Trading Basics
Complete training to understand the fundamentals of trading and start on the right foot
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1. Introduction to Trading
What is Trading?
Trading is the act of buying and selling financial instruments with the aim of making a profit. Unlike long-term investing, trading focuses on shorter time horizons, ranging from a few seconds to several months.
The 3 pillars of successful trading:
- Analysis: Technical and/or fundamental
- Risk management: Capital protection
- Psychology: Discipline and emotional control
Difference between Trading and Investment
Trading
- Short term (seconds to months)
- Technical analysis priority
- Profits from fluctuations
- Daily active management
- Leverage often used
Investment
- Long term (years)
- Fundamental analysis priority
- Capital growth
- Passive management
- Little or no leverage
2. Financial Markets
Major Markets
📈 Stock Market
- Ownership shares in companies
- Exchanges: NYSE, NASDAQ, Euronext
- Hours: Defined sessions (9:30am-4pm EST for NYSE)
- Possible dividends
💱 Currency Market (Forex)
- Currency exchange (EUR/USD, GBP/JPY...)
- World's largest market: $7.5 trillion/day
- Open 24/7, 5 days a week
- High leverage available
🌾 Futures Market
- Forward contracts on indices, commodities
- CME, ICE, Eurex
- Standardized and regulated
- Popular among prop firms
🪙 Cryptocurrency Market
- Bitcoin, Ethereum, altcoins
- 24/7/365 market
- Very volatile
- Decentralized (CEX and DEX)
Major Trading Sessions
💡 Tip: Session overlaps (London-New York: 13h-17h UTC) offer the best liquidity
3. Types of Tradable Assets
Spot Assets (Cash)
- Stocks: Apple, Tesla, Amazon
- ETFs: SPY, QQQ, VTI
- Forex Spot: EUR/USD, GBP/JPY
- Cryptos: BTC, ETH, SOL
- Commodities: Gold, Silver (physical)
Derivative Products
- Futures: ES (S&P 500), NQ (Nasdaq)
- Options: Calls and Puts
- CFDs: Contracts for Difference
- Warrants: Options issued by banks
- Forex Forward: Currency forward contracts
🎯 For Prop Firms
Most prop firms focus on:
- Index futures: ES, NQ, YM (Dow Jones)
- Major forex: EUR/USD, GBP/USD, USD/JPY
- Gold and oil: GC (Gold), CL (Crude Oil)
4. Order Types
Basic Orders
Market Order
Immediate execution at the best available price
- ✅ Advantage: Guaranteed execution
- ❌ Disadvantage: Price not guaranteed (slippage possible)
Limit Order
Execution only at specified price or better
- ✅ Advantage: Guaranteed price
- ❌ Disadvantage: Execution not guaranteed
Stop Loss (SL)
Protective order to limit losses
- Triggers when price reaches an unfavorable level
- Becomes a market order once triggered
- ⚠️ ESSENTIAL for risk management
Take Profit (TP)
Order to secure profits
- Triggers when price reaches the target
- Allows automatic exit with profit
- Avoids greed and reversals
Advanced Orders
OCO (One Cancels Other)
Two linked orders, execution of one cancels the other
Trailing Stop
Stop loss that automatically follows favorable price movement
Stop Limit
Stop that becomes limit order (not market)
Iceberg Order
Shows only part of the total quantity
5. Reading Charts
Chart Types
📈 Line
- Simple and clear
- Closing price only
- Good for general trend
📊 Bars
- OHLC (Open, High, Low, Close)
- More information
- Trading standard
🕯️ Japanese Candlesticks
- Most popular
- Clear visual patterns
- Market psychology
Timeframes
Short Term
1min (M1), 5min (M5), 15min (M15), 30min (M30)
→ Scalping, Day Trading
Medium Term
1h (H1), 4h (H4), Daily (D1)
→ Swing Trading
Long Term
Weekly (W1), Monthly (MN)
→ Position Trading, Investment
Key Elements of a Candlestick
- Body: Area between open and close
- Green/White: Close > Open (bullish)
- Red/Black: Close < Open (bearish)
- Wicks/Shadows: Lines showing the extremes
- Volume: Quantity traded (often at bottom of chart)
6. Essential Terminology
Basic Vocabulary
Bull/Bullish: Upward, optimistic
Bear/Bearish: Downward, pessimistic
Long: Buy position (betting on price rise)
Short: Sell position (betting on price fall)
Spread: Difference between buy and sell price
Pip: Smallest price movement (Forex)
Tick: Smallest price movement (Futures)
Leverage: Financial leverage
Margin: Required margin for a position
Equity: Total account capital
Performance Terms
P&L (Profit & Loss): Profits and losses
Drawdown: Maximum loss from a peak
Risk/Reward (R:R): Risk/reward ratio
Win Rate: Percentage of winning trades
Profit Factor: Total gains / Total losses
7. Brokers and Platforms
Broker Types
Market Maker
- Creates its own market
- Fixed spreads
- May trade against you
- Low minimum deposits
ECN/STP
- Direct market access
- Variable spreads
- No conflict of interest
- Commissions on trades
Popular Platforms
MetaTrader 4/5
Most popular for Forex and CFDs
- ✅ Free, many indicators
- ✅ Expert Advisors (robots)
- ❌ Outdated interface
TradingView
Modern web platform
- ✅ Modern interface, cloud-based
- ✅ Active community
- ❌ Limited free version
NinjaTrader
Futures specialized
- ✅ Excellent for futures
- ✅ Advanced backtesting
- ❌ Learning curve
8. Capital and Leverage
Starting Capital
Required capital depends on your approach:
- Forex: Minimum $500-1000 (with leverage)
- Stocks: $5000-25000 (PDT rule in USA)
- Futures: $5000-10000 minimum
- Cryptos: $100 possible
- Prop Firms: $100-600 for a challenge
Understanding Leverage
Leverage amplifies your positions:
Example with 1:100 leverage
- Capital: $1000
- Buying power: $100,000
- +1% on market = +$100 (+10% on your capital)
- -1% on market = -$100 (-10% on your capital)
⚠️ Leverage Warning
- Double-edged sword: amplifies gains AND losses
- Can lead to total capital loss
- Beginners: start with low leverage (1:10 max)
- Always use a stop loss
Capital Management
Golden Rules
- 1-2% Rule: Never risk more than 1-2% per trade
- Diversification: Don't put all eggs in one basket
- Survival capital: Keep 6 months of expenses in savings
- Cold money: Only trade with what you can afford to lose
- Reinvestment: Compound your gains gradually
9. Your First Practical Steps
Action Plan for Beginners
Education (1-3 months)
- Read this guide and our other training courses
- Watch educational YouTube videos
- Follow experienced traders
- Understand basic technical analysis
Demo Account (2-6 months)
- Open a free demo account
- Practice without risking real money
- Test different strategies
- Keep a trading journal
Micro Real Account (3-6 months)
- Start with $100-500
- Trade micro-lots
- Focus on process, not profits
- Strictly follow risk management
Prop Firm Challenge
- Once profitable in demo
- Attempt a prop firm challenge
- Access to more capital
- Develop discipline
Recommended Resources
📚 Essential Books
- "Market Wizards" - Jack Schwager
- "Trading in the Zone" - Mark Douglas
- "Technical Analysis" - John Murphy
🛠️ Free Tools
- TradingView (charts)
- Investing.com (news)
- Myfxbook (journal)
✅ Beginner's Checklist
- Understand financial markets
- Know order types
- Know how to read charts
- Master terminology
- Demo account opened
- Basic strategy defined
- Risk management understood
- Trading journal ready
🎯 Congratulations!
You now have the essential basics to start your trading journey. The path will be long and sometimes difficult, but with discipline, patience and continuous learning, you can succeed.
⚠️ Important Reminder: Trading involves high risks. Never trade with money you cannot afford to lose. This training is educational and does not constitute financial advice.
Important Warning
The information presented on this page is provided for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or trading incentives. Trading carries significant risks of financial losses. Past performance is not indicative of future results. We strongly encourage you to properly educate yourself, practice on a demo account, and never invest more than you can afford to lose. Consult a professional financial advisor before making any investment decision.
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