Financial trading

What is traded in financial trading? Financial instruments such as shares, forex or bonds, or derivatives such as CFDs, futures or options can be traded. Whatever the instrument being traded, the intended outcome is always the same: to make a profit. If you buy an instrument at a low price and sell it at a higher price, you make a profit. If you sell an instrument for less than you bought it, you’ll make a loss. Who trades? In financial markets, millions of companies, individuals, institutions and even governments are all trading at the same time. But what is a trader? A trader is defined as a person who buys and sells financial instruments with the aim of making a profit

Some traders stick to a particular instrument or asset class, while others have more diverse portfolios. Some do lots of research before placing a trade, while others read charts and watch out for trends. But trades all have one thing in common – they all carry risk. Risk is a key concept to all types of financial trading. No matter what instrument is being traded, who’s trading it or where the trade takes place, balancing potential profit against risk is key to a successful trading strategy.