#tradingview Lecture 1: Introduction to Trading
What Is Trading?
Trading is the act of buying and selling financial instruments—like stocks, currencies, commodities, or crypto—with the goal of making a profit.
- Investor vs. Trader:
- Investor: Buys and holds assets long-term.
- Trader: Buys and sells frequently to capitalize on short-term price movements.
📊 Types of Financial Markets
Each market has its own dynamics and instruments:
| Market Type | Description | Examples |
|------------------|--------------------------------------------------|----------------------------------|
| Stock Market | Buy/sell shares of companies | NYSE, NASDAQ |
| Forex Market | Trade currencies | EUR/USD, GBP/JPY |
| Commodity Market | Trade physical goods | Gold, Oil, Wheat |
| Crypto Market | Trade digital assets | Bitcoin, Ethereum |
| Derivatives | Trade contracts based on asset value | Options, Futures |
🧩 Key Trading Instruments
- Stocks: Ownership in a company.
- Forex: Currency pairs traded globally.
- Options: Contracts giving the right (not obligation) to buy/sell.
- Futures: Agreement to buy/sell at a future date at a set price.
- ETFs: Bundled assets traded like stocks.
🕰️ Trading Styles
Different traders use different timeframes and strategies:
| Style | Timeframe | Characteristics |
|---------------|-------------------|------------------------------------------|
| Scalping | Seconds to minutes| High frequency, small profits |
| Day Trading | Intraday | No overnight positions |
| Swing Trading | Days to weeks | Captures short-term trends |
| Position Trading | Weeks to months| Long-term trend following |
📚 Basic Terminology
Here are some must-know terms:
- Bid/Ask: Price buyers are willing to pay vs. sellers’ asking price.
- Spread: Difference between bid and ask.
- Volume: Number of shares/contracts traded.
- Liquidity: Ease of buying/selling without affecting price.
- Volatility: Degree of price fluctuation.
⚙️ How Trading Works
1. Market Participants: Retail traders, institutional investors, market makers.
2. Order Types:
- Market Order: Executes immediately at current price.
- Limit Order: Executes at a specified price or better.
- Stop Order: Triggers a market order once a price is reached.
3. Brokerage Accounts: Needed to access markets. Can be:
- Cash Account: Trade with your own money.
- Margin Account: Borrow money to trade (adds risk).
🧠 Psychology of Trading
- Discipline: Stick to your strategy.
- Emotions: Fear and greed are your biggest enemies.
- Risk Management: Never risk more than you can afford to lose.
🛠️ Tools You’ll Need
- Trading Platform: e.g., MetaTrader, TradingView, Thinkorswim.
- Charting Software: For technical analysis.
- News Feed: Stay updated on market-moving events.
- Economic Calendar: Track key financial announcements.