Trade involves the transfer of the ownership of goods or services from one person or entity to another in exchange for other goods or services or for money. Possible synonyms of "trade" include "commerce" and "financial transaction". Types of trade include barter. A network that allows trade is called a market.
The original form of trade, barter, saw the direct exchange of goods and services for other goods and services. Later one side of the barter started to involve precious metals, which gained symbolic as well as practical importance. Modern traders generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later credit, paper money and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade.
Trade exists due to the specialization and division of labor, in which most people concentrate on a small aspect of production, trading for other products. Trade exists between regions because different regions may have a comparative advantage (perceived or real) in the production of some trade-able commodity, or because different regions' size may encourage mass production. As such, trade atmarket prices between locations can benefit both locations.
Retail trade consists of the sale of goods or merchandise from a very fixed location, such as a department store, boutique or kiosk,online or by mail, in small or individual lots for direct consumption or use by the purchaser. Wholesale trade is defined as the sale of goods that are sold as merchandise to retailers, and/or industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services.
Trading is a value-added function: it is the economic process by which a product finds its end user, in which specific risks are borne by the trader.
Trading can also refer to the action performed by traders and other market agents in the financial markets.
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