Infinance, atrade is an exchange of asecurity such asstocks,bonds,commodities,currencies,derivatives or any valuablefinancial instrument for "cash". Such afinancial transaction is usually done by participants of anexchange such as astock exchange,commodity exchange orfutures exchange with a short-dated promise to pay in thecurrency of the country where the 'exchange' is located.

Theprice is agreed between the buyer and seller on the execution of the trade and is guided by the supply and demand for that financial instrument.^[1] Once the trade is executed a number of steps take place until the trade is finallysettled. There is a pre-definedsettlement period for this to happen in each market.

Trading in financial markets is key part of a countries economics, providing liquidity, enabling price discovery, and facilitating efficient capital allocation.^[2] When trading in financial markets,financial traders balance risk and potential reward to attempt to make profit from the trades.

The securities trade life cycle involves:

1. Order initiation and execution. (Front office function)
2. Risk management and order routing. (Middle office function)
3. Order matching and conversion into trade. (Front office function)
4. Affirmation and confirmation. (back office function)
5. Clearing (back office function)
6. Settlement. (back office function)

Participants in the financial markets include:

• Speculators orretail traders
• Institutional traders such asinsurance companies, private funds,hedge funds
• Central banks such as the U.S. Federal Reserve(Fed), Bank of Japan (BOJ), European Central Bank (ECB)
• Corporations such as Multinational companies (MNCs)
• Governments

• Electronic trading platform
• Stockbroker
• Stock exchange
• Stock market
• Trader

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