What is Trading?

💹 What is Trading in General?

Trading, in general, refers to the act of buying or selling financial assets (such as securities, commodities, or others) with the goal of making a profit within a short time frame.

What is Forex Trading?

Forex trading involves the buying or selling of currencies through a Forex broker. You can choose from a wide range of currency pairs, categorized as majors, minors, and exotics. Today, Forex trading is conducted online, with dozens or even hundreds of brokers available.

What is the Difference Between Trading and Investing?

Trading is essentially a short-term form of investing. Two main factors distinguish these practices:

(1) Time Horizon

Investing typically has a time horizon ranging from one year to many years. Trading, on the other hand, operates on much shorter time frames—ranging from intraday to a few months.

(2) Trading Sides

In investing, profits are usually made only from the appreciation in the price of a financial asset. In trading, however, you can profit from both upward and downward price movements.

Global Markets

Today, traders can choose from dozens of financial markets and thousands of different assets. The most common market for trading is Forex (Foreign Exchange), but stocks, indices, and commodities are also very popular.

What is a Trading Account?

A trading account is a personalized account opened with a brokerage firm that allows an individual to buy and sell securities globally. Over the past couple of decades, trading has become highly computerized, and trading accounts are now typically opened online.

After selecting a Forex broker and depositing funds, you can execute trades with just a few clicks. Forex trading allows for high capital leverage (up to 1,000%). Your trading costs include the spread and/or any applicable commissions.