Trading

There are a lot 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 that changes over time. Trading is the activity of buying and selling financial instruments with different goals, like making a profit (investment), gaining protection from future price movement (hedging), or just getting what you need (like buying steel or exchanging USD for JPY to pay a contract).

Since the first financial market was established, people have been trying to predict future price movements, as this promises many benefits, like "profit from nowhere" or protecting capital from sudden...