What Is a Trading Business? [Business Banking 101]

In this article, we’re answering β€œwhat is trading business?”

In short, a trading business is any business that engages in the buying and selling of an underlying asset.

Of course, trading businesses exist in every industry around the world, ranging from financial securities to physical uranium and from Wall Street to Kazakhstan.

In this article, well be taking a closer look at what exactly is a trading business, including answering common questions we receive on the topic.

This article is part of our series on business banking, including free articles that range from merchant accounts to opening a bank account for ecommerce businesses – click here to get free access now.

Feel free to use the table of contents to jump ahead to the sections most relevant to you.

Table of Contents

  1. What Is Trading Business?
  2. Trading Company vs Stock Trading
  3. Frequently Asked Questions
  4. Do You Want Help Opening Bank Accounts?

What Is Trading Business?

A trading business is any business that engages in the buying and selling of an underlying asset. In other words, a trading business will buy and sell assets for an agreed-upon price with other parties. Trading businesses exist in most industries, ranging from trading financing instruments, soft commodities, hard commodities, precious metals, and even currencies.

Not surprisingly, trading businesses play an important role in society. In addition to being economic drivers, trading businesses also influence food and energy security around the world. Not to mention, affordable access to a wide range of other products.

Trading Company vs Stock Trading

The main difference between a trading company and a stock trading company is that trading typically refers to the buying and selling of physical commodities like coffee, wheat, coal, uranium, and other physical goods while stock trading refers to the buying and selling of financial securities.

In other words, both a trading company and a stock trading company engage in the exchange of an underlying asset, whether it is a financial instrument or a physical commodity. So, the main difference between the two is the underlying asset being traded.

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Frequently Asked Questions

Below are two of the most common questions that we receive from people looking into what trading business is. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.

What Is Trading and How Does It Work?

Whether you are referring to trading in finance or trading of physical goods like commodities, the underlying principles and mechanisms of trading work in the same way. In finance, trading is the act of matching with either a buyer or seller at an agreed upon price for financial securities or other financial instruments. Alternatively, in physical commodities, trading is the act of matching with either a buyer or seller at an agreed upon price for the underlying goods, whether those are agricultural, energy, or other food and beverage products.

What Are Examples of Trading Businesses?

Examples of trading business will ultimately depend on the type of trading you are referring to. That said, if you are looking for examples of businesses that engage in physical trade, those can include soft commodities like grain, hard commodities like coal, other agricultural products, other energy products, as well as food and beverage products like coffee, orange juice, and more.

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