Trading

There are lots of financial instruments traded on markets every day: goods, stocks, and currencies. Even weather forecasts can be bought or sold using so-called “weather derivatives," which is just a consequence of the complexity of the modern world and financial markets. If your income depends on future weather conditions, like a business growing crops, then you might want to hedge the risks by buying weather derivatives. All these different items have a price which is changed over time. Trading is an activity of buying and selling financial instruments with different goals, like making profit (investment), gaining protection from future price movement (hedging) or just getting what you need (like buying steel for your manufacture or exchanging USD to JPY to pay a contract).

Since the first financial market was established, people have been trying to predict future price movements, as this promises lots of benefits, like “profit from nowhere” or protecting...