6. Understand factors that impact the financial markets
Before investing in financial markets, you need to understand the factors that influence its movements. Financial markets include stock exchanges, foreign exchanges, Sukuk/bond markets, money markets, and the interbank markets. These are essentially a marketplace for financial instruments and, like any other market, they respond to demand and supply dynamics.
Like any other market, there are also external factors such as interest rates and inflation that influence financial markets. Markets also react strongly to policy changes announced or indicated by central banks and financial arms of governments.