What Is Trading?

Understanding the Foundations of Global Commerce

Introduction: Trading as the Engine of Global Business

Trading is the exchange of goods or services between two parties—usually a buyer and a seller—across local or international markets.


In global commerce, trading connects countries, industries, and supply chains. It allows businesses to move products from regions of surplus to areas of demand, balancing the global economy

But modern trading is far more complex than simply buying and selling. It involves logistics, documentation, risk analysis, negotiation, compliance, banking, and the coordination of multiple parties.


.This lesson will give you a clear foundation in how trading works, so you can understand the whole system before moving into technical concepts like LOI, BCL, Incoterms, TT payments, SCO, CIS, and contracts in future lessons

What Exactly Is Trading?

Trading is the process of purchasing goods at one location and selling them at another, generating profit by:

  • Price differences between markets
  • Market timing
  • Supply and demand imbalance
  • Value-added services (logistics, packaging, insurance, financing, etc.)

In international trading, this often means:

  • Buying from a producer in one country
  • Transporting the goods across borders
  • Selling to an importer in another country

Trading only succeeds when the trader understands both sides of the market—the supply and the demand.

The Two Main Types of Trading



1. Domestic Trading

Trading is conducted within the same country.

No customs, no international logistics, simpler documentation.


2. International Trading (Global Trade

Trading across borders.

Much more complex because it includes:

  • Customs clearance
  • International freight
  • Trade finance
  • Regulatory compliance
  • Currency differences (FX)
  • International standards and certificates

Green Gubre Group Academy focuses primarily on international trading, especially in the fertilizer and commodity sectors.

The Core Elements of Trading

To understand international trade, you must understand the key components that shape every transaction:

1.The Buyer

The buyer is the party that wants to purchase goods.

Typical responsibilities:

  • Submitting LOI or ICPO
  • Showing financial capability (BCL/RWA)
  • Making payment (TT/LC/SBLC)
  • Confirming delivery terms (Incoterms)

3. Intermediaries (Optional)

These may include:

  • Brokers
  • Mandates
  • Agents
  • Traders
  • Consultants

They connect buyers and sellers, often earning commissions through agreements.

5. Documentation

Documents drive trade.

Even one missing document can stop a shipment.

Examples include:

  • LOI, ICPO
  • CIS
  • SCO, FCO
  • Proforma Invoice
  • Commercial Invoice
  • Packing List
  • Bill of Lading
  • Certificate of Origin
  • Insurance Documents
  • SGS/BV inspection reports

You will learn all these in separate lessons.

7. Risk Management

Trading is profitable, but not without risk.

Risks include:

  • Price volatility
  • Counterparty fraud
  • Logistics delays
  • Port congestion
  • Political instability
  • Regulatory changes
  • FX (currency) fluctuations

Professional traders must actively monitor and mitigate these risks.

2. The Seller

The seller provides the goods.

Typical responsibilities include:

  • Issuing SCO/FCO
  • Preparing contracts
  • Handling export procedures
  • Coordinating logistics and shipment

4. Logistics and Freight

Goods must be transported physically.

This includes:

  • Trucks
  • Rail
  • Sea vessels (bulk or container)
  • Air cargo (rare for commodities)

Understanding freight markets is crucial in global trading.

6. Banking & Payment Methods

Money moves differently in international trade.

Common payment methods:

  • TT (Telegraphic Transfer)
  • LC / ILC (Letter of Credit)
  • SBLC
  • Escrow
  • CAD (Cash Against Documents)
  • DP/DA terms

Understanding risk and safety is essential.

How Profit Is Made in Trading

Traders earn profit through several mechanisms:



  1. Market Spread (Buy Low → Sell High): Classic trading model, buying goods at a lower price, selling at a higher price.
  2. Arbitrage: Taking advantage of price differences between markets.
  3. Long-term Contracts: Securing suppliers at stable pricing, selling at market rates.
  4. Value-Added Services: Providing logistics, packaging, storage, financing, or inspection services.
  5. Opportunistic Trading: Using knowledge of seasonality, supply shortages, freight changes, or geopolitical shifts.

The Flow of a Standard Trading Deal

Here is the simplified process you will learn in full detail in future lessons:



  1. Buyer inquiry
  2. Seller issues the SCO
  3. Buyer sends LOI / ICPO.
  4. Seller confirms CIS
  5. Parties negotiate terms
  6. Seller issues FCO
  7. Buyer accepts the offer.
  8. The contract is drafted and signed.
  9. The buyer arranges a payment instrument.
  10. Shipment arranged (FOB/CFR/CIF/etc.)
  11. Inspection conducted
  12. Goods delivered to the destination

Each step will have its own in-depth lesson.

Why Trading Is One of the Most Valuable Skills Today

Learning how to trade means you learn how to:

  • Understand global markets
  • Evaluate risks and opportunities.
  • Communicate professionally.
  • negotiate deals
  • Understand logistics and finance.
  • Structure international transactions



Trading knowledge opens doors in:

  • commodities
  • fertilizers
  • petrochemicals
  • metals
  • agriculture
  • energy markets
  • freight & logistics
  • International supply-chain management

This Academy will guide you through every level—from beginner to professional trader.

What Comes Next?

In the following lessons, you will learn:


Lesson 2 – Understanding Trade Terminology (The Language of Traders)