“Trading” is a term used for the buying and selling of highly liquid market-listed assets. It involves a digital market regulated by the State and private entities that administer it, becoming increasingly accessible for individuals interested in learning and venturing into this practice.
Initially, speculation about financial instruments can be challenging to understand. Our associate lawyer, Fátima Rivera, explained the most basic concepts about trading financial instruments in the segment on Radio Femenina, “Los 5 minutos legales.”
“Trading involves the buying and selling of assets, and their price moves according to supply and demand. All these transfers occur between the parties involved in trading. It can be the transfer of goods or services between the two parties,” Rivera pointed out.
Regarding the types of assets that can be “traded,” our expert stated that there isn’t a defined list but mentioned financial instruments such as bonds, securities, and cryptocurrencies, “used to transfer value in a decentralized manner.”
Rivera explained the differences between executing a trade and using an investment mechanism. The former refers to speculating and profiting from prices, trading with leverage, and not owning the asset. In contrast, investment involves purchasing assets like stocks.
“Investing is allocating resources to seek profit, usually within the long-term financial markets. Trading comprises people taking advantage of market volatility,” Rivera stated during the radio segment.
Our expert mentioned that anyone can speculate in the market from the comfort of their home or workplace. However, Rivera recommended that legal entities register with the Central Reserve Bank to obtain a license allowing them to operate with cryptocurrencies.
Additionally, our specialist described some ways of trading:
- Opening and closing operations within the same day of trading. It’s a short-term investment method since operations are not typically left open for the next day.
- Trading in very short periods throughout the day, with operations that may last seconds.
- Leaving operations open at the end of the day, extending for approximately ten days.
- Taking positions in the market in favor of the trend.