What is the concept of trading?
Most of us do the act of trading continuously in our daily life despite our lack of awareness of the fact that we do it. For example, all that we buy from the shops is considered a type of money exchange in exchange for the goods or services that we buy, and thus the concept of trading can be simplified in its definition that it is an exchange For one thing for another. Usually when the term trading is given to an act we immediately realize that a commodity or something has been exchanged for money, or in other words, something is bought from one person and sold to another person.
Trading depends mainly on supply and demand in general, as the value of the thing that a person or group of people wants to buy changes depending on the change in supply and demand, and the high demand for the commodity or financial asset means that there are a large number of people willing to pay the price to obtain it and thus increase the demand On a commodity that will lead to an increase in its price or price due to the need for a large number of it.On the other hand, a high supply of a commodity means that there are no orders for it, or that the quantity of it supplied is higher than the volume of demand for it, which may lead to a decrease in its price in order to attract customers to buy it.
We review together the following example to understand the topic more clearly
We assume that you are in the car market – that is, cars are exchanged – which is the commodity here – for money, and you want to buy a specific model that can only be found in one store that has only one car of this model. If you are the only buyer at the store, then you most likely can get It has a reasonable price, but if there are a number of buyers wanting to acquire the same model, this means that competition will arise between them to obtain it, in this case it is expected that the merchant will raise its price because there are a large number of people willing to pay for it, simply by explaining the first principle In the concept of trading it is “high demand – the desire to get – leads to higher prices”.
On the other hand, let us assume that the store has 10 cars of that model that you want to buy, and there are only two buyers, in this case it is expected that the store will reduce the price of the car in order to attract more buyers and this step is confirmation of the second principles Trading which, Therefore, the above can be summarized in indicating that the trading process works by exchanging something for another equal in the same value, and this value is determined depending on the strength of supply and demand for this thing, and the trading process has evolved over the ages, and in order to obtain the same thing The exchange used to vary in each period from bartering for another commodity, to exchanging it for gold or other metals, and finally exchanging commodities for money of various forms (cash, credit, electronic, or digital).
Skills required before learning to trade
After getting acquainted with the concept of trading and what it is, it must be known that trading is not limited only to daily transactions and exchanges, that trading is not limited to commercial transactions, with the presence of different financial markets, trading turns into a profession and its concepts vary between speculation and investment and so that the individual has the traits of the trader and becomes successful in it. That he has a number of basic characteristics that distinguish a successful trader from others.It must be borne in mind that success in trading is not by accident, but behind it a lot of effort in education, trial and error, and continuous development, perhaps for long days.
The following are the traits of a trader
The ability to continuously learn and experiment
You must be motivated to turn learning trading and its fundamentals into an enjoyable thing. Trading, like any other profession or craft, must be learned and not only scrapped things, but a complete understanding and familiarity with the details. Markets by their nature are dynamic, constantly changing, and affected by many external factors and news, every day there is something new, and your learning process must be enjoyable in order to take full advantage of what you have learned.
Most traders succeed when they learn from their past mistakes and do not repeat them, as the only way for matters to reach the end is to learn from and avoid past mistakes.
And always remember that you will not beat the market, and you cannot take revenge on it or its stubbornness. There are some traders who have achieved strong successes that gave them extra confidence to the point of vanity, which pushed them to the higher risk that ultimately led to a higher loss, also when experiencing a loss in the market, do not try to retaliate. Or the stubbornness of market movements, give you the opportunity to understand the reason for the loss, so that you can avoid it in the next trade, and thus achieve success.