Trading definition

Trading is the buying and selling of financial instruments to profit from price movements, and a trader is the person who does it. A trader opens and closes positions across markets such as stocks, forex, commodities, indices, crypto, futures, options, and CFDs.

A trader profits by entering and exiting positions on the back of market analysis, a strategy, and risk management. Trading can be short-term or long-term: a day trader opens and closes within a single day, while swing and position traders may hold for days, weeks, or months.

Trading differs from investing. A trader aims to profit from shorter-term price moves and turns positions over actively, while an investor buys to hold for the longer term, often for income or growth. Either way, a trader works with bid and ask prices, the spread, order types, position size, leverage, margin, stop-loss orders, and take-profit levels to control execution, cost, and risk.