What is Trade?


Trading is the basic economic concept of buying and selling goods and services. The common medium of Exchange is currency, but trade can also be executed by the exchange of goods and services between two parties, which is known as Barter. It can also be done with virtual currency which is known as Bitcoin. In financial markets, buying and selling of securities are known as Trading.

Currency transactions:

When the medium of exchange is currency, it provides various methods of funds transfers between two parties ie., Seller and Buyer, including cash, credit cards, debit cards, wired funds, etc., Money functions as a store of value and unit of account. It also provides assurance to the sellers who receive the currency in their account that any goods or services can be purchased in the future for the same value.

Barter Transactions:

Cashless trading between two parties is known as Barter Trading. This is a very old method of exchange. This is system has been used many centuries before even the currency was invented. People exchanges goods or services for another in return.

Virtual currencies:

This is the newest medium of exchange. The best example of virtual currency is Bitcoin. Bitcoin handles the transactions in Virtual wallets and can be used with a growing number of web-based merchants such as Overstock.com, WordPress.com, etc., Also some merchants provide Virtual currencies to their individual merchants. They are even used in smaller business because there are no transaction fees paid for virtual currencies.

Profits are being achieved in trading when the user buys stocks or goods for a lower price and sell the same for a higher price. The margin between the buying and selling line is the profit earned from trading. Below are the four primary trading styles:

Position Trading:

Position trading comprehends longer duration in trading, it may go up to months or even years to achieve profits. This type of trading is similar to “buy and hold” Investing (profiting from the bull market). Position traders may apply both short and long trading strategies.

Swing Trading:

It is a short-term trading method that user trades using stocks and options. This style of trading, holds the positions for a few days only to capture short-term profits. The typical duration of swing trade lasts from two to six days time period. Swing traders depend on the price action and technical analysis

Day Trading:

It is the style of trading where the positions are entered and exited on the same day. They do not hold any positions overnight like swing trading and position trading. Trading is closed by end of the day by some triggering points like profit target, end of the day exit or time exit, stop loss, etc., Day Traders typically utilizes Volume based chart intervals, Intraday price fluctuations, Viewing charts per minute, etc.,

Scalp Trading:

It is an extremely active form of day trading that involves buying/selling of stocks/options throughout the trading session. Profits are very small on each trade, hence users place hundreds of orders on each session to gain profits.

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