Trading

Meaning :

Trading refers to the act of buying and selling financial assets, such as stocks, commodities, currencies, or cryptocurrencies, with the goal of earning a profit. Unlike

regular trade, trading occurs in financial markets and is influenced by price fluctuations.

Example : 

For example, purchasing shares of TCS at ₹3,000 and later selling them at  ₹3,200 for a profit illustrates trading.

How to Understand : 

Trading is similar to conducting business in the stock market.

You buy when prices are low and sell when they rise.

Successful trading requires market knowledge, price analysis, risk management, and the  ability to make quick decisions.

Importance :

Trading assists investors in growing their wealth through profitable transactions.

It enhances liquidity in financial markets, facilitating easier buying and selling of assets.

Trading provides necessary capital to businesses, supporting their growth.

It serves as an indicator of the economy's health, reflecting market performance.

Trading promotes financial discipline and strategic planning among investors.