Trade

The voluntary exchange of commodities or services between various economic entities. Because neither party is obligated to trade, a transaction will take place only if both parties believe it will benefit their respective interests. Trade can take on multiple connotations depending on the circumstance. For example, free trade refers to cross-border exchanges of goods and services that are unhindered by tariffs or other trade restrictions, where in financial markets, trades refer to the buying and selling of derivatives, commodities, or securities.