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
- Trading vs investing: two different games · Holding for years and trading for days are different games with different risks, and someone is always on the other side.
- A one-page trading plan · Write five things on one page before you trade: what you trade, when you enter, where you exit, how big you go and when you do not trade at all.
- A momentum gauge and the overbought myth · See what a 0–100 momentum gauge actually measures, compute one by hand, and watch a "too high" reading stay high for weeks while the price keeps rising.
- Candles and timeframes · Read one candle in a few seconds, and see how a calm week can hide one frightening day.
- Fear, greed, hope and revenge trading · Name the four feelings that move a hand to the button and see how loss aversion turns a 60% win rate into a loss.