Get the app
Lesson 1 · 8 min

What trading is

What a market is, why prices move, and the two ways a trade makes or loses money.

  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  6. 6
  7. 7
  8. 8
  9. 9
  10. 10
  11. 11
  12. 12
Step 1

A market is buyers and sellers

A price is simply the last price at which a buyer and a seller agreed. Nobody sets it. When more people want to buy than to sell, the price has to rise to find sellers. When more want to sell, it has to fall to find buyers. A trade is you joining one side.
  1. More people want to buy than to sell. Buyers pay a little more each time, so the price climbs.
  2. Now sellers outnumber buyers. They accept a little less each time, so the price falls.
4,0504,1004,15012
Step 2

Why prices move

People change their minds about what something is worth. The usual reasons: news (interest rates, jobs, inflation), a company's results, big buyers or sellers stepping in, and plain fear or excitement. You will never know every reason. You do not need to: the chart shows you what all of them did to the price.
  1. Quiet trading, then a headline. In one candle, gold jumps.
4,1004,1204,1404,1601
Step 3

What you can trade

This course uses four kinds of market. They move for different reasons and at different hours, but every one of them is read the same way: with candles, levels and a plan. The short name, like XAU/USD, is the symbol you search for.
FOREXEUR/USDCurrencies, in pairs: the price of 1 euro in US dollars.
COMMODITIESXAU/USDRaw materials like gold, silver and oil. Gold is priced per ounce in dollars.
CRYPTOBTC/USDDigital coins like Bitcoin. They trade every day of the week.
STOCKSAAPLA share of one company, here Apple. Trades while its exchange is open.
Step 4

Buy: you gain if the price rises

The first way to trade is the one everyone knows: buy now, sell later at a higher price. Traders call it going long. Your result is the difference between the two prices, times how much you bought.
  1. You buy 1 ounce of gold at 4,100.
  2. You sell it at 4,150. The price rose by 50, so you made $50. If it had fallen to 4,060 instead and you sold there, you would have lost $40.
4,1004,1204,140BUY 4,100SELL 4,15012
Step 5

Sell first: you gain if the price falls

With a broker you can also do it the other way round: sell first, buy back later. Traders call it going short. You gain when the price falls and lose when it rises. That is why a falling market is not only bad news: it can be traded too.
  1. You sell 1 ounce of gold at 4,200, without owning it first.
  2. You buy it back at 4,150. The price fell by 50, so you made $50. Had it risen to 4,240, buying back would have cost you $40.
4,1604,1804,200SELL 4,200BUY BACK 4,15012
Step 6

Size turns a move into dollars

The move of the price is only half the story. The other half is your size: how much you bought or sold. Ten times the size means ten times the gain, and ten times the loss. Choosing the size so that a loss stays small is the most important skill in trading, and lesson 7 is all about it.
SIZEUP 50DOWN 50
0.1 ounce+$5-$5
1 ounce+$50-$50
10 ounces+$500-$500
The same move of 50 on gold, with three sizes. Wins and losses grow together.

Watch out. Many beginners lose money, mostly because they risk too much and trade without a plan. Practise on a demo account, with no real money, until the rest of this course feels easy.

Words

New words in this lesson

Market
Anything people buy and sell at a price that moves: a currency pair, gold, a coin, a share.
Price
The last price at which a buyer and a seller agreed.
Symbol
The short name of a market, like XAU/USD for gold in dollars.
Long
Buying first, to sell later at a higher price.
Short
Selling first, to buy back later at a lower price.
Size
How much you buy or sell. It multiplies every move into dollars.
Demo account
Practice trading with pretend money and real prices.
Check yourself

Test yourself

6 questions, 2 of them on a chart. Tap an answer to see right away if it is correct and why. You pass with 5 of 6; retry any time.

1You bought gold at the dashed line. If you sell now, what happens?
4,1004,1204,140YOU BOUGHT
2You sold first (went short) at the dashed line, and price did this. Where are you?
4,1504,1604,1704,1804,190YOU SOLD
3What makes a price rise?
4Which of these is a currency pair?
5You buy 10 ounces of gold and it rises by $5. What did the trade make?
6Where should a beginner practise first?
AI read · GoldAsk the AI why gold is moving todayIt reads live prices and the latest news for any market and answers in plain words.
Start in your browser
QR code for the AiTradely appPrefer your phone?Scan to get the app
4.9App Store4.2Trustpilot

Risk warning. Trading financial markets involves a high risk of loss and is not suitable for everyone. This course is education, not financial, investment or tax advice. The charts are drawn examples, not real prices or predictions. Past behaviour of a market does not guarantee what it does next. You make your own trading decisions.