Introduction to Trading: Trading can feel like stepping into a whole new world — charts moving every second, numbers flashing, and markets that never seem to sleep. But at its core, trading is simple: it’s the act of buying and selling financial assets to make a profit.

This first lesson will give you the big picture: what trading is, how it’s different from investing, and the different markets you can trade.

1. What Is Trading?

At its most basic, trading is about taking advantage of price changes.

If you think the price of something will go up, you buy it (also called going long).
If you think the price will go down, you sell it (also called going short).

Your goal as a trader is to make money from those price movements, whether they’re small (minutes or hours) or larger (days or weeks).

2. Trading vs. Investing

Many people confuse the two, so let’s clear it up:

Investing → Long-term. Investors buy assets (like stocks) and hold them for years, expecting growth over time.
Trading → Short- to medium-term. Traders buy and sell more frequently, aiming to profit from short-term moves in price.

Think of it like this:

Investors are marathon runners (slow and steady).
Traders are sprinters (fast, reactive, and focused on short bursts).

3. What Can You Trade?

There isn’t just one market. Traders can choose from several, depending on their interests and goals:

Stocks → Shares of companies like Apple, Amazon, or Tesla.
Forex (foreign exchange) → Currency pairs like GBP/USD or EUR/JPY. The forex market is the largest in the world.
Commodities → Physical goods like gold, oil, or wheat.
Indices → Groups of stocks that represent a market, like the FTSE 100 or S&P 500.
Cryptocurrencies → Digital assets like Bitcoin or Ethereum.

Each market has its own pros and cons. For example, forex runs 24 hours a day, while stock markets open and close at set times.

4. Why Do People Trade?

Profit Potential → Traders aim to make money from rising and falling prices.
Flexibility → You can trade part-time or full-time. Many traders start while still working another job.
Accessibility → With online brokers, anyone with an internet connection can start trading.

But here’s the truth: trading is not a get-rich-quick scheme. It takes knowledge, discipline, and practice.

5. The Risks You Need to Know

Trading is exciting, but it comes with real risks:

You can lose money just as quickly as you can make it.
Leverage (borrowing money to trade bigger positions) can magnify both profits and losses.
Emotional decisions (fear, greed, impatience) often hurt traders more than bad strategies.

The most important lesson? Only trade with money you can afford to lose.

6. Key Takeaway

Trading is the art of buying and selling assets for profit over shorter time frames than traditional investing. It offers opportunity, but also risk. Before you dive deeper, you need to understand the markets, tools, and mindset that successful traders rely on.

Understanding the Markets

Now that you know what trading is, it’s time to explore where you can trade. There isn’t just one single market — there are many. Each has its own personality, risks, and opportunities.

By the end of this lesson, you’ll know the main markets traders focus on, and you’ll start to see which one might suit you best.

1. The Main Markets You Can Trade

Stocks (Equities)

Buying and selling shares of companies like Apple, Microsoft, or Tesla.
Profit comes from stock prices going up (or by shorting when they fall).
Why trade stocks? → Clear information, strong regulation, and opportunities around company news (earnings reports, product launches).
Best for → People who like following businesses and big-name companies.

Forex (Foreign Exchange)

The largest market in the world — over $6 trillion traded daily.
You trade one currency against another, like GBP/USD or EUR/JPY.
Profit comes from predicting if one currency will strengthen or weaken against the other.
Why trade forex? → Open 24 hours a day, highly liquid, and great for short-term trades.
Best for → People who like fast-moving markets and global economic news.

Commodities

Includes things like gold, silver, oil, wheat, or coffee.
Often used as “safe havens” (gold in uncertain times).
Why trade commodities? → Great for diversifying beyond currencies and stocks.
Best for → Traders who like following global events (like oil supply cuts or weather affecting crops).

Indices

Groups of stocks are bundled together. Example:
- FTSE 100 → 100 biggest UK companies.
- S&P 500 → 500 biggest US companies.
Trading indices means betting on how the whole market will perform, not just one company.
Why trade indices? → Less risky than single stocks, but still track big economic trends.
Best for → People who want broad exposure without picking individual companies.

Cryptocurrencies

Digital assets like Bitcoin, Ethereum, and Ripple.
Tradeable 24/7, no closing hours.
Very volatile — prices can swing massively in hours.
Why trade crypto? → High potential returns, exciting new asset class.
Best for → Traders who don’t mind high risk and want something more speculative.

2. How to Choose Your Market

When deciding where to start, ask yourself:

Do I like following companies, currencies, or global news?
Do I prefer slow and steady (stocks/indices) or fast and volatile (forex/crypto)?
What trading hours fit my lifestyle? (Forex is 24/5, crypto is 24/7, stocks have set hours).

There’s no “best” market. The right one depends on your personality, time, and risk tolerance.

3. Key Takeaway

Each market has its rhythm:

Stocks → Company-focused.
Forex → Currency battles.
Commodities → Driven by supply/demand.
Indices → Reflecting economies.
Crypto → High-risk, high-reward.

The important part is not to trade everything at once. Start with one market, learn its patterns, and build from there.

How Trading Works

So far, you know what trading is and the different markets you can dive into. Now let’s look at the mechanics — how trading works in practice.

This lesson will take you through the journey of a trade, from setting up with a broker to closing your position.

1. The Role of a Broker / Trading Platform

You can’t just walk into the stock exchange and shout, “I’ll buy 10 shares of Tesla!” — you need a middleman. That’s your broker.

Broker / Platform → An online service or app that connects you to the markets.
Examples: eToro, IG, MetaTrader, TradingView (for charting + brokers).
They handle your orders (buy/sell) and give you tools like charts, price feeds, and account management.

2. Placing a Trade

When you open your broker app, you’ll see options like Buy and Sell.

Buy (Long) → You think the price will go up.
Sell (Short) → You think the price will go down.

Your profit or loss depends on whether your prediction is right.

3. Order Types

Not every trade is placed instantly — there are different ways to enter the market.

Market Order → Instantly buys/sells at the current price.
Limit Order → Buys/sells only if the price reaches a level you choose.
Stop Order → Triggers when price passes a certain point, often to cut losses (Stop-Loss).

Think of it like shopping online:

Market Order = “Buy now.”
Limit Order = “Only buy if it’s on sale at my price.”
Stop Order = “Cancel my purchase if the price runs away.”

4. Closing a Trade

A trade isn’t complete until you close it.

If you opened a Buy, you close with a Sell.
If you opened a Sell, you close with a Buy.

That’s when your profit (or loss) is locked in.

5. The Costs of Trading

Trading isn’t free — here are the common costs:

Spread → The small difference between buy and sell price (built-in broker fee).
Commission → Some brokers charge a small fee per trade.
Swap/Overnight Fees → If you hold a trade overnight, you might pay interest.

6. A Simple Trade Example

Let’s imagine:

You open a Buy trade on GBP/USD at 1.2000.
Price rises to 1.2050.
You close the trade.

Result: 50 pips of profit (pips = tiny price movements in forex).
If your position size = £1 per pip, that’s £50 profit.

7. Key Takeaway

Trading works through brokers that connect you to markets. You open trades (buy/sell), manage them with orders, and close them to secure results. Along the way, you pay small costs like spreads or commissions.

The foundation is simple: decide your direction, enter, and exit wisely.

Reading Price Charts

A chart is a trader’s map. It shows where the market has been and gives clues about where it might go next. In this lesson, you’ll learn how to read charts, understand candlesticks, and spot basic patterns.

1. What Is a Price Chart?

A price chart is a visual representation of how an asset’s price has moved over time. It tells the story of buyers and sellers battling it out.

The horizontal axis (X-axis) = Time (minutes, hours, days).
The vertical axis (Y-axis) = Price.

2. Types of Charts

Line Chart → Connects closing prices with a line. Clean but very simple.
Bar Chart → Shows the open, high, low, and close.
Candlestick Chart → The most popular for traders — each candle shows open, close, high, and low in a compact way.

3. The Candlestick Explained

Each candlestick represents a period (1 minute, 1 hour, 1 day, etc.).

A candle has 4 key parts:

Open → Price at the start of the period.
Close → Price at the end of the period.
High → Highest price reached during that period.
Low → Lowest price reached during that period.

Colors matter:

Green (or White) = Price went up (bullish).
Red (or Black) = Price went down (bearish).

4. Candlestick Patterns (The Basics)

Candlesticks don’t just show price — they reveal psychology.

Bullish Candle (Green) → Buyers were stronger.
Bearish Candle (Red) → Sellers were stronger.
Doji → Open and Close are nearly the same. Market indecision.

5. Timeframe

Charts can be viewed on different timeframes:

1 Minute (M1) → Each candle = 1 minute. Good for scalping.
1 Hour (H1) → Each candle = 1 hour. Popular for day trading.
1 Day (D1) → Each candle = 1 day. Great for swing trading or long-term analysis.

Same asset, different timeframe = completely different perspective.

6. Support and Resistance (The Market’s Boundaries)

Support → A price level where buyers step in and push the price up (a “floor”).
Resistance → A price level where sellers push price back down (a “ceiling”).

These levels help traders spot potential entry and exit points.

7. Key Takeaway

Charts are the trader’s language. By learning to read candlesticks and spot support and resistance, you’re no longer blind — you can see the market’s rhythm.

Don’t worry about memorising dozens of patterns right now. Start with the basics: bullish, bearish, doji, support, and resistance. That foundation alone will put you ahead of most beginners.

Key Trading Concepts

By now you know what trading is, how it works, and how to read charts. Next, you need to understand the nuts and bolts — the terms that come up every time you place a trade. These concepts might sound technical at first, but once you get them, they’ll feel second nature.

1. The Spread

The spread is the difference between the buy price and the sell price of an asset.

Brokers add a small markup so they make money even when you win.
The tighter the spread, the cheaper it is to trade.

2. Pips

A pip (short for percentage in point) is the unit of measurement for price moves in forex.

In most pairs, 1 pip = 0.0001.
Example: EUR/USD moves from 1.2000 → 1.2005 = 5 pips.

Think of pips as the “points” traders count their profits and losses in.

3. Leverage

Leverage means borrowing from your broker so you can control bigger trades with less money.

Example: With 1:100 leverage, £100 of your money controls £10,000 worth of currency.
Sounds powerful (and it is), but leverage magnifies both profits and losses.

4. Margin

Margin is the amount of your money set aside to open and maintain a leveraged trade.

If you’re trading £10,000 with 1:100 leverage, your broker may require only £100 margin.
If your account drops below the required margin, you can face a margin call (your broker closes your trades to protect themselves).

5. Lot Size

Trades are measured in lots in forex:

Standard Lot = 100,000 units.
Mini Lot = 10,000 units.
Micro Lot = 1,000 units.

Most beginners trade micro or mini lots to manage risk.

6. Stop-Loss and Take-Profit

These are protective tools every trader must use:

Stop-Loss → Automatically closes a trade if it hits a loss level you set.
Take-Profit → Automatically closes a trade when it reaches your target profit.

They keep you disciplined and protect your account from emotional mistakes.

7. Risk-to-Reward Ratio

This tells you how much you’re risking compared to how much you hope to gain.

Example: Risking £50 to make £150 = 1:3 ratio.
Good traders look for trades where the potential reward is bigger than the risk.

8. Key Takeaway

Trading isn’t just about predicting direction — it’s about understanding the mechanics.

The spread, pips, and lot sizes measure the market.
Leverage and margin decide your power (and danger).
Stop-Loss, Take-Profit, and risk-to-reward keep you safe.

Master these concepts and you’ll stop trading blind — you’ll know exactly what each trade means for your money.