Trading is a current trend in making a quick profit. Some consider it as a business while some do it as a hobby. People, who consider it as a business, take it seriously in making money easily. Trading can be considered as buying and selling of securities like shares, commodities, currencies in the market. The price increase or decrease based on how it is bought or sold in the xglobal markets by other traders. So, instead of holding them for a long term many traders buy and sell them in a short period of time.
Trading can be called as a financial instrument. There are different types of financial instruments. Some of them are .
Share or stock trading has become very common these days. Trading with shares involves the trader to purchase stocks. The share can be a part of a company where he or she works in or can be any other share of companies that gets traded in the stock market. By this it means, a company might have decided to sell a part of it in the share market to make money for improving their business. Such shares are bought and sold by the traders in the markets. The main point to be noted in this is that the trader cannot become the owner of the company just by purchasing few of the shares in the market.
A single trader can purchase any number of shares and the trader can decide to keep the shares for a long term or for a short term. The price rate of the stocks changes from time to time. Hence the trader has to keep an eye on the rate of the share.
Here, traders purchase currency of particular type and they sell it when the market price of that currency increases. Similar to the handling of long term stock markets, the trader can hold the money with him for a long term and he may decide to sell it for his use in the near future. Apart from doing it as a business to make money, there are certain situations when there is a need for foreign exchange in the day to day life. Assume someone has moved out of country temporarily to study or to work there. It is not possible for a person to deal with a currency that is not acceptable in another country. So, one need to exchange their money on hand, for the acceptable mode of currency. This case is not a trade to make profit.
This involves totally a different product of trading. Here, the market mainly involves the economic sector. This type of trading can be divided into two categories. They are soft commodity trading and hard commodity trading. Hard commodity trading: As the name implies, the products that enter the market are natural resources that involve hard work of the people or machines mainly extracted or mined such as gold and oil.
The other forms of dividing the commodities are
Metals: this type of trading involves bidding with metals like gold, silver, and platinum. Energies: Energy trading involves bidding with extracted natural resources like crude oil, gas, and heating oil.
Livestock: The latest trend in the U.S. Commodity market is the livestock commodity which involves trading with live cattle and lean hogs, pigs, chicken and few more.
Agricultural: Agricultural trading involves bidding with grown crops like cocoa, coffee, soybeans, wheat, rice and much more. The commodity market can be considered for spot delivery or for a future contract. Spot delivery includes purchasing and delivery of goods immediately, whereas future contract involves an agreement of purchasing and selling of goods in the future for the specified price.
These are only a few types of trading that are very popular in the current market. Similar to the different types of trading, there are a number of ways one can trade like intraday trading, swing trading, and positional trading and so on. So, understand the type and way of trading before choosing your style.
This is generally called as FOREX. This is a market which deals with currencies. The currency is not limited to a particular type. It can be of any currency across the world.
This involves totally a different product of trading. Here, the market mainly involves the economic sector. This type of trading can be divided into two categories.
Soft commodity trading: This type of trading includes agricultural products. Some of the products that enter this type of trading are sugar, wheat, and cocoa.