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 What are Securities Trading?

Securities trading are not new. This trading has been plasticized in the developed world since many years. This procedure involves transactions of property such as bonds, stocks, currency securities, and commodities. Though it has a long history, but it became popular after the World War II. Now more people are showing interest in this trading. Moreover, the advents of new technology, especially the introduction of the telecommunication and computers have given a new shape to this trading. Currently, this is widespread and people of all over the world are considering it as a safe process. They are using this policy to earn money.

As mentioned above, this practice became easier with the advent of new technologies. In the current conditions, many developed trading organizations are showing interest in computerized trading that deals with the trading of both national and international levels. In developed countries, particularly in the USA and the UK, there are many safe and secure trading policies to make the process less complicated and profitable. 


In 1986, the London Stock Exchange created a computer-based network that is similar to National Association of Securities Dealers Automated Quotations (NASDAQ) of the USA. The object of both these institutions is to promote computerized trading and to establish connections with the trading professionals of all over the world.  

Securities trading can be utilized by all to invest and to earn money through this process. Generally, trading securities are considered as a special class of investment that includes stock, bond, and commodities. This trading is being treated differently than any other trading. 

Securities trading are plasticized by financial institutions, companies, and individuals. While companies own equities, stocks, or bonds as part of their asset, trading securities are a completely different and special class of possessions used by companies, especially by financial organizations to make profits from this process. Companies and many organizations try to create profits by buying and selling the securities instead of holding them for a longer time. Their goal is to use these securities to make money through a safe procedure rather than holding it. Usually, trading securities are considered as a short-term investment and they are held for a very short period. In fact, the duration might not exceed more than a couple of hours or a day that mostly depends on the market situation and the value of the securities during that particular period. 

Role of balance sheet in securities trading

This trading is very popular in the current market. You can find it in the balance sheet of the most companies. You can simply go through the current assets section of companies to know more about the securities trading. This trading is very liquid and that can be easily valued with a little experience. To get more information and to make the process easier, you can simply go through the liability portion of the balance sheet. This portion is known as trading account liabilities. That will help you to know the current status of the company and this section also indicates that the company has a net short position in some securities held for the trading purpose. 

Securities trading are mostly dependent on the current market status. As it is held for a shorter period, all the profits and losses are calculated within a few hours depending on the market value of the securities. Trading securities are known as the market to market strategy that means both loss and gain are reported at a fair market price when the balance sheet is prepared. If the value and price changes between the period of purchase and at the time of the financial statement, the income statement will show the both the loss and gain associated with the trading securities. 

In the current market conditions, many financial organizations and companies have reduced the amount of the possessions that are held for trading purposes. The reason of this reduction is that securities trading have both negative and positive impacts. In the case of sudden changes of market values, it can help them to make unexpected gains. Similarly, it can make them lose a huge amount within a shorter period of time. So to make a balance and to avoid increased volatility, the financial institutions are taking a little risk and are focusing on investing less on securities trading. Securities trading are advisable when a market situation is favorable and when you have invested with a proper planning and understanding.