Trading

Trading involves vigorous participation in the financial markets in comparison to investing, which works on a buy-and-hold strategy. The success of trading is dependent on the ability of a trader to be profitable over a period of time.

A trader is a person who gets involved in buying and selling a financial asset in any financial market. He or she can buy or sell either for himself/herself or on behalf of another individual or institution. The main difference between an investor and a trader is the duration for which he or she holds on to the asset.

Trading is a short-term and volatile process that involves frequent transactions based on the trends in the market. It is relatively short compared to long-term transactions such as mutual funds or bonds. Common examples of trading are stocks, commodities, currencies [Forex], or other financial instruments. The advantage of trading over investing is more profit. Suppose the long-term investors earn 10-15% of the profit annually; a trader can earn the same 10-15% monthly depending upon the choices and decisions of the trader. But that is not all; trading is dynamic and volatile; it is a high-risk money-making process where the market trends directly affect the trading and can incur both heavy profits and losses.

The basic fundamental of trading is to buy when the price is low and sell when the price is high, but there are several other strategies such as reverse trading and short-selling, which only seasoned traders use to make high profits in the short term. Such strategies are risky and not recommended for beginners.

A trader is a person who engages in the short-term purchasing and selling of equity either for an institution or for themselves. The disadvantages of trading include – capital gains taxes which are applicable to trades and the expenses of paying brokers in the form of multiple commission rates.

Trade can have more specific meanings in different contexts. In financial markets, trade refers to the purchase and sale of securities, commodities, or derivatives. Free trade means international exchanges of products and services, without obstruction by tariffs

Conclusion

Trade is a primary economic concept which involves buying and selling commodities and services, along with compensation paid by a buyer to a seller. In another case, trading can be an exchange of commodities/services between parties. Trade can occur between producers and consumers within an economy

What are the advantages of Trading?

Traders can work for financial institutions, in which case they will trade via the funds and credits of a company, and they are paid a combination of bonus and salary. As another option, traders can work for themselves too, as in they can trade with their own money and credit. However, with this option, they will also keep all of the profit to themselves.

Highlights of trading:

  1. Trade involves the exchange of commodities and services, mostly in return for money.
  2. Trade can happen within a country or amongst trading nations. In the case of international trade, the theory concerning comparative advantage speculates that trade proves to be a benefit to all parties, even though critics contend that it leads to stratification within countries in reality.
  3. Economists recommend free trade among nations, but protectionism like tariffs might present itself because of political motives.

When it comes to foreign trading, the following are the latest trends: 1. Forced dynamism 2. Cooperation among countries 3. Growth in emerging markets 4. Technology sharing  trade barriers.5. Liberalisation of cross-border movements

Trading Skills & Essentials

There are several ways through which one can become a professional trader.

  •   Price Action

  •   Morning Star Pattern

  •   Put Option

  •   Common Stock Trading Terms Every Trader Should Know

  •   Top Trading Techniques & Strategies Traders Should Know

Technical Analysis

Technical analysis involves the evaluation of various investments and identifying business opportunities for the same by studying recent trends such as the change in prices and volume traded among others.

  •   T Distribution

  •   Average Return

  •   Value-Added Monthly Index (VAMI)

  •   Bollinger bands

  •   Bullish Harami

Fund Trading

Trading mutual and investment funds are different as compared to stock trading.

  •   Performance-Based Index

  •   S&P/Citigroup Broad Market Index (BMI) Global

  •   Short-Term Investment Fund (STIF)

  •   Zacks Lifecycle Indexes

  •   Passive Management

Algorithmic Trading

Algorithmic trading is a procedure for carrying out orders using pre-programmed and automated trading commands to account for factors such as volume, timing, and price.

  •   Magic Formula Investing

  •   neural networks

Stock Trading

Stock trading involves buying and selling shares in a certain company.

  •   Inflation Trade

  •   Broad Tape

  •   Distributing Syndicate

  •   Bid-Ask Spread

  •   Short Selling

Futures & Commodities Trading

Futures are financial contracts that restrain the parties to transact an asset at a predetermined future date and preset price.

  •   Futures Strip

  •   Invisible Supply

  •   Itayose

  •   Delivery Trading

  •   CFD

Fixed Income Trading

Fixed-income trading is the process of trading fixed-income securities.

  •   Negative Bond Yield

  •   Non-Marketable Security

  •   Normal Yield Curve

  •   Riding the Yield Curve

  •   Clearing Corporation of India Limited (CCIL)

Forex & Currencies Trading

The word forex, also known as FX, is an abbreviation for foreign exchange.

  •   Competitive Devaluation

  •   Forex Club

  •   IN

  •   foreign exchange market

  •   forex

Commodities

Commodity refers to an object or item of an economic good or service.

  •   Full Carry

  •   Futures Equivalent

  •   Price Stabilisation Fund (PSF)

  •   hydrocarbon

  •   wti

Trading Strategies

It is a method used for selling and buying in stock markets; it is based on predetermined instructions which are used for making trading-related decisions.

  •   Bear Position

  •   Market Arbitrage

  •   Efficient Market Hypothesis (EMH)

  •   ISM Manufacturing Index

  •   Fibonacci Retracement

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