Types of market seen in the financial sector

The marketplace where sellers and buyers participate to trade assets like currencies, bonds, derivatives, and equities is the financial market.  It is defined by having the following features:

·         Basic regulations on the costs, fees, and trading

·         Market forces which determine the securities prices

·         Transparent pricing

The financial market exists in all the nations.  Few of the countries have fewer people participating while others make trillions of dollars every day.

With the advancement of technology, the investors have access to all the markets and products in the world. Listed below are the different types of market in the financial sector.

Different types

Capital markets- In this market, the institutions and the individuals trade in financial securities.  Even the organization sells their securities on these markets to raise additional funds.  The capital market comprises of stock markets and bond markets.

Cryptocurrency market- In this market, cryptocurrencies like bitocin, litecoin, etc are traded. The trading is conducted online and it uses the blockchain technology to make the transactions safe and secure. There are automated robots like bitcoin code available in the market which helps in buying and selling the digital currencies.

Money market- In the case of the money market, the financial instrument which has short-term maturities and high liquidity are traded.  Participants use this market as a way to lend and borrow money for short-term.  The securities traded here are treasury bills, Eurodollars, certificate of deposits, commercial paper, federal funds, etc.  Since it has short maturity period, it is known as cash investments.  This market is considered safe because of the short maturities.  

Derivatives market- The value of the derivatives is derived from the underlying assets.  A derivative is basically a contract and the price of the contract is determined by core asset’s market price. It is quite complicated and is not ideal for inexperienced people who are just looking for speculative trading.  

Forex market- Forex market is the market wherein the currencies are traded.  It is the most liquid and largest market in terms of the value of money traded on daily basis.  Any firm, any business can enter the market and conduct transactions.  There is no marketplace that is centrally located for currency exchange.  The transactions are done over the counter.  The market is open 24/7. Now you can even conduct trade online through various online brokerage accounts. Even an average investor can sell and buy currencies with just a click.