Trade involves the transfer of goods or services from one person or entity to another, often in exchange for money. A system or network that allows trade is called a market.
An early form of trade, barter, saw the direct exchange of goods and services for other goods and services. Barter involves trading things without the use of money. Later, one bartering party started to involve precious metals, which gained symbolic as well as practical importance. Modern traders generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later of credit, of paper money and of non-physical money ) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade involving more than two traders is called multilateral trade.
Trade exists due to specialization and to the division of labor - a predominant form of economic activity in which individuals and groupsconcentrate on a small aspect of production, but use their output in trades for other products and needs.
