What Is Trading?

Trading means buying and selling financial instruments — stocks, currencies, crypto, commodities — to profit from price movements. That's the one-sentence version. This lesson unpacks what that actually looks like, how money is made (and lost), and the markets available to you. It includes two interactive quizzes — stick around to the end.

Trading vs. Investing

Both involve buying financial instruments, but the timeframe is fundamentally different. An investor buys shares of a company and holds them for months or years, betting that the business will grow over time. A trader buys and sells over much shorter periods — minutes, hours, days, or weeks — profiting from price movements regardless of the company's long-term prospects.

Neither approach is inherently better. Investing is simpler and requires less active decision-making. Trading demands more skill, more attention, and more discipline — but offers the ability to profit in both rising and falling markets.

How Money Is Made (and Lost)

The basic mechanic is straightforward. You buy something at one price and sell it at a higher price. The difference is your profit. If the price drops instead, you sell at a loss — or hold and hope, which is usually worse.

Trading also allows you to sell first and buy back later — this is called going “short.” If you believe a stock's price will fall, you can profit from that decline. This means traders can make money whether markets go up or down, provided they read the direction correctly.

Every trade comes down to three decisions:

1. When to enter — at what price and under what conditions do you open a position?
2. When to exit — at what price do you take profit, and at what price do you cut your loss?
3. How much to risk — what portion of your account is on the line?

Everything else you'll learn in this course — chart patterns, indicators, risk management — serves these three decisions. That's worth remembering when things start to feel complicated.

The Five Markets

There are five major markets that individual traders can access. Each has different characteristics, trading hours, and minimum requirements.

Stocks — Shares of individual companies like Apple, Tesla, or Nvidia. The most familiar market for most people. US stock exchanges are open roughly 9:30 AM – 4:00 PM Eastern time on weekdays. Stocks give you exposure to specific companies whose products and brands you already know.

Crypto — Bitcoin, Ethereum, and thousands of other digital assets. The crypto market is open 24 hours a day, 7 days a week. It's highly volatile — prices can move 5-10% in a single day — and there's no minimum account size. You can start trading crypto with as little as $10.

Forex — Foreign currency pairs like EUR/USD or GBP/JPY. Forex is the largest financial market in the world by daily volume, open 24 hours on weekdays. It attracts traders who like clean charts and macro-driven price movements. Currencies tend to move less violently than crypto but more consistently than stocks.

Indices & ETFs — Instruments that track a basket of stocks, like the S&P 500 (SPY) or Nasdaq 100 (QQQ). Instead of betting on one company, you're betting on the broad market direction. They're less volatile than individual stocks, which makes them more forgiving for beginners.

Commodities — Physical goods like gold, crude oil, natural gas, and agricultural products. Gold in particular is popular with chart-focused traders because it responds to global economic events and tends to have clean, trending price movements.

You don't need to pick a market right now. In fact, it's better not to — spend time learning the fundamentals first, then choose based on what fits your schedule, personality, and interests.

Key Takeaways

• Trading is buying and selling to profit from price movements — over shorter timeframes than investing.
• Every trade is three decisions: when to enter, when to exit, how much to risk.
• Five markets are available to you — stocks, crypto, forex, indices, and commodities. Each suits different schedules and personalities.

Now that you know what trading is and what markets exist, the next lesson covers the tool you'll use to analyze all of them: the candlestick chart.