An Introduction to Trading in the Financial Markets: Trading, Markets, Instruments, and Processes

2

Trading

Trading is the process of implementing investment decisions and other types of financial-asset purchases or sales (see Figure 1.2). Whereas investment tends to focus on what to do, trading is more directly concerned with how to do it. As we have noted, trading and investment begin to blur when trading becomes a source of profit and investment has a very short investment horizon.

Figure 1.2 Trading is the process of managing the submission of buy and sell orders to trading venues to maximize the returns resulting from investment decisions and/or to profit from transient opportunities in the markets.

In this chapter we begin by explaining ...