What is Trading?

Trading is the transfer of goods, services or shares from one entity to another in exchange for value (normally money). Trading shares or commodities means you own a piece of its asset and you decide to sell it when its value increases (to make profit). Hence, profitability occur when value increases and you sell (exit) at a high point. Also, some trading platforms enable profitability by predicting a fall in price and exiting low.

Trading originated with human communication in prehistoric times. Trading was the main facility of prehistoric people, who bartered (exchanged) goods and services from each other before the innovation of modern-day currency. This dates back thousands of years ago.

Over 5 trillion dollars is traded every day worldwide and there are different type of trading activities. The following to mention but a few:

1. Forex - This is foreign exchange trading both two countries where currency values are traded.

2. Commodity trading - This is the trading of physical asset i.e. oil, wheat or gold to make profit from the fluntuation in its price as a result of demand and supply changes.

3. Options trading - This is the trading of contract that gives the owner the right to buy or sell a number of shares for a specific period. Option value depend on the value of the underlining asset and also the option time remaining.

4. Crypto-Currency - These are digital currencies in which encryption techniques are used to regulate the generation of currency and verify transfer of funds, which operates independently of the central banking system. An example of this currency is the bitcoin which provides an outlet for personal wealth beyond restriction and confiscation. Crypto currency can also be traded but it is advised to take extra caution as it is very volatile and not regulated by the Financial Conduct Authority. Therefore, trading on crypto currency is fully at trader's risk.

Trading is profitable if you know what you are doing. In all trading endeavour, having the base knowledge and set of strategies prior is key to its success. In trading the trend is your friend, but risk management is your best friend.

If you want to learn how to trade, CLICK THE LEARN TRADING BUTTON BELOW.