What is trading?

One trade = one buy and one sell

A trade has two parts: you buy something, then later you sell it.

• You buy a share for $10.
• Later the price goes up and you sell it for $12.
• You made $2. That's your profit.

If the price went down to $7 and you sold, you'd lose $3. That's a loss. Every trader has losses. The goal is for the wins to be bigger than the losses over time.

You can make money when price goes down, too

This one sounds like magic. With short selling, you sell first and buy back later.

• You sell at $10.
• Price drops to $8.
• You buy it back at $8. You made $2.

Think of it like borrowing your friend's video game, selling it for $10, then buying the same game back for $8 when it goes on sale and returning it. You kept the $2. (In real life your broker handles the borrowing.)

Traders and investors

Both buy and sell. The difference is how long they hold:

• A trader holds for minutes, hours or days. They care about the next move.
• An investor holds for months or years. They care about the company growing.

Neither one is better. In this school you'll learn both.

Remember

• A trade is a buy and a sell.
• Sell for more than you paid: profit. Sell for less: loss.
• Short selling: sell first, buy back lower.
• Traders hold for a short time, investors hold for a long time.