The next two modules ask you to create CLAUDE.md and MEMORY.md files. Before you do that, you need to understand what a Markdown file actually is — and why it is the preferred format for giving AI context.

The Short Answer

A Markdown file is a plain text file with the extension .md. It uses simple symbols — like asterisks for bold, hyphens for bullet points, and pound signs for headings — to add formatting to what is otherwise just words.

You do not need special software to create one. Any text editor works, including VS Code.

What Markdown Looks Like

Here is an example of Markdown text:

# My Amazon Business Context

## My Top Products
- ASIN B08XYZ123 — 12-pack silicone spatula set, launched March 2024
- ASIN B09ABC456 — bamboo cutting board, top seller

## PPC Goals
- Target ACoS: 25% or below
- Budget cap per campaign: $50/day

## Brand Voice
Write in a friendly but professional tone. No jargon. Clear, direct sentences.
        

And here is what that text looks like when rendered (displayed as formatted output):

The formatting symbols are minimal and intuitive. But here is the thing: you do not even need to know all the formatting rules to use Markdown effectively in your CLAUDE.md. Claude understands plain text just as well as formatted Markdown. The symbols just help organize the content.

Why AI Loves Markdown

Claude — and most large language models — were trained on enormous amounts of text from the internet. A huge portion of that text was structured using Markdown: documentation, GitHub README files, technical guides, forum posts.

As a result, Claude reads Markdown naturally. It recognizes headings as section boundaries. It understands bullet points as lists. It parses tables correctly. This makes Markdown the most efficient way to organize information you want Claude to read and reference.

Compare this to a Word document (.docx) or an Excel file (.xlsx): those formats contain a lot of invisible formatting code that makes them harder for AI to parse cleanly. A plain .md file has no hidden complexity. What you write is exactly what Claude reads.

How to Create a Markdown File in VS Code

1. In VS Code, go to File > New File (or press Ctrl+N on Windows, Cmd+N on Mac).
2. Save it immediately with File > Save As (Ctrl+S / Cmd+S) and give it a name ending in .md. Example: CLAUDE.md
3. Start typing. Use # for headings, - for bullet points, and **bold text** for emphasis.

To preview how your Markdown will look when rendered, right-click the file in VS Code and choose Open Preview.

The Only Rules You Need to Know

What you type	What it means
# Heading 1	Large heading
## Heading 2	Medium heading
- bullet point	Bullet list item
**bold text**	Bold text
*italic text*	Italic text
Blank line between paragraphs	New paragraph

That is genuinely all you need. The CLAUDE.md and MEMORY.md files in the next modules only use headings and bullet points.

Why Not Just Use a Word Document?

You could put your business context in a Word document. But then you would have to copy-paste the content into every Claude chat. A Markdown file in your VS Code workspace is automatically available to Claude Code. You write it once, and Claude reads it at the start of every session — automatically.