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Silk Road an important ancient trading route connecting east to the west

3 Types of Trading – The best explanation

Trading is the exchange of one form of an 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 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 at least two-person, people or entities 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 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 the more the number of people more is the volume of transactions and the 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 you don’t already have one and if you’re residing in India then Angel Broking, Zerodha and Upstox are the best options available for you.

Types of Trading

There are different types of settlement of transactions of a given trade and they are illustrated below. The 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 about investing in the Indian Stock exchanges watch the videos on our YouTube Channel


If you’re a new trader and would like to start your journey by learning about the stock market. Then this is an opportunity for you to join us. We will offer you complete study material for learning all the different types of financial instruments. Types of investment products, their purpose and also how do they come into being.

The only thing we want from you is a little support. It motivates us if you share our content, give it a little appreciation or press that like button on any of the platforms. There are various ways to support us. If you’re not comfortable with publicly appreciating then you can also help us by opening your Demat account by the link provided below.

Kanishka Singh Rathore

Engineer Financial Planner Editor

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