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
- Buyer represents the demand side
- Seller represents the supply side
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 the volume of trading.
Types of Traders
- Intraday Traders – Those traders who trade daily.
- Positional Traders – That category of traders who take advanced positions based on some information or input.
- Investors – People who have a long-term view of the output.
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.
- Goods in return for Goods
- Currency in return for Goods
- Goods in return for Services
- Currency in return for Services
- Goods in return for Services
- Services in return for Services
- Services in return for Currency
- Currency in return for Currency
- Services in return for Goods
What are the factors of production?
Most of the goods that are essential for living a healthy life are naturally available. However, there is no end to greed and therefore we humans have created for ourselves such conditions that we need to produce more goods to live a healthy life with comfort. To produce more goods we need a system and there are certain factors that govern this system. These are known as factors of production.
- Land
- Labour
- Capital
- Entrepreneur
All these factors help us in ramping up the production 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. To survive one has to trade because in order to live you need money, in order to eat you need commodities to transport that food to you.
Shoutout
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 they come into being.
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