Trading Basics
What is trading?
It's probably wise to kick
things off with a
definition of the topic
we'll be discussing. A
staple of economics,
trading simply refers to
the buying and selling of
assets. When you buy
your groceries at the
local shop, that's a trade. When you exchange your old PC for a new game
console, that's a trade. We could go on forever here. To cut a long story
short, any activity where you give something to someone in return for
something else is a trade.
This principle really extends to the financial markets. You trade financial
assets like stocks, bonds, Forex pairs, options, cryptocurrencies, etc. Don't
worry if you don't know what any of those are yet. By the end of this book,
you'll be an expert!
What is investing?
You might hear people talking about trading financial instruments, but you
might also hear them talking about investing in them. The aim in both of
these activities is similar (let's make some monaaay!), but they're
somewhat different in their methodologies.
When you invest in something, you're hoping to get a return on that
investment – the goal is to get back the money you put in, plus some
more. For example, you could buy a run-down fast food restaurant for
$100,000, fix it up, and try to resell it for $500,000 in a few years. You
5
