Start with one simple idea: prices move because buyers and sellers react to new information. A trade is your decision to Buy or Sell based on where you think the price may go.
Trading in simple terms
Trading means choosing a market, deciding whether you think its price may rise or fall, and opening a position based on that view. If the market moves in the direction you expected, the trade may gain value. If it moves the other way, you may lose money. Trading always involves risk.
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What can you trade?
You can trade different types of markets, such as currencies, shares, indices and commodities. Each market moves for different reasons, so beginners are better off learning one market at a time.
- Forex
- Shares
- Indices
- Commodities
- ETFs
- Bonds
Trading vs investing
Trading usually focuses on shorter-term price movements. Investing usually means owning an asset for a longer period. Both involve risk, but the goals and timeframes are different.
Trading
Focuses on price movement over shorter timeframes. Derivative positions may not involve ownership of the underlying asset.
Investing
Typically involves owning an asset and holding it for a longer period, with returns linked to its long-term performance.
How does a trade work?
Most trades follow the same basic flow: choose a market, choose Buy or Sell, choose your trade size, open the trade, then close it later. Prices can move because of news, economic data, company results, interest rates, and changes in supply and demand.
Buy vs Sell
Choose Buy when you think the price may rise. Choose Sell when you think the price may fall. In trading, Buy is also called going long, while Sell is also called going short.
Buy vs Sell
Buy (long)
You think the price may rise.
Sell (short)
You think the price may fall.
Simple risk checklist
- Decide how much you can risk
- Know when you will exit
- Understand leverage before using it
- Check for major market news
- Remember spreads and other costs
Remember
Trading can result in losses. Learn the product, use sensible risk limits and practise before using real funds.
How should a beginner start?
Do not rush into a live trade. Learn the basic words first, focus on one market, practise in a demo account and build a simple routine before using real funds.
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Learn Buy and Sell
Understand what it means when you expect a price to rise or fall.
Choose one market
Focus on one market first so there is less information to learn at once.
Practise with a demo
Learn how to open and close a trade without using real funds.
Learn basic risk controls
Set a trade size and decide how much loss you are prepared to accept before entering.
Review and keep learning
Look back at what happened and use it to improve your next decision.
Managing trading risk
Risk cannot be removed from trading. Start small, understand leverage, decide your maximum acceptable loss and avoid risking money you cannot afford to lose.
Who moves market prices?
Market prices change when many buyers and sellers act. Individuals, banks, companies and investment firms can all take part, but a beginner only needs to remember that more buying can push prices up and more selling can push prices down.