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.

Correlated words

Bull Trap

A bull trap is a short bullish movement in a bearish market which can mislead people just like a trap.

Volatility

In economics, volatility indicates the variation of the price of a financial instrument through time.

Supply and demand

In economics, supply and demand correspond to the two main market variables and describe the behaviour of those who buy and sell goods or services.

Volume

The amount of currency traded in a given period.

Market Trend

A perceived tendency of financial markets to move in a particular direction over time.

Stop Order

A trading order that allows you to set a price at which another order is triggered.

Slippage

The difference between the execution price of an order and the price entered in the order.

Support and resistance

Support and resistance are two technical analysis tools used to monitor the price trend of an asset.

ROI

A value that measures the return generated by an investment.

Pump&Dump

A strategy that inflates the price of a cryptocurrency to generate profits only for those who implement it.

Prediction Market

Exchange-traded markets created for the purpose of trading the outcome of events.

Order Book

The list of all the prices at which traders are willing to trade a certain amount of cryptocurrency on an exchange.

Oracle

A service that collects data not available on blockchain, verifies it and provides it to smart contracts

Moon

When the price of a cryptocurrency rises very fast, they say it soars 'to the moon'.

Market Order

Instant buy or sell at the next best price available on the market.

Market Maker

Companies or organised entities that, in partnership with an exchange, are always willing to buy and sell a cryptocurrency.

Market Cap

The total value of all the coins or tokens of a cryptocurrency in circulation.

Limit Order

A buy or sell order that is executed only when the cryptocurrency reaches the set price.

Futures Contract

A contract that regulates the execution of a transaction at a predetermined price on a specific date.

FUD

Fear, Uncertainty and Doubt refers to a negative market sentiment

Circulating Supply

The number of units of a cryptocurrency available on the market.

Forex

The Foreign Exchange Market allows fiat currency trading.

FOMO

Fear Of Missing Out is an expression often used in the context of trading and cryptocurrencies.

ETF

ETFs are passively managed investment funds that replicate the value of a reference index called a benchmark.

Buy Wall and Sell Wall

High number of purchases or sales demanded at a certain price.

Bull Market

A market where there is an upward price trend

Break-Even point

The balance point between losses and gains, income and expenditure.

Bid and Ask

Supply and demand on a cryptocurrency exchange.

Benchmark

A standard for measuring the performance of a financial instrument or market.

Bear Market

A market phase characterised by price lows.

ATH and ATL

Acronyms used to indicate the maximum and minimum price of a cryptocurrency.

Bear Trap

A Bear Trap is a bearish movement in a bullish market that confuses investors.

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