In the previous module, we established that trading is about capturing profit from price movement.

But what exactly is being traded?

SYSTEM_DEFINITION

In trading, this “commodity” is called an asset.

But here’s the key idea:

An asset doesn’t have to be something physical..

An asset is anything that has two key properties:

👉 It has a price
👉 It has liquidity

PRICE

Price represents agreement.

→ Someone is willing to buy
→ Someone is willing to sell

Without participants, price has no practical meaning.

LIQUIDITY

Liquidity is the ability to enter and exit the market.

→ Quickly
→ Efficiently
→ Near the current market price.

Without liquidity, price is only a number.

If you can’t enter — it’s a problem.
But if you can’t exit — it’s a catastrophe.

PRACTICAL_EXAMPLE

Imagine a rare item.

It has a price. But no one wants to buy it.

Technically, it has value.
But practically — you can’t sell it.

ASSET_TYPES

An asset doesn’t have to be tangible.

It can be:
→ Bitcoin
→ Stocks
→ Oil
→ Gold

But also:
→ Contracts
→ Derivatives
→ Even abstract financial constructs

If it has price and liquidity — it can be traded.

THE_MENTAL_SHIFT

Professional traders do not trade Bitcoin, Gold, Oil…

They trade price movement.

The underlying asset is secondary. Movement is what creates opportunity.

ABSTRACTION

This is why trading sometimes seems strange. As if people are trading “nothing”.

But in reality, they are trading:
👉 Expectations
👉 Perceived value
👉 Future demand

THOUGHT_EXPERIMENT

Imagine a new asset called “Air” appears tomorrow.

A contract for clean air.

If millions of people start buying and selling it — a market is born instantly. And traders will follow.

Because the essentials are there:
👉 price
👉 liquidity
👉 movement

CONCLUSION

Imagine a new asset called “Air” appears tomorrow.

Where price stands still — there is no trader.
And where there is a market — there is profit.

NEXT_PHASE

Now you understand what is being traded.

The next question is: Does price always need to rise to create opportunity?
Or can movement in either direction be traded?