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Trading 111

Trading 111: The Basics

Trading is simply the act of buying and selling financial assets — like stocks, currencies, commodities, or crypto — with the goal of making a profit. Sounds simple, but the how and why can get complicated fast. This guide will walk you through the core building blocks.

1. What is Trading?

  • Investing vs Trading:
    • Investing is long-term — buying and holding for years.
    • Trading is short- to medium-term, looking to profit from price moves over hours, days, or weeks.
  • Traders use price changes in the market to make gains.

2. The Markets You Can Trade

  • Stocks → Buying and selling shares of companies like Apple or Tesla.
  • Forex (foreign exchange) → Trading currency pairs like EUR/USD or GBP/JPY.
  • Commodities → Gold, oil, silver, wheat, etc.
  • Indices → Groups of stocks, like the S&P 500 or FTSE 100.
  • Crypto → Digital assets like Bitcoin and Ethereum.

Each market has its own style, risk, and trading hours.

3. How Trading Works

Trading usually happens on a platform or broker app. Here’s the flow:

  1. You deposit funds with a broker.
  2. You pick an asset (say GBP/USD).
  3. You decide whether the price will go up (buy/long) or go down (sell/short).
  4. You open the trade and later close it to lock in a profit (or loss).

4. Key Concepts Every Beginner Must Know

  • Price Chart → Shows how the price has moved over time.
  • Candlesticks → A type of chart that shows open, close, high, and low prices.
  • Spread → The small cost between the buy and sell price.
  • Leverage → Borrowing from your broker to open bigger trades (powerful, but risky).
  • Margin → The money you need in your account to open a leveraged trade.

5. The Trader’s Toolkit

  • Technical Analysis → Reading charts and indicators (moving averages, RSI, MACD, etc.).
  • Fundamental Analysis → Studying news, earnings reports, or economic events.
  • Risk Management → Setting stop-loss orders, managing position sizes, and never risking more than you can afford.

6. The Mindset

Trading isn’t just numbers — it’s psychology. Greed, fear, and impatience can ruin even the best plan. The best traders stay disciplined, keep emotions in check, and follow their strategy.

7. The Golden Rule

There is no guaranteed profit. Every trade carries risk. The goal is to manage that risk so that, over time, your wins are bigger than your losses.

That’s your foundation. Trading 111 is about learning the language of the markets. Once you understand these basics, you can start diving into strategies and practice with demo accounts.

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