Definition
to purchase an item, often a house or car, that is either more expensive or less costly than what you currently possess
They decided to sell their old car and then purchase a new luxury sedan, referring to the process as trading up.
Due to the poor economy, they opted to trade down from their large house to a smaller apartment, which is what they referred to as trading down.
In the market, people often decide to trade up or down their homes to meet their current needs.