A transaction whereby participants make a voluntary exchange of goods or services. Both parties engage in the activity if they deem it to be of benefit. The exchange often involved money, typically in the form of currency. This differs from barter where goods are traded for each other. The currency is a medium of exchange through which the trades are negotiated.
The system or network that allows for trading is called a market. Historically, this was a venue where face-to-face commerce occurred. Today, with advancements in technology, especially communications, we see markets often operating in the digital realm. These networks facilitate trillions of dollars in business activity.
It is something that will only expand as the capabilities of the Internet grow.
Trade between two traders is called bilateral trade, while trade involving more than two traders is called multilateral trade.
Finance
In the financial area, it refers to the purchase or sale of securities and other assets.
Some of the different trading vehicles that people can use:
- Stocks
- Bonds
- Cryptocurrency
- Commodities
- Options
- Futures
- Exchange Traded Funds (ETFs)
- NFTs
- Precious Metals including Gold and Silver
- Mutual Funds
Financial trades tend to occur on exchanges. This is accessed through brokerage firms who are authorized by the corporate entities behind the exchanges. It is collectively known as Wall Street, even if the operations take place outside of the geographic area.
A trader is a person who engages in trades. This is distinguished from an investorn. The latter is seeking long term gains whereas the former is concerned with short term moves. Traders will buy and sell the same securities repeatedly to achieve their goals.
Global Trade
Global trade can be consider the totality of all commerce taking place around the world. This is a macroeconomic concept that deals with the relationship between different vested parties and their geographic location. This ties into the different economies, both the overall global and national ones.
There are many factors that enter into international trade. It is impossible to discuss without mentioned geo-politics and how the relationship between different nations affects trade. For example, sanctions are ways that countries look to inflict damage upon the economy of another. Tariffs are also used as a way to retaliate at actions deemed unfair such as the stealing of technological secrets. It many instances, it is implemented as a form of protectionism for certain industries.