Why do we trade?

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TLDR: It is not true about every one trade for profit, someone trade for "lost"

Why are we here ?

To be good at something, you must understand its most basic elements. The more you understand the basics, the greater you become. Easy squeezy freezy right ?

Imagine you've just started playing badminton. You're young. You go to the gym five days a week. You can bench heavy weights, your arms are pumped, and you're convinced that power comes from muscle. So you grip the racket as hard as you can.

You clench your teeth.

You swing with everything you've got.

The shuttle barely moves.

You try again.

Harder.

Faster.

Still nothing.

Now you begin to wonder.

"Maybe badminton just isn't for me."

"Maybe I'm not talented enough."

"Maybe I'm simply too weak."

It doesn't make sense. You can demolish a 500-gram steak in one sitting. You spend hours in the gym every week. Yet somehow, your "power smash" looks like it came from a child. Then one day, you play against an old man. He slowly walks onto the court wearing a pair of worn-out shoes with cracks in the soles. During the warm-up, he barely moves. You quietly think to yourself, "He'll probably be exhausted after two rallies."

The game begins.

Then...

Boom.

His smash is explosive.The shuttle rockets across the court faster than anything you've ever seen. It doesn't make sense.

He isn't muscular.

He isn't fast.

He isn't even trying that hard.

After the match, curiosity gets the better of you."Grandpa," you ask, "how can you hit the shuttle so hard?"

He smiles.

"I don't hit harder than you," he says.

"I just understand where the power comes from."

He explains that a powerful smash isn't generated by the arm alone, it starts from the ground.

Your legs create the force.

Your hips rotate.

Your torso transfers the momentum.

Your shoulder follows.

Your arm accelerates.

Your wrist simply delivers the final snap.

Every part of the body works together in one smooth chain. The arm isn't the source of the power, it's merely the last link.Then he tells you something even more surprising.

"The swing isn't finished when you hit the shuttle."

He shows you the follow-through, how the body naturally slows down after the impact, protecting the shoulder, keeping the body balanced, and allowing you to recover instantly for the next shot. What looked like a single movement is actually a carefully coordinated sequence.

In that moment, everything changes. You realise badminton isn't about strength. It's about understanding the fundamentals. Once you understand the principles, the technique suddenly makes sense. And badminton seem like an "art".

Trading is exactly the same.

Most beginners spend months learning candlestick patterns, indicators, options strategies, or AI models. They try to swing harder and harder, believing that more techniques will make them successful.

But before learning how to trade, they rarely stop to ask the most fundamental question of all:

Why do people trade?

Just like badminton, trading is beautiful once you understand the principles beneath the techniques.

So, why the market appear? what problem did that solve?

Alright, let's travel back thousands of years. Imagine you're living in a small tribe. Every morning, you wake up, hunt for food, gather berries, and return to your village before sunset. Life is simple, and one day, another tribe passes by. They've crafted beautiful clothes and handmade accessories unlike anything you've ever seen. In return, they need food for the rest of their journey and luckily, your tribe has more food than you need, so both sides make a trade, but you feel no interesting with their pearls, and just trade with other accessories.

Everyone leaves happy.

A week later, another tribe arrives. This time, they're wearing the most beautiful leather shoes you've ever seen. You'd love to trade for them. The shoemaker smiles and says, "I'll trade these shoes... but only if you can give me pearls."

You missed that trade last week and even though you have plenty of food, the trade can't happen.

Now imagine another problem. A sheep is worth twice as much as a basket of fruit. How do you pay half a sheep? You can't exactly cut it in half. Early societies quickly realised that barter had serious limitations. Trade only worked when two people happened to want exactly what the other person had. Economists call this the double coincidence of wants. As villages became towns, and towns became cities, barter simply couldn't keep up. So humans invented something revolutionary.

Money.

Instead of exchanging goods directly, everyone agreed to exchange goods for money. You sell your food for coins and the shoemaker sells shoes for coins. Now you can buy shoes without worrying whether the shoemaker wants your food. Money didn't create trade, it made trade dramatically easier.

Future Market

But as societies grew richer, a new problem appeared. Imagine your small tribe has become famous for making luxury jewellery. Each necklace is handcrafted and takes almost a year to complete and gold is your biggest expense.

You begin making a necklace today, expecting to sell it next year. But after twelve months of work, disaster strikes and the price of gold collapses. You didn't do anything wrong and your craftsmanship is still exceptional. Customers still love your jewellery. Yet you've lost most of your profit because the price of gold changed while you were making it. You never wanted to gamble on gold prices. You just wanted to make beautiful jewellery. So you make an agreement with a gold merchant. Today, both of you agree on the price of gold that will be delivered one year from now. If gold prices collapse, you're protected otherwise if gold prices soar, the merchant benefits from buying at the agreed price.

Neither side knows who will "win." The point is that both sides eliminate uncertainty. This simple idea eventually evolved into what we now call the futures market. Futures weren't created for speculators. They were created so businesses could focus on what they do best without worrying about unpredictable prices.

Stock Market

As time passed, your jewellery business became famous across continents. Merchants from China, India, and Europe wanted your products. The opportunity was enormous but there was one problem that is shipping goods across the ocean required an expensive ship—far more money than any single merchant could afford. So you come up with a brilliant idea. Instead of paying for the voyage yourself, you invite hundreds of investors to contribute. Each investor owns a small share of the expedition. If the voyage succeeds, everyone shares the profits. If the ship sinks, everyone shares the losses.

For the first time, risk is divided instead of carried by one person. But another problem soon appears. One investor's house is destroyed by a storm and he urgently needs money. The voyage won't return for another two years. Instead of waiting, he sells his ownership to another investor. The new investor now owns the future profits, while the original investor gets the cash he needs today.

Both people are better off. This simple idea became the foundation of the modern stock market. Stock market and all the trading market does something remarkably simple:

It allows people to transfer ownership and risk.

Morden Market

Today, markets exist for almost anything involving ownership or uncertainty.

Notice the pattern. Every major market in history was created to solve a real economic problem.

The stock market solved the problem of raising capital.

Futures markets solved the problem of price uncertainty.

Currency markets solved the problem of international trade.

Only later did speculators enter these markets.They weren't the reason markets were created and they simply became willing participants who took the other side of trades, making it easier for everyone else to manage risk and exchange ownership.

Markets were never invented so people could speculate. They were invented to solve real economic problems. Speculation came later because every market that transfers ownership or risk also creates opportunities for someone willing to accept that risk.

Now we know why market appear, so what about who decide join market? And what is their propose?

If you notice, we can se our accessories tribe will join market for risk management of gold price, there is some one they will trade with, that can be trader, investors, ...

The common misconceptions is:

Everyone joins the market to make money

But that's simple not true

If everyone wanted the exact same thing, there would be no trade. Every trade only happnes because two parties have different objectives

You can remind all of tribe, none of them entered the market to "beat" someone else. They entered because each had a real business problem to solve. Only after these participants entered did another group appear.

Speculators.

Unlike farmers or airlines, speculators aren't trying to produce food, bake bread, or build aeroplanes and their role is different. They willingly accept the risks that others want to avoid. Without speculators, many hedgers would struggle to find someone willing to take the opposite side of their trades.

In other words, every participant plays a different role.

The farmer wants certainty.

The airline brand wants predictable costs of oils.

The company wants capital.

The investor wants future returns.

The speculator wants to profit from correctly predicting prices.

They're all participating in the same market. But they're playing completely different games. And this is perhaps the biggest lesson in trading. Before asking how to trade, ask why you're trading. Because your reason determines your strategy.

The market is the same but the objectives are not.

Conclusion

Thousands of years ago, markets were created to solve simple problems: exchanging goods, sharing risk, and raising capital.

Today, those same ideas still exist. The instruments have changed from rice and gold to stocks, options, futures, and cryptocurrencies but the people behind every trade are surprisingly similar. There are 8 types people join market:

Your purpose defines your strategy but here's where trading becomes truly fascinating. Once you understand why different participants are in the market, you can begin to understand how they behave.

Understanding your counterparty is one of the most powerful edges you can have. That is what makes trading so diverse and so beautiful. This is only the beginning.

And yes, maybe you heard about boring thing like trading is zero sum game, because total someone lost + total someone profit = 0. It's true, trading is zero sum in finance, but is not zero sum in economic.

In the next article, we'll explore how different participants create opportunities in the market, and why competing against a speculator requires a completely different mindset from trading against a hedger or an investor.

Until then, remember the lesson from the old man on the badminton court, master the fundamentals before chasing the techniques. Understand the principles before searching for strategies. The market isn't just a place to make money. It's one of humanity's greatest inventions for solving problems, sharing risk, and creating value.

Happy coding and happy trading.

Peace