What is Trading: Definition, Types, Advantages and Disadvantages

Basically, trading is one of the activities carried out in the money market. This activity is more than just a process of buying and selling goods or services. The main purpose of holding this economic activity is to conduct buying and selling activities in a short period of time and get the greatest profit value.

So, how to do trading? Does this activity have a high risk? In this opportunity, let’s discuss the answers to these questions together.


1 Trading Is
2 Trading Characteristics
3 Types of Trading

3.1 Forex Trading
3.2 Stock Trading
3.3 Binary Trading
3.4 Gold Trading
3.5 Bitcoin Trading
4 Advantages of Trading

4.1 1. Flexible
4.2 2. Practical
4.3 3. Affordable Fees and Secure Data
4.4 4. Demo Account for Beginners
Trading Risks

5.1 1. Big Deposit
5.2 2. Error choosing a Broker

What is Trading

Reporting from the official Investopedia page, the general understanding of trading is a concept from the basic economy in which there are buying and selling activities of goods or services. The value of the profits obtained from this activity is the compensation paid by the buyer to the seller, or in the exchange of goods or services to both parties.

Besides being able to be done on those who come from the same country, trading activities can also be done globally which is usually called international trade. Later, the international trade market will offer a very tight competition, resulting in very competitive prices.

In the financial concept, this trading activity refers to buying and selling securities such as stocks. In addition, trading is also often carried out in the futures market and also the foreign exchange market or what we often hear today as forex ( foreign exchange ).

Currently, there are even many people who are trading to increase their income, this is because trading is able to bring very lucrative profits.

Trading Characteristics

Different from investments that are more active in nature. As an investor, you as a businessman must work alone to pursue a certain profit within a period.

The existence of profits and losses as part of the results of the capital you have deposited depends on you as a trader. If you can manage it well, then you can get profit. On the other hand, you will suffer huge losses if you mismanage it.

One form of trading activity is investment activity on the stock exchange floor or foreign exchange. For this reason, you must immediately understand the true nature of forex trading, trading strategies, and the various factors that affect the value of profits in the world of trading if you are interested in trading.

Types of Trading

In the financial world, there are at least five very well-known types of trading, namely:

  • Forex Trading

Forex trading is a form of trading foreign exchange rates. As we all know, the value of foreign currencies is basically volatile. To be able to do this forex trading, then you have to exchange money at a money changer or money exchange directly or online by depositing your currency first.

The value of the profits obtained from forex trading depends on the exchange rate of foreign currencies with the currency you choose.

So, if today you buy 10 Singapore Dollars at a price of IDR 5000, then if you exchange them in the future, the exchange rate could be IDR 10000 or maybe lower than the initial price.

From this we can see that this type of trading is a type of trading that can bring a lot of benefits, but the risk behind it is also the same.

  • Stock Trading

In this case, you should really be able to differentiate between stock trading and stock investing. Reporting from Investopedia, although both have the word stock, the concepts of the two are clearly different.

Stock trading is the activity of buying and selling shares within a certain and fairly short period of time. While stock investment is an activity of saving to later be able to benefit from the results of buying shares in a long period of time.

In trading stocks, you have to buy and sell with erratic price fluctuations. You have to make the right decisions to get a profit or capital gain, especially when the stock price is high.

  • Binary Trading

Almost the same as other types of trading, this binary trading activity is also always attached to buying and selling activities. However, often this binary trading activity ends in fraud. Generally, this type of trading can be found in horse racing betting or football matches.

In doing this type of trading, then you must be able to determine the target target and also risk a certain amount of your currency. If you can achieve the target, then you will get a big profit. But if you miss, then you can experience a loss that is also equal in magnitude.

  • Gold Trading

It is different from buying and selling activities, investing, or saving gold. Gold trading activities are almost the same as forex trading or stock trading, the only difference being the object, namely gold.

This gold trading activity can be done through the services of a broker. In it you should always monitor the price of the US dollar. Why? Because the fluctuations in the price of gold have a great influence on the value of the dollar and also the financial condition in the United States.

  • Bitcoin Trading

Since the presence of bitcoin a few years ago, bitcoin trading has become one of the new trading options. The object being traded is, of course, bitcoin.

This bitcoin purchase can be done using the rupiah currency. You also don’t always have to spend a large amount of capital to trade bitcoin. The most important thing is how carefully you monitor bitcoin price fluctuations in order to be able to make the right decision.

Trading Advantage

Some of the things that make trading often considered a very enjoyable activity are:

1. Flexible

The first reason why people like trading is because trading can be done anywhere and anytime as long as you have internet access. In addition, this activity also does not require a lot of time, so you can still do it in your spare time without disturbing your main activity.

2. Practical

With the development of sophisticated technology as it is today, you can access every trading broker online. In addition, you also have an auto trading feature to facilitate trading activities. So, you no longer need to have trouble monitoring prices and determining the selling price of trading products anymore.

3. Affordable Fees and Secure Data

Even though trading promises big profits, it doesn’t mean you have to prepare a large capital as well. Some online brokers do not even charge an account registration fee and charge low commissions and spreads.

In addition, you can also choose an online broker that you really trust, so you don’t have to worry anymore about the security of personal data that usually has to be included when you start trading.

4. Demo Account for Beginners

If you are still in doubt and confused about trading, then you can try to start with a demo account which will also provide information and guidance on trading strategies.

Trading Risk

In addition to the above advantages, trading also has big risks, namely:

1. Big Deposit

Some brokers have set a requirement for each user to deposit a large amount of money. So, it can bring big profits as well as very large losses as well.

This is what you must be prepared to face because in trading there is no institution or institution that guarantees your money savings.

2. Error choosing a Broker

You could be wrong in choosing a broker during the online broker search process. Although there are hundreds to thousands of online brokers out there, they all have different advantages. But, you still have to be more vigilant and do in-depth research before choosing a trade so that your broker doesn’t make a loss.

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