What It Is:
Also called the spot market or the physical , a cash market is a for securities or commodities in which the goods are sold for cash and for immediate delivery. In some cases, "immediate" means one month or less. Foreign exchange are some of the largest cash .
How It Works/Example:
Cash markets differ from futures markets in that delivery takes place immediately. So, if you wish to purchase Company XYZ and own them immediately, you would go to the cash market on which the are traded (the New York Stock Exchange, for example). If, however, you wanted to purchase a contract that entailed taking possession of Company XYZ , you would seek out the exchange on which Company XYZ trade.
Why It Matters:
It is important to know the difference between cash markets and futures markets are also influenced by expectations about prices later, storage costs, weather predictions (for perishable commodities in particular), and other factors.