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Economics

What is Trading?

Trading is the exchange of one form of asset with the other. Let us look at an example. If a pen costs 10 units of any currency. To buy a pen one needs to go to a shop and give away 10 units of the currency to have that pen. After having paid the amount the person can now use the pen.

We observe here that a good is exchanged with a currency. This exchange of goods with currency is an example of trading. Every trade involves a transaction and therefore every transaction is a trade.

There are atleast two person, people or entity involved in trading

  1. Buyer represents the demand side
  2. Seller represents the supply side
 Silk Road an important ancient trading route connecting east to the west
Silk Road an important ancient trading route connecting east to the west

The invention of money in the form of coins and in the later centuries in the form of paper helped a great deal in facilitating the transactions. This in turn increased the volume of trade between people and that is how we see more prosperity and variety all around.

The core of trading is transactions and more the number of people more is the volume of transactions and more is the volume of trading.

Types of Traders

  1. Intraday Traders
  2. Positional Traders
  3. Investors

What is a demat account?

In order to trade one needs to open a demat account or trading account if your don’t already have one and if you’re residing in India then Angel Broking, Zerodha and Upstox are the best option available for you.

Types of Trading

There are different types of settlement of trasactions of a given trade and they are illustrated as below. Intermingling of Goods, Services and Currency.

  1. Goods in return of Goods
  2. Currency in return of Goods
  3. Goods in return of Services
  4. Currency in return of Services
  5. Goods in return of Services
  6. Services in return of Services
  7. Services in return of Currency
  8. Currency in return of Currency
  9. Services in return of Goods

Why should anyone trade?

The intention of trading is to gain either currency or goods or services by exchanging them with one another so that it benefits the exchanger in one way or the other.

To learn trading in the Indian Stock exchanges watch the videos on our YouTube Channel

By Kanishka Singh Rathore

  1. Engineer
  2. Financial Planner
  3. Editor

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