Financial markets serve as platforms where buyers and sellers engage in trading various financial instruments, including stocks, bonds, currencies, and derivatives. The primary purpose of these markets is to facilitate the exchange of capital and risk among participants.

Trading involves speculating on the price movements of financial assets without necessarily owning them. Traders predict whether the price of an asset will rise or fall and take positions accordingly. If their predictions are correct, they can profit; if not, they incur losses. Common trading instruments include stocks, forex (foreign exchange), commodities, and indices.