What is trading? Definition & Meaning - nextmarkets Glossary

For decades, financial trading was conducted only between banks and financial institutions. This meant that no one outside of these institutions had access to the financial markets. As the internet came into existence, and as it evolved into a high-speed entity, trading became accessible to virtually anyone who wants to get involved. Virtually anything can be traded online.

Commodities, stocks, currencies, physical goods and all manner of other things are assets that can be bought and sold with nextmarkets. In essence, if something can be traded, it will be. The forex market is currently the largest, with almost $4 trillion worth of currency traded every single day. You can find out more about forex in our dedicated Forex Trading guide.

This can be explained with a simple analogy of buying food. Say you are in a market and there are only ten apples left on a stall. There are no other places to buy apples. If you are the only person there looking to buy apples, the stall owner will probably offer a reasonable price.

But if there are fourteen other people there in need of apples, they will be willing to pay extra to ensure they get one. This allows the stall owner to put a higher price on the apples because he knows the high demand outweighs the supply and people will pay the higher prices. Once the price reaches a point that customers think is too expensive, they will stop buying and the price will cease to rise.

If you aim to get involved in the financial markets, your journey will take you to form your own definition of what trading means to you. While the generic concept of ‘trading’ is constant, everyone engages with it in their own way. That is why there are so many styles of trading, assets to be traded and strategies for success.

Everyone is unique, and everyone will develop their own approach to trading. At nextmarkets, we like to provide as much support as possible for clients to form their own identity as a trader and trade in the way that is well suited to their strengths and weaknesses. From our sophisticated demo platform to the wealth of tools and resources to learn from, we are the best trading software to find your own trading definition.

As an online trader, you should only ever risk what you can afford to lose. A good rule of thumb to guard against heavy losses is to use a stop loss. This is a predetermined level of risk that you are willing to accept in a trade, and can be specified as a percentage or a certain amount of money. Whichever way you specify it, it limits your expenditure during a trade. Failing to implement a stop loss is bad practice, and you should factor in stop losses to your strategies to ensure even a losing trade falls within your trading plan rules.

If you want to get the most out of online trading, you must treat it like a business. If you trade as a hobby, with no real commitment to learning, you will probably find it to be a very expensive pastime. Trading is a business, subject to expenses, losses, uncertainty, taxes and stress.

As an online trader you are a small business owner, and it’s important that you do all you can to maximise the potential of your business. Your online security is also important, and choosing an online broker PayPal gives your transactions an extra layer of security. Always develop and stick to a trading plan; it’s a time-consuming endeavour, but with all the tools that modern technology puts at your disposal, it can really help you make significant gains.

Transactions in modern financial markets are governed less by human beings shouting commands and pushing paper and more by computers and software. This shift affects tens of trillions of pounds around the world, and it shows how online trading now defines modern finance. Markets always go up and down, but the technology associated with online trading has led to lots of trading being done by algorithms and programmes rather than people, executed in a fraction of a second.

People who want to succeed in online trading need to understand the ins and outs of how it works; even veteran traders have had to learn about all the changes that have come with new technologies. The nextmarkets platform is designed to make this learning process as natural and intuitive as possible.

What is Day Trading? Day trading is one of the most common approaches people take. It’s a trading strategy for the short term, wherein you buy and sell securities within a single day session. This type of trading used to only be carried out by professional traders, but with the range of online free CFD software and platforms like nextmarkets, non-professional traders can also engage in this type of trading.

There are various types of Day Trading, and different traders will learn to specialise in certain methods. Day Trading can be a fast way to make big gains, depending on the accuracy of the data in your research. It’s an ideal way for novice investors to get a feel for online trading, and can lead you into taking your trading to the next level.

There are a few things you must think about when you look for the right broker to start your online trading journey. First, consider how much money you plan to invest, as most brokers have a minimum opening deposit. You also need to think about how frequently you intend to trade because some brokers will charge you for account inactivity, while others charge a high fee per trade.

Your experience level should tell you how much support and guidance you are likely to need; some brokers offer very little, while others like nextmarkets offer a great deal. And you will also want to consider your online broker payment options when making a decision. You will know your intentions and your needs, and it is important you take all of these things into account when deciding on the right broker for you.