In case of stock market, different companies stocks are listed and traded on a stock exchange. However, bond market operations are not bound by any stock exchange. This is due to the fact that bond markets in most countries remain decentralized and are operated through electronic trading networks. Every bond is different from one another. Different indices are used to manage portfolios and also gauge the performance of a bond market. Some of these include Lehman Aggregate, Citigroup BIG and Merrill Lynch Domestic Master.

The bond market can be divided into two categories. These include the primary market and the secondary market. The primary market involves trading of debt securities issued by the government including government bonds and corporate bonds. Trading is done between borrowers and lenders. The secondary market involves trading of debt securities that were issued earlier. In secondary market, trading is primarily between investors.

Bond market prices are highly volatile. Every bond issued in the bond market has a maturity date. If the bondholder continues with the bond till the maturity date, he can get a principal and interest as per the rates that were predetermined. However, when the bondholder wants to sell off his bond before maturity period, returns are primarily dependant on the interest rates. Hence, one should have a clear understanding of the market before trading bonds.