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trading

Buying and selling an asset over days, hours or minutes to profit from price moves, as opposed to holding it for years.

Trading is buying and selling an asset over a relatively short period to seek profit from price changes. It can last minutes, hours, or days, unlike investing, which usually involves holding for years.

A trade has an entry, an exit plan, and costs such as the spread and fees. A price move can go either way, so a plan and a small practice account help make decisions easier to review.

Trading is a skill to study, not a reliable source of income. Even a careful plan can lose money.

Example

Nora uses a $10,000 practice account to study a made-up Northwind Foods share. She enters at $20 per share and plans to exit if it reaches $22 or falls to $19.

If the price reaches $22, the price gain is $22 − $20 = $2 per share. If it reaches $19, the price loss is $20 − $19 = $1 per share. For 10 shares, those outcomes are +$20 or −$10 before costs. This example shows how a trading plan defines outcomes; it does not predict which one will happen.

Common mistakes

  • Confusing short-term trading with long-term investing.
  • Counting a price move while ignoring spread and fees.
  • Treating a planned outcome as a forecast.
  • Most people who trade lose money.

Learn it in the course