1.1 What is Trading?

Trading is the process of buying and selling financial assets in the markets in order to profit from price movements. Unlike long-term investing, where assets are held for years, traders look for short-term opportunities - from seconds to a few days.

Examples:

• Buy BTC at $30,000 → sell at $31,000 → profit $1,000
• You short EUR/USD at 1.1000 → you close at 1.0900 → profit 100 pips

For beginners, the concept of shorting can seem very confusing "How do you sell and make money" this is because unlike traditional investing, in trading you can participate in both directions of the market (for the types of trends you can check our site), that is, when your analysis whether technical or fundamental shows a downtrend you can open a short position thus betting that the price will fall.

How does Short work?

• You borrow the asset from someone else (for example a broker).
• You sell it immediately at the current market price.
• When the price drops, you buy it back lower.
• You return the asset to whoever you borrowed it from.
• The difference between the higher selling price and the lower buying back price is your profit.

Example:

• Price per share: 100 USD.
• You sell "short" 1 share → you get 100 USD.
• After a while the price drops to 70 USD.
• You buy back the same share for 70 USD.
• Profit: 100 - 70 = 30 USD

Risks:

• If the price goes up instead of down, you lose money.
• Eg: If the share jumps to 150 USD, you have to buy it back more expensive → loss of 50 USD.
• Theoretically you can lose unlimitedly because the price can rise infinitely.

1.2 Basic concepts in trading

Asset:

• It is a traded financial product (currency pair, cryptocurrency, stock, index, commodity).

Spread:

• the difference between "buy" and "sell" price here is important when choosing a broker to review the spreads, between different brokers the spreads are different.

Leverage:

• Leverage is a nice tool but it is very important to be careful with it! It allows traders to trade with more capital than they have available, in it the broker lends the trader in order to increase potential profit. Profits with leverage are much greater but so are losses.

Example:

• You have 100$ and you use 10:1 leverage, out of 100$ you get 1000$ for the trade ( 100$ is your 900$ is the loan from the broker)
• The price rises 5%-you make a 5% profit on $1000 which is $50($100+$50=$150 which is a $50 profit)
• Price drops 5%-loss of 5% on $1000 is $50 ( $100-$50=$50 which is a $50 loss)

Bid and Ask (Bid/Ask):

• Bid - the price at which the market wants to buy.
• Ask - the price at which the market sells.
• The difference between them is called the spread - this is the "hidden" price you pay.

Order:

• Instructions to the broker to buy or sell.
• Market order - buy/sell immediately at the market price..
• Limit order - only executed at a certain price.
• Stop-loss / Take-profit - automatic close on loss or profit.

Long and Short (Long/Short):

• Long position - you buy expecting the price to rise.
• Short position - you sell (borrow), expecting the price to fall.

Margin:

• The money you have to put up as collateral when you use leverage.

Pips and Lots:

• Pips - the smallest price movement in forex (e.g. 0.0001).
• Lots - standard trading volume. 1 lot= 100,000 units of currency in forex.

Volatility:

• How fast and how much the price of an asset changes.
• High volatility= greater risk but also opportunities.

Technical analysis:

• Using charts, indicators and models to forecast price movements.
• Example indicators: candlesticks, support and resistance, RSI, Moving Average, etc.

Fundamental analysis:

• Analyzing economic and news data that affect prices.
• For example: inflation, interest rates, financial reports, news.

Portfolio:

• The collective of all your investments or positions.

Risk management:

• Strategies for limiting losses.
• For example: using stop-losses, position sizing, not risking more than 1-2% of capital on a trade.

1.3 Difference between trading and investment

Trading is short term ( 1 minute to 1 day) price speculation, it carries high risks, to arrive at an informed trade technical analysis is done ( in the following courses you can see the basics of technical analysis) as well as fundamental.

Investing on the other hand is more long term (3-5 years or more) oriented, the risks are lower, Fundamental analysis is more prominent in this type of market participants, patience is key to achieving goals.

1.4 Types of markets

Forex market (Foreign Exchange)

• The largest financial market in the world - over $6 trillion daily volume
• Currency pairs traded - e.g. EUR/USD, GBP/JPY

Cryptocurrencies

• Decentralized digital assets - e.g. Bitcoin, Ethereum
• 24/7 trading
• High volatility

Stocks and indices

• Acquisition of stake in companies (Tesla, Apple)
• Indices - e.g. S&P500, NASDAQ - a collection of companies

Stocks and indices

• Futures, CFDs (Contracts for Difference), options
• Allow speculation without real ownership of the asset

Commodities

• Gold, Oil, Silver, etc.
• Low risk, influenced by economic events ( Wars, financial crises, inflation and recession)

1.5 The psychology behind trading

Trading is not just numbers, charts and strategies. The real challenge is in the mind of the trader. Even the best strategies can fail if the trader does not control his emotions. The psychology of trading is often more important than technical skills.

Fear and greed - the two main forces

• Fear: makes you close a winning position too early or not get into a good deal.
• Greed: makes you hold a losing position hoping it will turn around, or risk too much.
• The result is often the same: losses.

FOMO (Fear of Missing Out)

• This fear of missing out on a "golden opportunity" leads to hasty, ill considered trades.
• It most often happens when the market is moving strongly: everyone is "in", you are too - but it's too late.

Overtrading

• A willingness to trade constantly, even when there are no good opportunities.
• Reasons: boredom, desire for a quick profit or an attempt to "get back" your losses.
• Consequences: exhaustion, losses, loss of discipline.

Losses and revenge (Revenge Trading)

• After a big loss, some traders try to "get their money back" immediately.
• This leads to emotional, impulsive decisions→ more losses.

Discipline and patience

• Discipline is following a strategy even when your emotions tell you otherwise.
• Patience: is waiting for the right opportunity - not jumping in at any price.
• Many traders know what to do, but can't control themselves enough to do it.

Self-confidence versus arrogance

• It's good to believe in your strategy.
• But overconfidence (especially after a few successful trades) can trick you into taking too much risk.

Psychological preparation

• Keep a trading journal - keep track not only of your trades but also of your emotions.
• Practice with a demo account - to build confidence without risk. But remember that when trading with a demo account it is not the psychology that is the key part of trading. You can be extremely successful demo traders and lose money in the real market at the same time, so trade little and consistently until you gain confidence.
• Establish a routine - fixed rules, rituals and trading hours.
• Breaks - because a tired trader is a bad trader.

Conclusion

Winning traders are not those with the most sophisticated strategy, but those who can control themselves. Emotions are natural - the goal is not to eliminate them, but to recognize and manage them.

1.6 Choosing the right broker

Choosing the right broker

Choosing a broker is one of the most important steps for any trader. Even the best strategy will not work well if your broker is unreliable, expensive or restrictive. Here are the main factors to consider when choosing a broker:

Regulation and security

• Make sure the broker is regulated by an official financial authority (for example: ESMA (EU), FCA (UK), ASIC (Australia), BaFin (Germany) etc.).
• Regulation means that the broker operates under certain rules and has protection for its clients.
• Avoid unregulated brokers - there is a risk of fraud and lack of protection for your funds.

Fees and commissions

• Explore:
• Spreads - the difference between the buy and sell price.
• Commissions - whether there is an additional fee for each transaction.
• Withdrawal, inactivity and maintenance fees.
• These costs affect your profit, especially if you trade frequently.

Assets to trade

• Make sure the broker offers the markets you are interested in:
• Stocks, Forex, Cryptos, Commodities, Indices, ETFs, etc.
• Some brokers specialize in certain types of assets.

Trading platform

• Most commonly used platforms
• The platform should be:
• Stable and fast
• Convenient for analysis and charting
• Easy to use

Mobile application and accessibility

• Check if there's a convenient mobile app - especially important if you trade on the go.
• It's also important if there's a web version that works from any device

Leverage and margin conditions

• Different brokers offer different maximum leverage.
• For beginners, lower leverage is recommended to reduce risk.
• Read liquidation terms, margin call terms and other important rules.

Educational resources and support

• The availability of videos, webinars, analysis and articles is a big plus.
• Check if they have fast and adequate customer support - chat, email, phone.
• Read liquidation terms, margin call terms and other important rules.

Minimum deposit and account types

• Some brokers allow you to start with $10-$100, others require more.
• Check if there is a demo account to test the platform risk-free.

Deposit and withdrawal methods

• Make sure the broker supports methods that are convenient for you:
• Bank Transfer, Card, PayPal, Skrill, Revolut, etc.
• Check how long transactions take and if there are any fees.

Reputation and reviews

• Read reviews from real users on sites like Trustpilot, Reddit, trading forums.
• Be wary of brokers with numerous complaints about blocked accounts, delayed withdrawals, etc.

Conclusion

Choosing a broker should be based on security, terms and convenience, not just aggressive advertising or high bonuses. Take the time to research thoroughly - it's an investment in your peace of mind and future success as a trader.

1.7 Types of trading by time frame

Scalping

• Very fast trades - from seconds to a few minutes.
• Goal: small profits from many trades.
• Characteristics:
• High trading frequency.
• Requires fast reaction, stable platform, low spreads.
• Suitable for advanced traders with a lot of time and concentration.

Day trading

• All positions are opened and closed within the same day.
• Purpose: to exploit short-term movements
• No rollover of trades to next day (no overnight risk).
• Requires time, experience and discipline.

Swing trading

• Duration of trades: several days to several weeks.
• Goal: capture the "swing" - a larger movement within a trend.
• Less stressful than day trading, but requires good technical and fundamental understanding.

Position trading

• Long-term deals: weeks to months (even years).
• Almost like investing, but with an active approach.
• Based mainly on fundamental analysis, but often uses technical as well.

1.8 Types of trading by approach

Technical trading

• Using charts, indicators, patterns, volumes etc to make decisions.
• It is based on the principle: "Price includes everything".

Fundamentaltrading

• Based on economic news, reports, events, macroeconomics.
• Often used in forex and stock trading.

Quantum or algorithmic trading

• Automatic trading through bots and algorithms.
• Uses mathematical models and statistics.
• Most common in institutional trading.