Trade

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What is a 'Trade'

A trade is a basic economic concept that involves multiple parties participating in the voluntary negotiation and then the exchange of one's goods and services for desired goods and services that someone else possesses. The advent of money as a medium of exchange has allowed trade to be conducted in a manner that is much simpler and effective compared to earlier forms of trade, such as bartering.

In financial markets, trading also can mean performing a transaction that involves the selling and purchasing of a security.

BREAKING DOWN 'Trade'

Trading is not a new phenomenon - we've been doing it for centuries! The trade that occurred among the most primitive humans has evolved considerably over time, and the word "trade" has come to include the complex trading that occurs on the floor of the New York Stock Exchange (NYSE).

However, the basic elements of buying and selling in some form of a market haven't changed a bit, because ultimately, trade still involves giving one thing in exchange for another.

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RELATED FAQS
  1. What are some examples of barter transactions?

    Learn how bartering involves the provision of goods or services in exchange for other goods or services, and review different ... Read Answer >>
  2. How and where is revenue recognized from barter transactions?

    Find out how the IRS requires companies that engage in barter transactions to recognize the revenue from such transactions ... Read Answer >>
  3. Are barter transactions taxable?

    Learn what a barter transaction is, how the IRS requires businesses to report barter exchanges and tax implications of barter ... Read Answer >>
  4. How can bartering result in a more optimal allocation of resources?

    Learn how bartering helps with resource allocation, managing trade deficits and exchanging goods. Review how individuals, ... Read Answer >>
  5. What are the differences for barter transactions recognition between IFRS and USGAAP?

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  6. What is the difference between barter and currency systems?

    Learn the difference between barter and currency systems in the trade of goods and services. Why is currency preferred over ... Read Answer >>
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