Trading needs a person to come with a little knowledge about what it is and how it is conducted. Though we have heard that the various trading platforms encourage traders with absolutely no trading knowledge, it is important for the trader for his sake and safety on this field that he or she comes with a little understanding at least here so that they are able to cope with the new surprises and shocks presented to them from the beginning of this activity.

As all of us know, trading out and out is related and is completely dependent on the market and that there are always changes in the market. The happenings here on this trading field are unexpected and they happen in link with the changes in the market outside. So if a person comes prepared with at least the basics, he would be able to brace himself and stay strong and hold on to this field for long with confidence. Read more and get to know the basic trading principles that form the base for trading and this is handy information not related to any specific trading platform but is general and is eligible to be used and applied on any trading platform for any trading activity.

Trading principles

There are just two basic trading principles and these are not some big theories but are the ones that we know and get to hear every day; these are very practical theories that could be understood by any person

  • Price increases as demand increases – you might be trading in shares, commodities, stocks and anything and everything that is tradable online. Now many of us might be wondering as to why and how there are changes in the prices and values of the same when the asset or the tradable medium is the same. It is here that we need to understand the principle. Let’s get this clearly by taking a simple example. There are four chocolates with you and you just have a buyer who wants two. So you try to sell them at a very reasonable price. On the other hand, when you have 6 buyers for 4 chocolates you would obviously sell to the one who agrees to pay a higher price.
  • Price increases as supply decreases – as explained above, this principle is all about how prices go down when there is more to supply or when there are few buyers for more goods.