The Great Human Machine: Financial System
by James Franklen
The entire financial system has evolved to become one of the greatest system ever created by mankind in any age. Today millions of investors, dozens of countries, millions of businesses are all in one way or another dependent on the virtues of modern financial system. Its components other than stock exchanges are regulators, options/ futures exchange and banks. The system works round the clock, moving capital from one country to another, from one arbitrage to another, responding more quickly to any resource deadlock.
Prior to this century, progress towards enhancement of wealth was limited due to slower means of wealth creation. The avenues were limited to entrepreneurial ventures and wages. The financial markets (stocks and futures exchanges, Forex, etc) since their creation in late 1800s have been improving their operations manifold. There are newer and better products available for people to maximize their wealth and stop the eroding surges of inflation from eating up their wealth’s value. Financial markets offer another mode of wealth generation, that is quicker than other modes until it gets clogged up enough.
In the stock exchange, people can trade in dozens of different types of shares of companies that have varied characteristics. Every company’s stock has a different alpha and beta, a different set of subjectivity. Similarly, there are dozens of pairs of currencies people can trade in; who would have thought that someday currencies will be bought and sold for a profit. Then there are futures contracts and options that people can use to hedge exposures to their risky transactions or to speculate to make some serious cash. Then there are exotic options, such as the binary options, which let people trade with limited risks and different set of rules.
The use of internet to trade in financial products; some service providers allow demo accounts, free money such as free binary option bonuses or free Forex bonuses. Internet has made trading a heaven for day-traders.
With so many subjectivity and so many arbitrage opportunities present, ready to be exploited, who would not want to trade in these financial markets and get some gain out of them. The strength of our existing global financial system is that even in the rarest possible estimates, the opportunities of gains will not shrink in to extinction. With more people in the market, it means different volatility, behaviors and different subjectivity.