May 17, 2021

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Brief explanation of trading concept

What Is Trade?


Trading refers to buying and selling of the shares, securities by buyers and sellers. It is told that the concept of trading first started in south west Asia.

Trader is an individual who deals with the financial components such as stocks, bonds, derivatives, commodities according to the capacity of the agent like hedger, speculator etc.

How to start trading:

 To start trading one has to open an account then sets its budget. Then he has to know how to place market orders and limit orders. One should create a position so that he can   reduce his chance of risk.

What Traders do in the market?

The purpose of the traders is to purchase and sell off the financial entities and close out the position with the aim of making fractional gain.

Different types of trading:

There are various kinds of trading available in the market. They are scalping, swing trading, momentum trading, and position trading, day trading.

In the case of swing traders like to hold the assets for more than a single day but not for the longer period. They rely upon mainly on the technical tools and fundamental analysis. If it does not work, they need to depend upon market research. Swing trading is all about capturing the market for the short duration. In these trades traders are going to gain within a week. They are mostly concerned about the trends and patterns of price rather than fundamentals of the stock.

The day trading is another name of intraday trading.  The traders do their business within a day. In this short period they can buy and sell several times.

Scalpers take the advantage of the less volatile market. In this short period, since the profit level is low, they always seek liquidity to increase their frequency of the market. They buy at the bid price and sell the assets at the ask price. The difference made upon by the two is received by them.

In momentum trading, traders always search for the stock which is moving directly in one direction with high volume. The duration of this kind of trading is   some hours to some days. It depends mainly on how fast the stock moves and the time of changing direction.

In position trading, some traders who are not frequent in the market get the scope of trading. In this trading system, traders try to anticipate whether the current trend lasts for a longer period than a swing or momentum period.

Is trading a good career:

If anyone chooses trading as a career then there are multiple benefits of it. You are your own boss. With adequate knowledge and proper understanding one is able to earn a decent income. Before investing, you can check more information from