Beginner Trading Fundamentals
  1. Beginner Trading Fundamentals: Introduction
  2. Beginner Trading Fundamentals: Charting
  3. Beginner Trading Fundamentals: Leverage And Margin
  4. Beginner Trading Fundamentals: Popular Trading Instruments
  5. Beginner Trading Fundamentals: Limiting Risk
  6. Beginner Trading Fundamentals: Strategy Automation
  7. Beginner Trading Fundamentals: Record Keeping And Taxes
  8. Beginner Trading Fundamentals: Conclusion

Beginner Trading Fundamentals: Introduction

Trading is an active style of participating in the financial markets, which seeks to outperform traditional buy-and-hold investing. Instead of waiting to profit from long-term uptrends in the markets, traders seek short-term price moves in order to profit during both rising and falling markets. As a trader, you can be your own boss, work from home, set your own schedule and have the opportunity to achieve unlimited income potential. These factors, combined with the ease with which someone can enter the field, help make trading attractive.
 
While it's relatively easy to start trading - after all, you don't need any advanced degrees or specialized training - it is very difficult to become good at it and to become successful. It's not uncommon for someone who wants to trade for a living to overlook the financial, emotional and time commitments that are required to build a successful trading business. As a result, about 90% of day traders fail within the first year. Having a strategic approach, both in terms of your overall business and your actual trading activity, is an essential part of becoming a profitable trader.
 
In the first part of our beginner trading series, How To Start Trading, we emphasized the need to approach trading as a business and not as a hobby. In addition, we explored: 

  • Trading styles - position, swing, day and scalp trading
  • Trading technology - computers, trading software, market analysis, testing and order execution
  • Order types - market, limit, stop, stop loss, conditional and duration
  • Trading plan development - market, chart interval, indicators, position sizing, entry rules, trade filters and exit rules
  • Testing your trading plan - backtesting, in-sample and out-of-sample testing, and forward performance testing
  • Live trading performance - trader errors, fills, technical problems and unique trading conditions 

Here, in the second part of our beginner trading series, we introduce additional concepts that are important to traders, including: 

  • Charting
  • Leverage and margin
  • Popular trading instruments
  • Risk
  • Strategy automation
  • Record keeping and taxes
Beginner Trading Fundamentals: Charting

  1. Beginner Trading Fundamentals: Introduction
  2. Beginner Trading Fundamentals: Charting
  3. Beginner Trading Fundamentals: Leverage And Margin
  4. Beginner Trading Fundamentals: Popular Trading Instruments
  5. Beginner Trading Fundamentals: Limiting Risk
  6. Beginner Trading Fundamentals: Strategy Automation
  7. Beginner Trading Fundamentals: Record Keeping And Taxes
  8. Beginner Trading Fundamentals: Conclusion
RELATED TERMS
  1. Swing Trading

    A style of trading that attempts to capture gains in a stock ...
  2. Filter

    A set of criteria used to help an investor narrow down which ...
  3. Backtesting

    The process of testing a trading strategy on prior time periods. ...
  4. Stop Hunting

    A strategy that attempts to force some market participants out ...
  5. Manual Trader

    A trader who manually enters trades into a trading system without ...
  6. Forex Scalping

    A trading strategy used by forex traders to buy a currency pair ...
RELATED FAQS
  1. What is the best time of the day to trade?

    Unlike traditional investing, trading, or day trading, has a very short-term focus. Analysis may be broken down to days, ... Read Answer >>
  2. What is the difference between a stop order and a stop limit order?

    Learn the differences between a stop order and a stop limit order. Traders use these as stop losses and regular investors ... Read Answer >>
  3. How do I set a strike price in foreign exchange trading?

    Learn about the different order types foreign exchange traders can use to manage positions at certain strike prices and how ... Read Answer >>
  4. What's the difference between a stop and a limit order?

    Different types of orders allow you to be more specific about how you'd like your broker to fulfill your trades. When you ... Read Answer >>
  5. What is the difference between a buy limit and a stop order?

    Learn the difference between buy limit orders and stop orders, including stop loss orders, and understand the risks of the ... Read Answer >>
  6. Should I attempt to trade futures myself using software, or is this better left in ...

    Discover the factors to consider when deciding whether to trade futures on your own or to commit your trading decisions to ... Read Answer >>
Hot Definitions
  1. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  2. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  3. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  4. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  5. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  6. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
Trading Center