While markets may vary in size, location and type, the concept of a market is where buyers and sellers exchange goods and services. The types may range from illiquid to liquid assets and include things such as real estate, goods, currencies and contracts.
Financial markets in particular enable the exchange of liquid assets, which mainly occur through exchanges. Financial Markets are organized separated markets where brokers and dealers buy and sell securities, commodities, foreign exchange, futures, and options contracts. These markets include stock markets, foreign exchange markets, commodities markets and futures markets.
Historically markets simply involved the physical exchange of goods, however now there are now more complex instruments such as derivatives available for buyers. Companies who produce a good or own a security can use derivatives to hedge, or insure their risk.
These activities provide more volume and depth to securities markets worldwide but the basic concepts of the markets on the supply and demand have not changed. Since the price of derivatives is related to a physical good, they are also affected by events that affect the underlying security. These can be interest rate rises, changes of government, economic booms and downturns and political crises.
Also some markets have their own peculiarities, such as agricultural markets being affected by seasons, electricity markets boosted by demand for air conditioning in summer and demand for gold jewellery in India’s wedding season moving the gold commodity market.