What is Trading?

For trading to occur there two fundamental conditions which are required to be met.

First there must be at least two parties who choose to exchange goods and/or services and/or money in exchange for other goods and/or services and/or money.

Secondly there must be a market for this exchange.

Trading itself takes many forms. Originally it would have ocurred in the form of barter - where it would generally be just goods and services that were being exchanged. However, more common in modern times is the exchange of goods and services for money.

When trading Stocks, Commodities or other Financial Instruments the Parties are the Traders who range from individuals to financial institutions. The traders are often represented by Brokers who are licensed to trade the instruments.

The Market is represented by the Exchanges where the financial instruments are traded. Examples of exchanges are the New York Stock Exchange (Stocks), The Chicago Board of Trade (Commodities) and The Pacific Exchange (Options). These different exchanges have come a long way since the formation of the first exchanges in Europe in the 13th century when people would meet informaly in public places to carry out their trading.

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