What is a Spot Market ?

Spot market or cash market is a place where commodities or securities are bought and sold immediately. Spot markets are found where there are facilities for the transaction of commodities. In case of securities, the spot markets are mostly found on the Internet.

What are the characteristic features of spot market?
The characteristic features of spot markets are:
• The commodities bought and sold in a spot market are meant for immediate delivery, on the same day or the next business day.
• The commodities in a spot market are required to conform to particular standards, if they are to be sold in the spot market.

What can be bought or sold in a spot market?
In a spot market, one can buy or sell a range of commodities from grains to Ipods. The most common commodities at spot markets are oils, gold and natural gas. In the case of commodities like oil, although the selling happens at the current price the delivery is executed much later. With the entry of the Internet into the spot market, commodities like mobile phones, RAM chips etc are found in the spot market.

Enter your e-mail address below to subscribe to GenuineAnswer's FREE newsletter:

Spot markets have also emerged as a huge liquid market that enables currency trading or foreign exchange (Forex). It involves the exchange of the currency of one nation with another. For instance, Great Britain (GBP) and the United States (USD) currency are common pair currency that are bought or sold at the spot market.

Spot prices and future market expectations
Spot price refers to the current price at which a commodity is bought or sold at a specified time or place. Spot prices also determine the future market prices of commodities, depending on the kind of commodity traded. Non-perishable commodities have a longer life span, for instance, metals like gold or silver. So it will sell at a spot price which will determine the future price movements of gold in the market.

Spot prices also reflect the supply and demand of commodities, depending on the time of selling. In the case of perishable commodities like fruits or vegetables, the cost of storage is higher than the future price expectation of the commodity. For instance, just suppose that you know that oranges are cheaper in April than in January. Since it is easily perishable, it will not prompt you to buy and stock them till January when the demand is more and the prices are high. So the April price will reflect only the forward price of the commodity in April while the January price will show the market expectations in January.

Who manages spot markets?
Spot markets maybe privately owned like the ones dealing with commodities. It maybe operated or controlled by the industry organizations or government agencies like the currency trading ones. The public who speculate on the deals that are transacted supports spot markets.

What are the benefits of the spot market?
The benefits of the spot market are that the transactions are very quick and it gives room for bidding and bargaining. So it enables producers to locate available buyers and clinch deals faster than in an ordinary market. As for the customers, it ensures quick and immediate delivery of commodities. Spot markets enable negotiations for the buyer and the seller through bidding systems just as in the stock market. So this manual and more personal system scores above the computer brokerage which provides only an automated result of the best matching prices.

Article Contributed By: Sabina Zacharias


	Did you like what you read here ? Would you like to be updated about similar stuff in the same format once a fortnight? Just sign up for our Free Newsletter, and we will send you articles twice a month about another Interesting Question - one sure to have crossed your mind sometime. GenuineAnswers.com has the Highest Quality standard. Each Article is well researched by experienced writers who work from across the globe contributing to our pool of Answers and taking us close to our Goal of providing Clear and Genuine responses to questions that we hear now and then and cross our minds from time to time. You can expect Crisp & Clear newsletters of the highest quality and ones that would be an interesting read twice a month. IMPORTANT - Please Note that, unlike many other email newsletters, subscribing to the GenuineAnswers.com newsletter will NOT result in you receiving any Spam. We have put measures in place to ensure this, and so we can Guarantee it! Sign up for the free newsletter by entering your email address below.
		Sign Up for the FREE Genuine Answers Newsletter. Guaranteed NO Spam !!

Other Categories: Health-Wellness Software-Hardware Fruits-Food-Drinks Money-Finance Internet-Technology-Gadgets
Sports-Leisure Babies-Kids Pets-Animals Ailments-Medicine Miscellaneous

Similar Websites: