forexstats

Other Markets

In addition to the markets already discussed, which deal primarily with stock, a number of

different markets exist to service the trades of derivatives, options, futures, and other stocklike

investments. These niche exchanges are of great importance to their particular products,

although their exchanges may not be as widely known.

The Chicago Board of Trade, for example, deals almost exclusively with the exchange of

grain futures. The New York Cotton Exchange deals with cotton, of course. These specialty

markets rarely make for exciting financial news, yet the Chicago Board of Trade, for example,

is one of the most important exchanges in the world. A day's activity here could determine

changes in the

consumer price index, an indicator that measures the percentage of change

of the cost of goods and services in well-developed nations and that also measures the end

or beginning of famine in emerging markets.

Plain English

Remember that stock index explanation from Lesson 6, whereby an average would

indicate whether the price of everything in the market had gone up? The consumer

price index is the same thing, except that instead of averaging the cost of stock or

a farmer's market, it averages the cost of all things the average person in this

country buys, like food, clothing, and utilities.

Most of these exchanges operate on basically the same principle as the stock exchanges,

but their clientele as well as their purpose are usually substantially more specific. In addition,

the governing entities may be different from their stock exchange counterparts. The

exchange of futures, for example, is regulated by the Commodity Futures Trading

Commission (CFTC) rather than by the Securities and Exchange Commission (SEC). Like

stock exchanges, these various exchanges are located around the country, in Chicago,

Minneapolis, and Phil-adelphia, as well as around the world, in Paris, Winnipeg, and Sydney.

Finally, be aware that in the past the activity of these various exchanges could be a little

more difficult to find. Usually only the very large financial publications such as The Wall

Street Journal or corresponding local publications carried the reports. Fortunately, today's

computers and dedicated financial media are so broad that information on any of these

markets is usually available at the touch of a button.