Each person in the news has heard information about the situation in the financial markets. Sometimes, news about the financial markets is just as emotional as an emergency news bulletin.
What are financial markets and their types? And why are markets spoken of in the plural?
The point is that modern trade is very versatile. What can you not buy in the markets. These are all kinds of currency, goods, energy raw materials, “Soft” and tasty goods, machinery, precious and non-ferrous metals, real estate, cryptocurrency, even the market for human (including intellectual and professional) values ….
Financial markets are called sales-purchase relationships, institutions that provide the opportunity to hold meetings between buyers and sellers, as well as financial assets, instruments that are traded on the markets.
Markets can be regional, national, transnational, or international. And there are also black markets where goods are traded clandestinely.
The activities of financial markets are supported by special structures. These are exchanges. But there are also over-the-counter markets. A striking example – Forex market.
Functions of financial markets
Each financial market has specific functions:
- Conducting domestic and international auctions,
- Reallocation of capital,
- Capital movement,
- Risk hedging, the ability to manage risks,
- Implementation of investment capital management,
- Conducting speculative transactions.
As you can see, the functions of financial markets are applicable to the functions of an ordinary merchant. Especially with regard to speculation and investing. Speaking about the functioning of financial markets, one should also mention the participants in these very markets.
Large structural units such as banks, private and national, all kinds of import-export corporations, various funds, enterprises, brokerage companies, as well as single traders and ordinary investors participate in the functioning of markets.
What types of financial markets are there?
Depending on the specialization, the markets are divided into types:
- Foreign exchange market (Forex),
- Fund or securities market,
- Commodity market,
- The market is urgent,
- Loan market,
- Precious Metals Market,
- Commodity market,
- Cryptocurrency market….
These are the main types of financial markets. At this stage, the boundaries of specialization of financial markets are being blurred, so many financial instruments can be purchased, for example, on Forex, on the fund market, and on the cryptocurrency market.
Forex is mainly traded in foreign exchange instruments. But on Forex it is possible to buy more securities, cryptocurrency, derivative instruments (options, futures …).
On stock financial markets, they buy and sell securities, all kinds of index funds. Various goods act as instruments in the goods market. The derivatives market is formed at the expense of derivative instruments (futures, forwards, options).
In the credit market, you can borrow funds or provide someone with a loan. The precious metals market is a place of trade in precious gold, silver, platinum, palladium. And on cryptocurrency, you can buy and sell cryptocurrency assets.
Financial markets and their types – this information is necessary for professional traders and beginners.