What is a financial market?
It is a location or facility for the trading of financial instruments such as shares, currencies, bonds or commodities. A market may have a physical trading floor or it may exist only in cyber-space, but in both cases there will be rules of conduct that traders must observe.
Where have you heard about financial markets?
If you are an investor, you will be familiar with financial markets providing the chance to buy, sell and check the price of your assets. Financial markets are rarely out of the news, whether because prices are rising or falling.
What you need to know about financial markets...
Financial markets vary greatly in size, liquidity and the adoption of technology. But they tend to share common features. The assets that they trade are standardised: one dollar, one General Electric share, one barrel of Brent crude is the same as the next. A diamond exchange is not really a financial market because all stones are different.
There are usually trading hours and periods within which bargains must be settled. Trades are cleared either by the market itself or under its rules. The most reputable markets will stand behind each trade, guaranteeing to make good any loss suffered by a counter-party should a trader default.