Trading
Trading is a speculative activity of buying and selling financial assets, with the goal of making a profit.
Trading involves all fungible, i.e. divisible and interchangeable assets such as financial instruments, and non-fungible, i.e. non-replicable and unique assets such as NFTs. Trading can also be extended to the world of cryptocurrencies.
Generally, buying and selling takes place within a national or international financial market. The largest ecosystem is the Foreign Exchange Market (Forex), a global financial market that determines the exchange rates of fiat currencies. To trade crypto, on the other hand, you simply have to rely on dedicated exchange platforms.
The main difference between trading and investing lies in the time frame in which the positions are made. Investment involves holding a financial asset for a medium to long time period, whereas trading is carried out over the short or medium term.
Since a private investor does not normally have access to financial securities and the stock exchange, trading requires the services of a broker: i.e. an intermediary who organises and executes transactions within the markets. In the past, the figure of the financial broker was represented exclusively by a natural person operating in the banking or private sector. Today, thanks to the development of digital technologies and the internet, numerous online broker platforms have been launched.
Trading is an independent activity: each trader has the option of adopting a distinct strategy according to his or her objectives. In general, trading types are classified according to time frame. Scalping trading, for example, is a strategy based on a very short time frame: investors enter the market for a few minutes or even seconds, closing a very large amount of positions. Scalping trading has a relatively lower risk than other strategies, but is also associated with a lower possible profit.
Intraday trading, on the other hand, is a trading strategy in which investors buy and sell assets within the time frame of one day (therefore before the evening and weekend closing of the stock exchange).
Swing trading, again, looks at a time frame of a few days to a few months.
Trading is a risky business, where risk is directly proportional to possible return. Inexperience within the financial markets could lead investors to suffer serious losses on their capital: it is necessary to carry out a careful analysis of the market in which you want to operate, avoiding alleged online professionals who promise staggering gains.
