What is the meaning of trading and what does it consist of?

What is the meaning of trading and what does it consist of?

To begin with, trading simply means exchanging one thing for another. You buy something at one price and sell it again at another price. When we talk about trading in the financial markets, we use the same principle. Think of a person who trades stocks. What he actually does is buy shares or a small part of a company. If those shares increase in value, he makes money by selling them back at a higher price.

Trading is divided into three parts: the merchandise, the merchant, and the price

  • 4 types of merchandise in circulation:

There are four basics in trading that anyone can trade online, and these basics are:

  1. stocks: 

Quite simply, stocks in trading are a part of a company. In other words, there are different types of companies. There is a private company, which is owned by one person, two people, or several people. 

There is a public company, and the public company is divided into many shares, which are divided for sale and purchase in the public market, which is the stock market, in other words When you buy a share in trading, you buy a reward from a company.

Mostly, we find that large companies are public companies such as

Apple, Google, Samsung, and many other companies.

  1. Currencies:  

There are two types of currencies in circulation, the first type is Forex, which is foreign currencies such as the euro, the dollar, the Japanese yen, and others.

The second type, it is a cryptocurrency such as Bitcoin, Ethereum, Tether, and other currencies.

  1. commodity:

There are many types of commodities in circulation, and the most famous of them are luminaries such as gold, silver, iron,.

  1. Derivatives :

The meaning of derivatives in trading is that you simply prove hair for another time.

These four basics that we talked about, each one has a different market from the other, they affect each other indirectly, for example, the forex price has changed, and this means that it affects the price of the commodity and this affects the company's profits and the share price.

  • types of merchants:

There are many types of traders in trading, and one trader differs from another because of the length of time he keeps the commodity. We will mention three types of traders:


  1. day trader :

This type of merchant in trading buys and sells the commodity on the same day, meaning he does not keep it until the next day

  1. swing trader :

This type of trader buys the commodity and sells it after a few days, and in most cases, the period is less than a week. This type of trader in trading targets the price ratio over a few days.


  1. investor :

This type of merchant buys the commodity and keeps it for many years in the hope that its price will increase in the future and then sells it.

  • Trading price:

In short, the price changes whenever supply and demand change and does not change from day to day only, but also every year.

  • How is the trading process:

There are 3 main parts to trading: the stock exchange, the broker, and the platform, and we will talk in detail about each one to make it easy for you to understand the meaning of these words in the trading process.


  1. exchange:

All commodities, forex, cryptocurrencies, and stocks must have a market where they are exposed to buying and selling, and these things are intangible, unlike traditional markets.

  1. the broker :

In short, a broker in trading is an intermediary between the buyer and the seller, which means that it is an intermediary between you and the stock market. A good broker must be chosen because of the basics of trading.

As it takes the broker in every transaction, whether buying or selling $1 per transaction, and the broker can make you a winner or a loser, so be careful to choose a broker because it is one of the very important basics of trading.

  1. platform : 

In the platform, you see the status of the price of the stock you bought or a commodity if the price decreases or increases. This is an essential factor in trading, so care must be taken in choosing the right platform.

This is for the purpose of trading and how the trading process takes place, and if something is missing from these, it is only a lack of an essential factor in the trading process.

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