Financial Market

AAA

DEFINITION of 'Financial Market'

Broad term describing any marketplace where buyers and sellers participate in the trade of assets such as equities, bonds, currencies and derivatives. Financial markets are typically defined by having transparent pricing, basic regulations on trading, costs and fees and market forces determining the prices of securities that trade.

Some financial markets only allow participants that meet certain criteria, which can be based on factors like the amount of money held, the investor's geographical location, knowledge of the markets or the profession of the participant.

INVESTOPEDIA EXPLAINS 'Financial Market'

Financial markets can be found in nearly every nation in the world. Some are very small, with only a few participants, while others โ€“ like the New York Stock Exchange (NYSE) and the forex markets โ€“ trade trillions of dollars daily.

Most financial markets have periods of heavy trading and demand for securities; in these periods, prices may rise above historical norms. The converse is also true โ€“ downturns may cause prices to fall past levels of intrinsic value, based on low levels of demand or other macroeconomic forces like tax rates, national production or employment levels.

Information transparency is important to increase the confidence of participants and therefore foster an efficient financial marketplace.

RELATED TERMS
  1. Stock Market

    The market in which shares of publicly held companies are issued ...
  2. Over-The-Counter Market

    A decentralized market, without a central physical location, ...
  3. Dealer Market

    A financial market mechanism wherein multiple dealers post prices ...
  4. Nasdaq

    A global electronic marketplace for buying and selling securities, ...
  5. Centre For European Policy Studies ...

    An organization started to debate and research European Union ...
  6. American Stock Exchange - AMEX

    The third-largest stock exchange by trading volume in the United ...
Related Articles
  1. Economics

    Economics Basics

    Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more!
  2. Investing Basics

    Stock Basics Tutorial

    If you're new to the stock market and want the basics, this is the tutorial for you!
  3. Investing Basics

    A Fresh Look At The Financial Markets

    Different markets provide unique opportunities and risks for investors. Find out more here.
  4. Investing Basics

    Broadening Your Portfolio's Borders

    Find out what type of international fund might suit your needs in gaining exposure to foreign markets.
  5. Mutual Funds & ETFs

    Change The World One Investment At A Time

    Socially responsible investing allows you to express your political views in an unlikely way.
  6. Personal Finance

    Financial Physics: "Natural" Market Laws

    Physics uses math to define the laws of the universe; here, we look at what laws explain the financial universe.
  7. Trading Systems & Software

    The Global Electronic Stock Market

    The way trading is conducted is changing rapidly as exchanges turn toward automation.
  8. Trading Strategies

    Risk Management Techniques For Shorting Call Options

    Shorting covered calls is a popular options trade strategy. Here are the methods to mitigate the risk/loss and enhance profits for selling covered calls
  9. Fundamental Analysis

    What are the most common issues with Serial Correlation in stocks?

    Read about the concept of serial correlation in stock returns, and learn why market analysts are divided about the efficacy of trading based on stock patterns.
  10. Bonds & Fixed Income

    How do I calculate yield to maturity of a zero coupon bond?

    Find out how to calculate the yield to maturity for a zero coupon bond, and see why this calculation is more simple than a bond with a coupon.

You May Also Like

Hot Definitions
  1. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  2. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  4. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  5. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  6. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
Trading Center