What is an Actual Market?

Malcolm Tatum
Malcolm Tatum

While there are a number of markets that are used for trading stocks, the actual market is concerned with the buying and selling of commodities. Commodities are simply tangible goods, and may involve such diverse types of products as crude oil and related products, computer supplies such as memory chips, or basic foods such as grains, sugars, or produce. What is a little different about actual markets is that the goods are bought and sold on a cash basis only. Here are some of the basics of dealing within an actual market, as well as a couple of advantages.

Businesswoman talking on a mobile phone
Businesswoman talking on a mobile phone

Sometimes referred to as a cash market or a spot market, the concept behind the actual market is very simple. A seller has goods to sell for cash, and seeks a buyer who has cash. The exchange is quick and easy, not unlike going into a store and purchasing an item for cash. There are no lengthy processes to go through, no financing to arrange, and no delay while funds are obtained and transferred. The buyer delivers the agreed upon amount of cash to the seller, and the seller in turn releases the goods to the new owner.

This type of commodity market is more common than many people realize. While our world operates with a great deal of extension of credit, there are still a number of ways to operate using resources that are in hand and tangible. The actual market provides an ideal environment for this sort of financial transaction. Buyers have the advantage of being able to quickly secure what is desired, with no need to go through any type of background checks or verification of credit rating. Sellers also benefit from the use of an actual market, in that the return on the goods is realized immediately, not incrementally, or after waiting for credit to clear.

For persons who prefer to work with resources in hand to meet their needs and desires, the actual market is an ideal place to buy and sell commodities of just about every type. Just as with other forms of investments, there are basic rules of operation that are imposed by both governmental agencies and the trading industry in general. However, most of these are simply in place for the protection of both the buyer and the seller, and do not take long to master. Before engaging in a transaction in an actual market, it is a good idea to become acquainted with all laws relating to buying and selling in a cash or actual market. Doing so will ensure that expectations do not exceed the limits of the law, and that all transactions are conducted in an ethical and legal manner.

Malcolm Tatum
Malcolm Tatum

After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including wiseGEEK, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.

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