What is trading?
Trading is the buying and selling of financial instruments with the expectation of a profit.
The main financial instruments that are traded are: stocks, options, bonds, futures and forex (foreign exchange) and those are the ones we'll be talking about throughout the site.
In simple terms, you either:
a) BUY: If you expect that a financial instrument will increase in price you buy it (this is referred to as being long the financial instrument), hold it and then turn around and sell it (at a higher price) to make a profit.
b) SELL SHORT: If you expect that a financial instrument will decrease in price you sell it short (this is referred to as being short the financial instrument), hold the short position and then turn around and buy it back (at a lower price) to make a profit.
There are many ways to determine whether you think that a certain financial instrument will have a higher price or a lower price in the future. These are determined by your trading style and how comfortable you are taking financial risks while trading. All of these items will be analysed in subsequent articles.
