What Is Trading? Beginners Guide.

What is Trading?

Trade is a primary economic concept which involves buying and selling of commodities and services, along with a compensation paid by a buyer to a seller.

In another case, trading can be an exchange of commodities/services between parties, mostly in return of money. 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.

How does trading work?

When you trade, you profit if the market price of your position moves in the right direction, and you lose money if the price of your position moves in the wrong direction. It can be risky to dive in without the proper knowledge

The basic premise to remember is supply and demand. When there are more buyers than sellers in the market, demand is greater, and the price goes up.

If there are more sellers than buyers in the market, demand is reduced, and the price goes down.

Types of Trading?

Scalping: A scalper is an individual who makes dozens or hundreds of trades per day in an attempt to "scalp" a small profit from each trade by exploiting the bid-ask spread. Traders usually holds 1 to 5mins

Momentum Trading: Momentum traders seek stocks that are moving significantly in one direction in high volume. These traders attempt to ride the momentum to the desired profit

Technical Trading: Technical traders focus on charts and graphs. They analyze lines on stock or index graphs for signs of convergence or divergence that might indicate buy or sell signals.

Swing Trading: Swing traders are fundamental traders who hold their positions longer than a single day. Most fundamentalists are really swing trading since changes in corporate fundamentals typically require several days or even weeks to produce a price movement sufficient for the trader to claim a reasonable profit.

Traders usually holds days or weeks 

Fundamental Trading: Fundamentalists trade companies based on fundamental analysis, which examines corporate events, particularly actual or anticipated earnings reports, stock splits, reorganizations, or acquisitions. Trader usually holds weeks, months or years.

Assets where you can trade:

•Equity shares

•Forex

•Indices 

•Commodities

•Bonds

•Intrest Rates

•ETFs

Risks Involved in Trading:

1. Before starting be prepared to suffer severe financial losses.

2. If you've not taken enough knowledge at the beginning you'll might be ending blowing your account. 

3. Day trading might be stressful and expensive full-time job if you're looking for. 

4. Day traders depend heavily on borrowing money or buying stocks on margin.

5. Trader have to take a certain amount of risk on their capital