Trading refers to the buying and selling of goods. Many medieval towns and cities became well known trading centres, some for specific types of goods, but the nature of trade allows many types of goods to be exchanged.
Objects that came from further away demanded higher prices to cover costs and objects in high demand but short supply would support a higher price as people paid to obtain said item.
A trade is a business or occupation that is undertaken by an individual or group for the purpose of profit. Trades might include smithing, fishing, tanning etc.
Trade in the SCA
In the SCA a trade may refer to the bartering of goods.
Often people will trade items based one their cost and the time it took to make. So, for example, you might be good at leatherwork and your friend might be good at sewing. You buy a tabard from your friend for the cost of materials and the time it took to make. The other person can then "use" the time you paid to have a new leather belt made (plus the cost of materials of course).