Trading

Tax Glossary Definition

Trading

Trading refers to the purchase and sale of financial assets—such as shares, commodities, currencies, or derivative contracts—with the intention of benefiting from price movements. People or institutions who regularly engage in these transactions are called traders. Depending on goals and market outlook, trading strategies may range from very short-term speculation to positions held over longer periods.

Example: Imagine an investor purchases 100 shares of XYZ Ltd. at ₹200 each. A week later, the price rises to ₹230 per share, and the investor sells the entire lot. The price gain of ₹30 per share results in a total profit of ₹3,000.

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