From the FAQ:
Encounter Sequence
When characters choose to encounter a space, they must resolve the encounter in the order listed below. If a character is moved to a different space any time during the encounter, he continues with a new encounter in the new space. Exception: If a character is defeated during a battle or psychic combat and is forced to move to a new space, he cannot encounter the new space and his turn immediately ends.
1. If the space has instructions to draw cards (see Encountering A Space Draw Cards Spaces on page 9 in the main games rulebook), the character must follow the instructions on the space first.
2. Any cards in the space without an encounter number (such as the Hex Spell) must be encountered.
3. Any Events in the space must be encountered. Note that an Event that lasts more than one turn remains on the space as a reminder, and still counts as a card on that space. If a character encounters the Event again, the effect does not reset and last for additional turns.
4. Any Enemies in the space with an encounter number of 1 must be encountered. If all of the Enemies are killed or evaded the character continues to the next step, otherwise his turn ends.
5. Any Enemies in the space with an encounter number of 2 must be encountered. If all of the Enemies are killed or evaded the character continues to the next step, otherwise his turn ends.
6. Any Enemies in the space with an encounter number of 3 must be encountered. If all of the Enemies are killed or evaded the character continues to the next step, otherwise his turn ends.
7. Any Strangers must be visited.
8. Any gold, Followers, and Objects may be taken.
9. Any Places must be visited.
10. If the space does not have instructions to draw cards, the character must follow the instructions for the space.
As for trading, I don't believe you are allowed to trade unless a card permits you to. But, you can house rule that easily if you prefer.