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Trading Basics Guide

Trading involves buying and selling financial instruments for short-term profit, distinct from long-term investing. Key concepts include trading terminology, styles, technical analysis tools, and risk management strategies. Beginners are advised to control emotions, continuously learn, and practice with demo accounts before trading with real money.

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18 views2 pages

Trading Basics Guide

Trading involves buying and selling financial instruments for short-term profit, distinct from long-term investing. Key concepts include trading terminology, styles, technical analysis tools, and risk management strategies. Beginners are advised to control emotions, continuously learn, and practice with demo accounts before trading with real money.

Uploaded by

keskurangagao
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Beginner's Guide to Trading

What Is Trading?

Trading is the act of buying and selling financial instruments such as stocks, forex, or cryptocurrencies with

the aim of making a profit. Unlike investing, which is long-term, trading focuses on short-term price

movements.

Common Trading Terminology

- Asset: A tradable item like a stock or currency.

- Market: The environment where trading occurs.

- Buy/Sell: Placing orders to purchase or sell assets.

- Bid/Ask Price: Bid is what buyers want to pay; ask is what sellers want.

- Spread: The difference between bid and ask prices.

- Volume: The number of units traded.

- Liquidity: How easily an asset can be bought or sold.

- Volatility: The degree of price variation.

- Leverage: Borrowed funds to increase trading size.

- Margin: Collateral to open a leveraged position.

- Pips: Smallest price move in forex.

- Bullish/Bearish: Expecting price to rise/fall.

- Support/Resistance: Price levels where price often stops or reverses.

Trading Styles

- Scalping: Very short-term trades for small profits.

- Day Trading: Trades within a single day.

- Swing Trading: Holding positions for days to weeks.

- Position Trading: Long-term holding based on trends.

Technical Analysis Tools

- Candlestick Charts: Visual representation of price movement.

- Moving Averages: Smooth out price data to identify trends.

- RSI: Measures speed of price movements.


Beginner's Guide to Trading

- MACD: Trend-following momentum indicator.

- Trendlines: Lines showing direction of price.

- Fibonacci Retracement: Predicts potential reversal levels.

Candlestick Patterns Explained

- Doji: Indicates indecision in the market.

- Hammer: Bullish reversal signal.

- Shooting Star: Bearish reversal signal.

- Engulfing: Pattern where one candle completely covers the previous.

- Morning Star/Evening Star: Reversal patterns after trends.

Risk Management

- Stop Loss: Limit losses by auto-closing positions.

- Take Profit: Automatically lock in profits.

- Risk-to-Reward Ratio: Compares potential risk vs. reward.

- Position Sizing: Choosing how much to trade to manage risk.

Conclusion & Tips for Beginners

- Control emotions.

- Learn continuously.

- Start with demo accounts before real money trading.

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