exchanges. FOREX is a financial market of this kind.

Borrowers and lenders are the two main parties involved in financial market. The lender is the person who buys shares or securities of a company. Lenders either expect dividends from the borrowers or looks for a rise in the price value of the share so that he can transfer the share to other thus making profit out of it. Lenders can be individuals or companies.

There are many forms of investment a lender can offer. He can pay premium for his insurance plan, invest in shares of companies, deposit money in savings account of banks, etc. Companies which have large amount of money idle can also lend the money in the market expecting a high return.  Borrowers are the person who accept money from the lenders and in turn delivers a security (either bond or share) to the lender. Borrowers can be individuals, government bodies and public corporations.

There are many types of financial markets available. Capital markets comprises of stock and bond market. This form of market is the most profit proven investment and this also has a considerable amount of risk involved. Commodity markets support commodity trading. Money markets facilitate financing and investing. Derivative markets for risk management.  Insurance markets helps in redistribution of risks. Foreign exchange markets support currency exchanges.

Lots of analysis and research have been performed to study how the financial market varies with time. Most of the researchers tried to analyze what are the factors that determine the price of the products. The founder of Dow Jones & Company, Charles Dow published his ideas on the financial market. His ideas are now called ‘Dow Theory’.

This theory is considered as the basic for performing fundamental technical analysis for predicting the price of shares. There are also other theories with different suggestions. One of these kinds is random walk theory which states that the prices are not related to history. The last change is not related to the future value of that share. Rather than understanding those theories, investors can spend time in analyzing the market of their own with the advent of numerous software tools.

A huge pool of assets was offered for investors with very low interest rates. There is only a low risk premium involved in the investment. Even banks took the most part of the risk involved in the deal. Though banks held mortgages from every borrower, the price of the mortgages didn’t raise to the expected levels.

So, instead of paying back the loan, many borrowers opted for taking away the mortgages by the bank.  For example if a person opted for purchasing a hedge fund. The person can add lots of bonds to have a raise in the equity. The bonds can be leveraged by borrowing against them. After some days the asset which has been purchased by leveraging the bond might have low value that the debt the person owns against them. The equity of the hedge fund can also drop to zero by making a loss to the bank not to the borrower.

Finally the hedge fund manager is forced to sell them off for a considerably low amount. Mortgages started accumulated in the financial market and since the mortgages didn’t meet the expected level, several financial firms suffered a huge loss. ( Mortgages can be both physical assets and bonds )

Systematic risks will always be there in any economic fundamentals. Financial markets contribute much for this. Though many developed countries are well established and supports lots of development activities stabilizing the financial status have always been a difficult task. This continues till now from the past history. We have seen the financial market crisis and collapse in this decade.

We can say that now the financial market is in a recovery state. From the recent past both the investors and the business firms who invested in the financial markets have learned much. The rules and regulations for loan process have been tightened. Unlike the liberalization of loan products in the past decades, now government has added a check on this.

Because the promotion of loan especially real estate related financing ( or property loans ) for low interest rate was also considered to be one of the major causes for the recession. Capital inflow has started rising. Many companies have also started raising concerns over the asset price and the pressure on the exchange rates.

The recent downfall in the financial market also created opportunity for many middle class investors to buy shares. The moment economy started to grow, the financial market investment also started. This seems to be the best time to buy shares.

Though many experts forecast a boom in the financial market again, the unpredictable nature of this market still raises scares among people. So, present situation should be assessed well and diversified investments should be made for a high return.

REPO market ( Repurchase Agreement ) :
In Repo Market, owner of protections put up for sale them with a specific kind of contract to re-buy the similar protections later than a particular amount of time. But he will re-buy it at a predestined cost which is superior to the selling price.

In some wording it means that in the case of REPO Market transactions, investors replace protections and cash with a synchronized contract to turn around the dealings after a specific amount of time. Hence a Repurchase Agreement transaction signifies a borrowing deal for a collateralized small period of time.

The process of giving loan in form of cash and protections to other is called a REPO. The process of taking a loan in form of cash and protections from other is called a Repeal REPO. There is not any specific limit of time for the completion of the process of repo. But normally this process is used for a very short period of time like 10-14 days.

For ensuring the guarantee of REPO dealings, G-secs reserves receipts and institutionalized bond certificates are normally used. For the short time ago there were some restrictions for the organizations and commercial owners and they could only participate in the process of repeal repo. They could not participate in the process of repo ( Repurchase Agreement ). But the monetary banks and many other major brokers could participate in the both types of REPO business dealings.

Its good news for the organizations and commercial owners that now they can take part in both types of REPO business dealings due to the changing in the policies of central bank. Repos are developed on the similar calendar day but according to the rules and regulations of DVP. That’s why investors who want to take part in the dealings of repo must have a SGL account and present account in the Reserve Bank of India (RBI).

Commercial Paper (CP):
Commercial Papers (CPs) are normally release by non-monetary banking organizations. It is a one of the most common tool of small period protected sponge. Non-monetary banking organizations release Commercial Papers (CPs) on special concessions. These can be convertible into cash according to their printed values that are mentioned on Commercial Papers (CPs).

Non-monetary banking organizations release Commercial Papers (CPs) at several occasions according to the instructions of Reserve Bank. According to the Reserve Bank, only commercial businesses, all monetary organizations, crucial brokers and settlement merchants have right to release their Commercial Papers (CPs).

Only those commercial businesses can release the Commercial Papers (CPs) whose materialistic monetary value is more than four to four crores.  Non-monetary banking organizations release those Commercial Papers (CPs) whose maturity life is around 15 days to 365 days.

Only after this crash, people started realizing the investment risk factors involved in this. The stock market crash at 1929 is also termed as ‘Great Crash’, ‘Wall Street Crash of 1929’ and ‘Black Tuesday’. It was the most threatening crash in United State’s history.

At the time before this crash happened, United States was at its peak of development. The invention of air planes and radios were boosting the economy of US to a very high level. This is the time where people thought seriously about making money.

Stock markets were providing huge returns and attracted many people. A huge amount of money was prevailing on the stock market. People also never foresee this stock market crash. The total mood of the country was enthusiasm, optimism and confidence.

As lots of people started investing on stock market, the companies also earned nice profit and in turn the price of the stock also started increasing. So, buying and selling had been one of the most preferred methods of trading because this gave high return is short span. Though the period between 1925 and 1927 had ups and downs, 1928 had an increasing price. By this year, the stock boom had begun. The concept of long term investment had disappeared at this time period. Everyone wanted to buy a share and sell it as soon as its price increased.  Stock turned out to be a passion for people. The interest to become rich motivated many people to buy shares.

Not every person had the money to buy shares. To attract more investments the concept of buying on margins was introduced. In this method, a buyer can give only a part of the amount of stock and the rest will be paid by the broker. Even by giving 10 to 20 percent of the amount, buyers started owning shares. The rest 80 to 90 percent was borrowed from the brokers.

If the price of the stock drops down to less than the loan amount, then it is the responsibility of the buyer to pay back the cash immediately.  Despite the risk involved in this method, many people starting getting shares on margin. In fact, people didn’t even think of the risk involved in every investment , simply because every stock was giving assured profit back then.

A mini-crash happened on March 25, 1929 and after some days steel industry, real estate and car manufacturers had a dip in their profit.  Panic aroused among many people and people started selling the share while there was no one to buy the shares.

Many brokers also started sending margin calls. This made a major collapse in the stock market. Stocks became stagnant as there was no one to buy shares. There was serious aftermath of this crash. Many people lost their entire saving and the total economy was devastated.

This crash is always a lesson for the stock traders and the associated companies. This crash will be there in the history forever.

Actually it is much of a network in which banks and traders are liked. They make use of different media like telephones, computers and fax machines in order to connect to each other. These markets are found in US along with many other countries.

Money markets are used to sell short-term debts and other securities. These debts and securities are called money market instruments. These instruments are liquid in nature and have maturity periods in the range of one day to one year. Some examples of these instruments are federal agency notes, repurchase agreements and certificates of deposit. Individuals or the institutions that supply the funds for these money markets prefer high liquidity and less risk.

The money markets actually act as a storage area for your short-term funds. Large organizations participate in money markets via dealers. They handle their short-term funds themselves. Small businesses often choose to invest their funds in money markets.

Money market securities are not free from risks but they still minimize their intensity. This little risk is due to the fact that banks can also fail. The low risks are associated with the lenders that you select.

Different Money Market Instruments

Federal Agency Notes:
Short-term and long-term obligations are issued by some of the federal agencies. Government doesn’t often back these obligations. They can yield more than treasury bills but still the risk is very small. These money market instruments are generally purchased by the corporations.

Repurchase Agreements:
Treasury securities that are purchased by the dealers are called repurchase agreements. Like a Derivatives Future Contract, these agreements are on the basis of the condition that they will be sold at some future date for higher prices. Ranging from 24 hours to several months, these instruments tend to be more liquid than any other money market investments. They have much resemblance with the bank deposit accounts. Some corporations have such arrangements with their bank that the excess amount is automatically transferred to such funds.

Tax exempts for short-term:
Municipal government and states issue these short-term notes. The risk involved in them is a bit more than what we have in T-bills. They are also less open to discussion. The feature they add in it is the interest they earn, that is not subjected to income tax.

Bankers’ Acceptances:
Non financial corporation produce this instrument in the name of some bank. It is a document that indicates that who will pay the face amount of the instrument in the future. Foreign trade is often financed through bankers’ acceptance. Companies also use them when they need to finance their inventory or to purchase goods on credit. Bankers’ acceptances have maturity period ranging from one to six months.

Certificates of Deposit:
Federally licensed banks issue these certificates of deposit. They issue them on the basis of deposited funds and specified return that can be earned after predefined time period. A company or an individual can lend certain amount from some bank for a given time period. The bank also agrees to repay the amount after the fixed time period with interest. This certificate comprises of the agreement with the bank to repay the loan.

From the past history it is clearly visible that stock markets directly affect the global economy. If the shares in a country are increasing then that country economy is also considered to be up and healthy. Smooth trading ensures that there is no fluctuation in the country’s economy.

This also means that lots of development is happening in the country. Share’s price also depicts a country’s currency values. So, every country keeps an eye of how the market is doing and tries to stabilize the market if anything goes wrong.  Stock exchanges play a major role in trading. It is the responsibility of the stock exchanges to make the profit is correctly paid to the share holders.

Recent stock market crashes have clearly brought a remarkable transformation in the western countries. One of the major kinds of this transformation is the cutting down of intermediates. Intermediates were said to be one of the major cause of 1929 market crash. At that time, lots of share was sold on margin.

In this method, a share buyer need not give full amount for buying share. He can contribute around 10 to 20 percent and the broker pays the rest.  These are called margin shares. When there was a small dip in the market, every margin brokers forced their margin share holders to pay the full amount and it caused panic among share holder leading to a huge stagnation of the stock.

US had a huge leap in its economy because of this. This was the time where people started really looking into the risk factor involved and managing those risk in tradings activities. After this many countries also started creating rules and started closely monitoring the stock exchanges. Stock exchanges also have their own requirements for adding a company to their list.

The number of shares, capital of the company’s business and the price value of the shares should meet the requirement provided by the stock exchange. Even, the company should provide an approximate minimum guaranteed annual income. In this way, each stock exchange makes sure that they promote only high profitable company, at the same time managing the risks while improving trading efficiency.

The traditional long term investments are replaced by this stock market investment. Stocks also help in increasing the income of the individual and also the profit of the company. Though the behavior of stock market has always been fluctuating, many companies have learned how to manage the share prices.

Promoting stock market is undoubted best way to boost economy. Stock markets should be promoted by every government, because they not only encourage new companies to be started but also helps in increasing the income of the people and hence economy grows. Awareness should also be created among people to make wise investments.

There are also no specific rules and regulations for the investments of Money Markets, as we speak. Like specific rules, there are also particular fixed rates of the money market in all parts of the world. Borrowers, loaners, monetary banks foundations, corporations and administrations are the main contributors of the money market.

They interact with each other for dealing through internet, mobile phones, web conference facilities and computers. In this way, they all form a never ended network. In this network there exists a central bank that has significant importance in this network. All the contributors of money market have to follow the rules, regulations, policies and certain constraints of this Central Bank.

For balancing the requirements and delivery of small maturity life finances, money market provides a stability system. Money market also performs its role as a central position for the involvement of the central bank for authorizing the flow and interest charge in the economic system.

Money Market Investment skills:
Investment in Money Market requires lot of talent, skills and experiences in this field. An investor must have major knowledge about how to put in his wealth in the business of Money market. He must have an excellent instinctive skill so that he can take correct decisions at right time about their investments. If you are the beginner in this field then you must invest your money in low risk investments like simple money market finances or funds. Because when you invest your cash in money market finances or funds then there is almost no chance to bear any sort of loss.

Differentiation between Money Market Saving Account and Online Deposit Account:

Large number of differences exists between the money market saving account and online deposit account. We can easily differentiate the money market saving account from online deposit account. We can say that money market saving bank account is just a mixture deposit and examination bank account. We can earn small amount of profit with the help of money market saving bank account.

Another thing about money market saving bank account is that there is a restriction of maintaining the little high amount of cash for continues this account. But in case of online deposit account, there is not any restriction of maintaining the minimum cash balance to continue your account.

In case of money market saving bank account, you can access your cash directly by your credit card and cash checks. But in online saving account, you can access your cash account with the help of Asynchronous Transfer Machine ( commonly refers as ATM ) and by conveying to checking your bank account. But they both are FDIC assured.

There was a sharp decline at 2007 and then again a great fall in 2008. This severely affected many countries economy.  Unemployment, price rise, share stagnation and many more outcomes of this downfall shocked every nation.

Now, the conditions seem to be favorable for the growth of financial markets. Financial markets conditions are slowly regaining the power. Since the financial markets have a direct impact on the economy, we can say that global economy is also recovering. Increase in borrower’s credit risk, more market participation and increase in the liquidity of financial markets are some of the signs that indicate that financial markets are recovering.

There are two types of interest rate spreads. One is the London Interbank Offered Rate also called as LIBOR or and the other is the one between T-bill rate and the commercial paper rate. LIBOR is used by the banks for borrowing funds in dollar denominations. During 2007, the LIBOR spread was constantly decreasing. But, now this is in an increasing mode which clearly indicates that financial market is in an upfront mode.

There are many factors which suggest that economic recovery and financial market are very much related. Economic shocks can have an impact both on economic environment and the financial market. For example if there is adverse news on productivity of a product, then the productivity of that product will be low for some time, brings uncertainty among investors who have already invested in the firm which manufactures the product, new investments will be blocked as people become more cautious about the firm and the credit risk spreads.

Similarly if there is volatility on the same product, it could also cause adverse effects as the same along with increasing the financial market stress.

Economic recovery and financial markets grow with hand in hand. Both have an impact on each other. If there are shocks which slows down the economic activity, then it would make the borrowers detain their balance sheets. This also increases the financial market stress. But in contrary if there is a shock on financial condition which directly affects the borrowers then financial markets declines along with spreading the credit risk and the financial cost of the shares.

If there is a rise in the financial market then the economy of the country is said to be in developing stage. This is the reason why the currency of United States remain high when compared to other countries. The financial market condition in United States is always better than any other country. Also, many companies in United States have their operational world wide. Because of this, if there is a dip in the economy or financial market in United States, whole world would feel the change.

Types of Day Traders:

Day traders can be of two types: Institutional day traders and retail day traders.

1. Institutional Day Traders:

This type of traders works for financial firms. They generally have more access to more resources, tools and they have wide knowledge about day trading. Their motive is to work for their firm so that their firm can get more customers.

2. Retail Day Traders:

A retail day trader doesn’t work for others. He works for himself or his team. This type of trader invests their own money and they use either internet banking or contact brokers for trading. Recent advancements in computers and internet have attracted more retail day traders.

Trade Frequencies:
Day trading doesn’t mean to be trading for the whole day. A day trader can trade unlimited number of shares in a day. Scalping and shaving are some of the methods which involves short time span. Each day trader follows their own strategy. Some traders aim for high profit.

If they feel that the stock price has reached at its highest for that day, then they suddenly sell the share. Some others observe the pattern of the price variation and try to predict the time at which there is higher probability for the share’s price to increase. Some people just believe in the market close price. So, they just purchase the share when the market opens and at the time when the market is about to close, they sell the shares.

Day traders can also enjoy the benefit of margin trading. In a margin trading, the trader can borrow money from the brokerage to trade. Margin interests will be charged only on overnight balance. So, if a share is bought and sold at the same day, no fee needs to be paid. But, if the share price decreases to considerable level, then the buyer should pay the amount immediately.

This type of trading activities should only be done if you are highly skilled and knowledgeable in particular share or industry. A novice trader should avoid such practice as it could means deep loss if not careful.

Risk factor:
Day trading has both the positive and negative impacts. It could either produce huge profit or it could also produce a huge loss. So, close monitoring of the market is a must. Some of the companies’ shares follow a specific trend. Identifying the trend can also help in earning more. The method of margin buying also can either return huge gain or huge loss.

Range trading:

In this type of trading, the share price will be monitored closely by automated software. An upper limit and lower limit should be set by the trader. If the share price either crosses the upper limit or if it goes down below the lower limit, then the share will be automatically sold.

More internet brokering firms have software with artificial intelligence and customized tools. Better utilization and good strategy will certainly help day trades in getting high profit.

A good example of this kind is a future contract. Here the traders will involve in an agreement that in a future date they both agree to exchange the underlying asset. Derivatives usually have high leverage because even a small change in the asset value can cause high difference in the derivative.

Derivatives are used by investors mainly for speculating and making profit in the financial market. But, this will work only if the value of the asset follows the trend in the financial market as expected. If the asset price moves in a downward direction in the financial market then it could prove risky. In such cases where traders are uncertain of the assert price trend they can use hedge or can enter into agreement for which the opposite derivative moves in opposite direction.

In the financial market, derivatives classified based on the following:

1. The link between the derivative and the underlying asset.
2. The kind of the underlying asset. This can be equity derivatives, interest rate derivatives foreign exchange derivatives and credit derivatives.
3. The type of market where the trade happens. It can be traded over the counter or using exchanges.

Hedging:
This technique reduces the risk involved in financial market. In this method, the risk involved in the derivative can be transferred from one trader to the other. For example consider a derivative agreement between a wheat farmer and a miller. They can sign for an agreement so that the wheat farmer can hand over a certain amount of wheat to the miller and the miller in turn gives a certain amount of cash.

The money involved and the quantity of the asset involved can be stated in the agreement. Wheat farmer satisfies with the fact that he has got a customer to sell his product for a confirmed amount. He cannot predict the price of the wheat in future.

So, the risk involved is reduced to a huge level. The miller satisfies with the fact that he has got wheat supply in future. Both the farmer and the miller have reduced the risk factor involved, the farmer with the price and the miller with the wheat supply.

Types of derivatives:

In the present financial market condition, derivatives can prove to be a method of acquiring risks. There are two types of derivatives existing in the financial market – Over the counter derivatives and exchange traded derivatives.

Over the counter derivatives are largest among the derivatives. Here the trading happens directly between the parties involved. There will be no intermediates involved. In exchange traded derivatives, contracts are signed and trading happens through some specialized exchanges.

These funds are the mutual funds that are designed for the sake of investors that are conservative. Money market funds help these investors to earn interest. All they have to do is to buy low-risk treasuries, savings bonds and commercial papers. These funds are quite safe and their purpose is to preserve your capital. Despite all these facts these funds are still not insured by the FDIC.

FDIC insured Money Market Accounts:
Till December 31, 2013 the level of insurance protection provided by FDIC is up to $250,000. This limit will regress back to original $ 100,000 after 2013 unless there is any change in the policy by Congress. People who have cashed beyond these limits should consider different investments with these money market mutual funds. This will also lead you to preserve your capital and will ensure safety as well.

What Money Market Funds have for you?
The major purpose of these money market funds is to maintain a value of $1 per share. Some money market funds have also gone below this limit but it happens quite rarely. One advantage that they have over money market accounts is that they earn more interest. These funds are not insured by any insurance program. Even the money market funds that are sold by the banks are also not insured by FDIC. US treasury introduced programs that offered guarantee temporarily for these money market funds.

This program implemented on the funds that were already invested. In September 2009, this program also finished its time frame. In the year 2009, due to the Federal Reserve rate policies, cash investments had very low interest rates. Many money market accounts paid much more than what money market mutual funds did. The reason was that interest rate between the two entities was nearly zero.

Different money market funds:
Government and the municipal money market funds are two options for you to invest. Some money market funds only allow you to invest in US government securities. These funds are known as government funds. Investing in US Treasuries is the safest option for you. These investments are fully guaranteed and have full faith of the US government. But still if they held to maturity, mutual funds are not guaranteed at all.

Local government agencies and the state itself guarantee some money markets funds as well. These money market funds are known as single state and the municipal money market funds. One major advantage is that most of the tax payers don’t have to pay any federal or state taxes for these funds. They also provide you with high rates of return. These pros of money market funds should be considered by the investors who have cash in excess. It will be a safer option for them to invest.

Purpose of these funds:
A money market mutual fund is a fund whose purpose is to invest in cash or securities that are equivalent to cash. These tools are also known as money market instruments as well. They are in general short term funds that are liquid in nature.

These money market funds usually incorporate the commercial papers, US treasuries, Certificates of deposit and such other instruments. The typical maturity period for these money market security funds is 90 days as per rules and policy of the Securities and Exchange Commission (SEC).

Investing Procedure:
People who invest in the money market mutual funds are issued the shares for their investments as other normal mutual funds do. But they must have to abide by the procedures that have been set by the SEC. These money market mutual funds own all the properties that you have in normal mutual funds. There is one exception in them that is their net asset value that makes them dissimilar from the common mutual funds.

Some people consider the money market funds as the money market accounts. But they have to recognize that these are not the same things and must take them as two separate entities. One major difference among them is that the money market funds have been supported by some of the funding companies. Also we don’t have any guarantee of the principal amount. Contrarily the money market accounts are intended to earn interests. They are by nature the savings accounts that are offered by the Federal Deposit Insurance Corporation (FDIC).

In these money market accounts the principal amount is assured by the FDIC up to $100,000. These accounts often pay somewhat higher interests as compared to those in case of the passbook savings accounts. They pay slightly less amount of interest as compared to the certificates of deposit.

Characteristics of Money Market Funds:
The money market funds have three main characteristics that make them different from other available options such as private equity funds. They also make them a better alternative as compared to those other options. The first thing they provide is the safety. These funds invest only in those securities that are usually unwavering and are safe investments in every respect.

Second benefit they have is that they need low initial investments. Most of the money market securities have very hard conditions and have definite necessities. This makes it difficult for individual to purchase them, which is not the case with money market securities. You can buy money market fund shares any time you want them to buy. So we can say that these are easily accessible to those who want to purchase it.