Question

What are characteristics of trade? (Simple answer please) 22 points

Answer 1

Answer:

• Frequent Trades –Trading involves frequent buying and selling of commodities, currencies or other securities. Frequents trades help take advantage of the fluctuations in the market. Trading practice generally is buying when the market is down and selling when the market rises to its maturity and is about to fall again. Even smallest changes in market give high profits through frequent trades.

• Short term Gains –Trading helps to earn short term gains by taking advantage through volatility through buying and selling. Even smallest volatility can give high gains. Short term gains are helpful in satisfying the currents need and fulfill the short term goals. Short term gains increase the corpus available in the longer period.

• Short Term Approach –Trading has a short term approach. This approach can be very lucrative, but it can also be risky. In trading, investment period can be as short as few minutes. Investments are bought when the market is low and are sold immediately when they rise even a little.

• Focus –In trading, complete focus is given on short term aspects. Basically, trading is short term and therefore its focus is also on short term opportunities. Trading focuses on finding out short term trends of underlying asset’s price movements. These short term trends in price movements can be analysed and sometimes predicted. Thus, gains can be made by focusing on short term trends in price movements.