Financial literacy is an integral part of becoming a trader in the Bangladesh stock market. The dynamics of any stock market is vibrant, it is constantly changing and updating with time. Along with that, a trader in the Bangladesh stock market has to navigate through many information, it is important to strike a balance between this information and differentiate the correct one from the false information. In order to have a correct understanding of the market, it is important to have financial literacy in the Bangladesh stock market. Without proper financial literacy it is not easy for any individual to become a successful trader in the Bangladesh stock market. In addition to that, there are many other reasons to have financial literacy if you are trading in the Bangladesh stock market. In the following, we will discuss the importance of why financial literacy is important in the Bangladesh stock market.
What is Financial Literacy?
In the area of Stock Exchange, financial literacy refers to having proper and adequate knowledge of financial components that are related to trading in the Bangladesh stock market. It includes knowing the basics of trading, do’s and don’ts in the stock market, best practices of the market, understanding of the trend and nature of the stock market, knowing the performance indicator of any specific stock and many. To have a basic understanding of how the market works and the norms of the market is considered as financial literacy in terms of the Bangladesh stock market. Without delay, let’s have a look at the reasons why financial literacy is important in the Bangladesh stock market.
Gather Correct Basic Understanding
Without financial literacy, the traders will not have the correct basic understanding of the market. It will make them prone to make decisions that will be harmful to them in the long run. Along with that, there are many instances that indicate that having a basic understanding of the stock market, the trend, BO account, best practices will make it easier for the trader to conduct their day to day business in the stock market. Along with that, if they have a basic understanding regarding the different elements of the stock market, sustaining in the market with profitability will be easier for them. When a trader knows about the basic elements of the stock market, they can contrast between the right and wrong. Financial literacy regarding the basics will make the ground of the traders strong.
Differentiate Between Rumor and Information
There are many initiatives taken to spread rumors regarding any particular stock to manipulate the performance of the stock. Any trader having financial literacy about the stock market will not be a victim to such rumors. If they have financial literacy, they will know which sources are trusted and which are not. This will filter out the information they consume from different sources. Along with that, a well-educated trader will be able to tell when they hear a rumor. Plus, with financial literacy, they can connect the dots and create valuable sets of information from random data. Thus financial literacy is important to escalate the caliber of the individuals as a trader.
Make Better Decisions
Financial literacy about the stock market includes knowing about the performance indicators of any stock. A well-read trader will be able to notice the trend of any particular stock and make decisions that will benefit him in the long run. Along with that, financial literacy gives you the ability to process decisions that will be beneficial in the long term. It does not have any myopic focus on short term gain, rather they can make better decisions to ensure they sustain in the market for long. Apart from day to day trading, the traders can also focus on IPO. If a trader has financial literacy on an IPO, they will be able to know which IPO is better and which might not be as good as they claim. That will propel them to make a better decision with the help of financial literacy.
Finding Proper Source
There are many tools and sources that can provide you relevant up to date information that will contribute to yo0ur financial literacy. If an individual is enthusiastic to learn about the financial literacy of the stock market, they will be in touch with these tools and sources easily. Plus, if they are well literate in terms of the stock market, they will be able to make the most out of these tools. Keeping up to date with relevant updates, knowing the trend and possible market direction, insights on the performance of any specific stock and more will increase the efficiency of the trader in the Bangladesh stock market. Thus, increasing financial literacy is important to know the proper sources of up to date information and make the most of this available information.
Financial Literacy Saves from Fraudulent Practice
There are many endeavors taken by many organized groups that harm the stock market. They spread misinformation, engage in fraudulent practice and exploit the traders of the Bangladesh stock market. One of the most vital ways of combating such fraudulent practices is increasing financial literacy. With financial literacy, a trader will be more aware of malpractices and can keep themselves safe from falling victim to any of the fraudulent practices of misinformation. Thus to remain in safe hands, there is no alternative to increase your financial literacy. A well-read trader will keep himself safe and also increase awareness among other colleagues. This is very important considering the overall situation of the Bangladesh stock market.
From a bird’s eye view, these are the major reasons for increasing financial literacy in the Bangladesh stock market. We from Royal Capital, taking many initiatives and continuing many practices to increase the literacy of the traders. Among these the following practices are ongoing:
- Training Program: From Royal Capital, we conduct training and learning sessions for our members. In these training sessions, we share information and engage them to increase their financial know-how of the market. These training programs are designed by researching the training need analysis of the traders in the Bangladesh stock market. Every month we arrange training on different topics to ensure our members are having a 360-degree growth in learning.
- Q&A Sessions: Apart from training programs, we also host Q&A sessions with our members. Here they can ask any question they have and our panel of experts try to attend to them as much as possible. The Q&A sessions are designed to increase the engagement between the house and its members.
- Research-Based Insight: At Royal Capital, we have our own research wing. So if you become a member of Royal Capital, we will share relevant updates and information with you very frequently. This information is crafted from doing enormous research from our end. Our blogs are very frequently updated to keep our members posted with relevant contents, we provide IPO analysis before a new share hits the market. These practices ensure our members are taking the right decision.
Apart from that, we take many ad hoc endeavors to ensure our clients are well informed about the recent updates and changes so that our journey is a lasting and fruitful one.
In general, these are the reasons why financial literacy is important in the Bangladesh stock market.