Learn Trading
Evergreen trading education organized by topic. Each answer is a self-contained explainer linked to live market data — how the mechanism actually works, what it costs you when it goes wrong, and where to check the current numbers. No fluff, no paid courses.
119 explainers across 8 topics. Written and reviewed under our editorial policy.
Order types, execution, position sizing, mechanics
Equities, earnings, dividends, valuation basics
Day trading, swing trading, investing, approach selection
Currency pairs, leverage, carry trades, macro drivers
Bitcoin, altcoins, on-chain signals, custody
Stop losses, diversification, capital preservation
Gold, oil, agricultural products, supply and demand
S&P 500, NASDAQ, futures, index investing
Trading Basics
34 answersWhat is swing trading vs day trading
Swing trading and day trading are two distinct approaches to shortterm trading. The main difference is how long you hold a position. Day traders open and close all trades within a …
What is technical analysis in trading
Technical analysis is the study of past market data, mainly price and volume, to forecast where a security might go next. Unlike fundamental analysis, which looks at a company's ea…
What is the difference between forex and stocks
Forex and stocks are two different markets. Forex trades currency pairs like EUR/USD. Stocks trade shares of companies like Apple or Tesla. The core difference is what you own. In …
What are CFDs and how do they work
CFDs, or contracts for difference, are derivative products that let traders bet on price movements without owning the underlying asset. Think of them as a side bet between two part…
What is a spread in trading
A spread in trading is simply the difference between two prices. What that difference means depends on what you are trading and how you measure it. The word "spread" shows up in ma…
What is margin trading
Margin trading means borrowing money from a broker to buy more stock (or crypto, or currency) than you could with just your own cash. You put up a percentage of the trade's value a…
How to read a candlestick chart
A candlestick chart shows four price points for each time period: open, high, low, and close. Each candle has a body (the range between open and close) and wicks (the highs and low…
What is leverage in trading and how does it work
Leverage in trading is borrowed money from a broker that amplifies the size of a trade. Instead of putting up the full value of a position, a trader puts down a fraction and the br…
What is the difference between ECN and market maker brokers
Direct Answer The core difference between ECN (Electronic Communication Network) brokers and market maker brokers is how they handle client orders and where those orders are execut…
What is wash sale rule in trading
The wash sale rule is an IRS regulation that disallows a tax deduction for a loss on a security if the same or substantially identical security is purchased within 30 days before o…
How are trading profits taxed
Trading profits are taxed as either capital gains or ordinary income, depending on your country of residence, your trader status, the holding period of the asset, and the type of i…
What is a moving average and how to use it
A moving average (MA) is a technical indicator that calculates the average price of a security over a chosen number of periods, then updates that average as each new period closes.…
What is slippage in trading
Slippage is the difference between the price a trader expects a trade to execute at and the price at which the order actually fills. This gap occurs because markets move continuous…
What is a bull market vs bear market
A bull market is a sustained period of rising asset prices, commonly marked by a 20% or greater increase from a recent low. A bear market is a prolonged decline of 20% or more from…
What is dollar cost averaging
Dollar cost averaging (DCA) is an investment strategy where a fixed dollar amount is used to purchase a specific asset at regular, predetermined intervals, regardless of the asset'…
What is the bid ask spread
The bidask spread is the immediate difference between the highest price a buyer is willing to pay (the bid) and the lowest price a seller is willing to accept (the ask) for a speci…
What is slippage and how to avoid it
Slippage is the difference between the price a trader expects to pay or receive and the actual execution price of a trade. It occurs when the market moves between the moment an ord…
What is an OCO order
An OCO order, short for OneCancelstheOther, is a conditional order that links two separate entry or exit orders so that when one is executed, the other is automatically cancelled. …
What is a trailing stop order
A trailing stop order is a conditional order that automatically adjusts the stop price as the market moves in a favourable direction, locking in profits while limiting downside. Un…
What is a stop limit order
A stop limit order is a conditional trade instruction that combines a trigger price (the stop) with a maximum or minimum acceptable execution price (the limit). When the market tra…
What is divergence in trading
Divergence in trading is a technical analysis concept where the price of an asset and a momentum indicator move in opposite directions, signaling a potential weakening of the preva…
What are chart timeframes in trading
Chart timeframes define the interval each candlestick, bar, or line point represents on a price chart. A 5minute timeframe means every candle captures the open, high, low, and clos…
What is Bollinger Bands indicator
Bollinger Bands are a technical analysis indicator that measures market volatility and identifies potential overbought or oversold price levels. Created by John Bollinger, the tool…
What is volume in trading and why it matters
Volume is the total number of shares, contracts, or units traded for a specific financial asset during a defined period, such as one minute, one hour, or one full trading day. It m…
What is a head and shoulders pattern
A head and shoulders pattern is a bearish reversal chart formation that signals the likely end of an uptrend and the start of a downtrend. It appears as three consecutive price pea…
What is a double top and double bottom pattern
A double top is a bearish reversal chart pattern that signals a potential trend change from an uptrend to a downtrend. It forms when price tests a resistance level twice and fails …
What are Fibonacci retracement levels
Fibonacci retracement levels are horizontal lines on a price chart that indicate where a financial asset might find support or resistance during a pullback within a trend. They are…
What is MACD and how to use it
The Moving Average Convergence Divergence (MACD) is a trendfollowing momentum indicator that reveals the relationship between two exponential moving averages (EMAs) of an asset's p…
What is the RSI indicator
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and magnitude of recent price changes to evaluate overbought or oversold conditions in an asset. …
What is a market order vs limit order
A market order executes immediately at the best available current price, prioritizing speed. A limit order executes only at a specified price or better, prioritizing price control.…
What is scalping in trading
Scalping is a shortterm trading strategy where a trader aims to profit from very small price movements, often holding positions for seconds to a few minutes. The core idea is to ex…
What is copy trading
Copy trading is an automated investment method where a follower's brokerage account directly replicates the realtime trades of a chosen experienced trader, known as a signal provid…
What are support and resistance levels
Support and resistance levels are specific price zones on a financial chart where the forces of supply and demand meet, causing a price trend to pause, stall, or reverse. Support i…
What is fundamental analysis
Fundamental analysis is a method for determining an asset's intrinsic value by examining the economic, financial, and qualitative factors that drive its longterm worth. The goal is…
Stocks
17 answersHow to start trading stocks as a beginner
Start by opening a brokerage account with a lowcost, beginnerfriendly broker. You need a passport or ID, a bank account, and a way to deposit money. That step takes about 15 minute…
What is an IPO and how to invest in one
An IPO, or initial public offering, is the process where a private company sells shares to public investors for the first time and becomes listed on a stock exchange. After an IPO,…
What is the Nasdaq 100
The Nasdaq 100 is a stock market index that tracks the performance of 100 of the largest nonfinancial companies listed on the Nasdaq exchange. It is marketcapitalizationweighted, s…
What is earnings season and why it matters
Earnings season is the period occurring four times a year, typically spanning four to six weeks, when a large number of publicly traded companies simultaneously release their quart…
What is a stock market index
A stock market index is a statistical measure that tracks the performance of a selected group of stocks, acting as a benchmark for a specific market segment, sector, or national ec…
What is a blue chip stock
A blue chip stock represents ownership in a large, wellestablished, and financially resilient company that has demonstrated consistent earnings and often pays regular dividends ove…
What is a hedge fund
A hedge fund is a private, actively managed investment partnership that pools capital from accredited investors and institutional backers to pursue absolute returns using flexible …
What is insider trading
Insider trading is the act of buying or selling a company's securities, such as stocks or bonds, while in possession of material, nonpublic information about that company. The core…
What is a stock buyback
A stock buyback, also called a share repurchase, is when a publicly traded company uses its own cash to purchase shares from the open market. This reduces the total number of outst…
What is short selling
Short selling is a strategy that allows a trader to profit from a decline in a security's price. The sequence is reversed from a traditional trade: the trader sells a borrowed asse…
What is P/E ratio and how to use it
The PricetoEarnings (P/E) ratio is a valuation metric that tells you how much investors are willing to pay for each dollar of a company's earnings. It is calculated by dividing the…
What is market capitalization
Market capitalization, commonly called market cap, is the total dollar value of a company's outstanding shares. It is calculated by multiplying the current share price by the total…
What is a stock split
A stock split is a corporate action in which a company increases its number of outstanding shares by issuing more shares to current shareholders, while proportionally reducing the …
What is a dividend and how does it work
A dividend is a cash payment a company makes to its shareholders from its profits, typically on a regular schedule. When a corporation earns money, its board of directors decides w…
What is an ETF and how does it work
An exchangetraded fund (ETF) is a pooled investment vehicle that holds a diversified basket of assets such as stocks, bonds, commodities, or real estate, and trades on a stock exch…
What is the S&P 500 index
The S&P 500 is a stock market index that measures the performance of 500 large publicly traded companies in the United States. It is widely regarded as the best single gauge of the…
How does inflation affect stock prices
Inflation affects stock prices by eroding the real value of future corporate earnings and triggering central bank interest rate hikes, which increase borrowing costs and lower the …
Strategy
16 answersHow long does it take to become a profitable trader
Becoming a profitable trader typically takes between one and three years of consistent practice, study, and capital management. A small number of dedicated individuals achieve cons…
Why do most retail traders lose money
Most retail traders lose money because they lack a statistical edge, trade with insufficient capital, and fail to manage risk properly. Industry data consistently shows that 70% to…
What is FOMO in trading and how to avoid it
FOMO, or the fear of missing out, in trading is the emotional reaction that drives a trader to enter a position impulsively after seeing a price move sharply up or down without a p…
How to control emotions while trading
Controlling emotions while trading requires a structured system of rules, preparation, and selfawareness. Emotional reactions like fear, greed, and frustration are the primary caus…
What is arbitrage in trading
Arbitrage in trading is the practice of simultaneously buying and selling the same or equivalent asset in different markets to capture a riskfree profit from temporary price discre…
What is position trading
Position trading is a longterm investment strategy where traders hold financial assets for extended periods, typically ranging from several weeks to multiple years, to profit from …
How to backtest a trading strategy
Backtesting a trading strategy means replaying historical price data through a set of defined entry and exit rules to see how the strategy would have performed in the past. The pro…
How to build a trading strategy from scratch
Building a trading strategy from scratch means creating a fully mechanical, rulebased system that defines exactly when to enter a trade, how much to risk, and when to exit. The goa…
What is pairs trading and how does it work
Pairs trading is a marketneutral strategy that simultaneously buys one asset and sells short another highly correlated asset, aiming to profit from the temporary divergence in thei…
What is a breakout trading strategy
A breakout trading strategy is a method that enters a trade when an asset's price moves decisively beyond a defined support or resistance level, ideally with a surge in trading vol…
What is algorithmic trading
Algorithmic trading is the use of computer programs to execute trades automatically based on a defined set of rules for timing, price, and quantity. The core idea is to remove huma…
What is trend following in trading
Trend following is a trading strategy that aims to profit from sustained price moves in one direction. Instead of predicting reversals or valuing assets, trend followers identify a…
What is mean reversion trading
Mean reversion trading is a strategy based on the idea that asset prices, after moving sharply away from their historical average, tend to return to that average over time. Traders…
What is value investing vs growth investing
Value investing and growth investing are two contrasting strategies for picking stocks. Value investors look for companies trading at a price below what they believe the business i…
What is momentum trading
Momentum trading is a strategy that buys assets with strong recent price performance and sells those with weak performance, based on the idea that trends tend to persist. Instead o…
What is the difference between investing and trading
The fundamental difference between investing and trading lies in the time horizon and the source of profit. Investing is a longterm wealthbuilding strategy where assets are held fo…
Forex
13 answersHow to choose a forex broker
Choosing a forex broker comes down to four things: regulation, costs, trading platform, and execution model. Get those right and the rest is noise. Get regulation wrong and you mig…
How do central banks affect forex markets
Central banks shape forex markets mainly through interest rate decisions, open market operations, and occasionally direct intervention. The core mechanism is simple: higher interes…
Best time to trade EUR/USD
The best time to trade EUR/USD is during the overlap of the London and New York sessions, roughly 1:00 p.m. to 5:00 p.m. GMT (8:00 a.m. to 12:00 p.m. ET). This window produces the …
What is a pip in forex trading
A pip is the smallest price move a currency pair can make in the forex market. The word stands for "percentage in point" or "price interest point." For most major pairs like EUR/US…
What is forex trading and how does it work
Forex trading is the act of buying and selling currencies on the foreign exchange market with the goal of profiting from changes in their exchange rates. It is the largest financia…
Do I need a license to trade forex
For most retail traders trading forex with their own capital through a regulated broker, no license is required. You simply open an account with a broker, deposit funds, and start …
What is interest rate parity
Interest rate parity (IRP) is a fundamental financial theory stating that the interest rate differential between two countries should equal the difference between the forward excha…
Why does the US dollar affect everything
The US dollar affects nearly every financial market because it serves as the world's primary reserve currency, the dominant invoicing unit for global trade, and the benchmark for k…
What is a pip value and how to calculate it
A pip value is the monetary worth of a single pip movement in a currency pair, expressed in the account's base currency. It directly translates price changes into real profit or lo…
What is correlation between currency pairs
Correlation between currency pairs measures the statistical relationship showing how two forex pairs move in relation to each other. It is expressed as a coefficient that ranges fr…
What is a carry trade in forex
A carry trade in forex is a strategy that aims to profit from the difference in interest rates between two currencies. A trader borrows money in a currency with a low interest rate…
What are major minor and exotic currency pairs
Currency pairs in the foreign exchange market are divided into three tiers based on liquidity, trading volume, and the economic profile of the countries involved: major pairs, mino…
What are forex trading sessions
Forex trading sessions are the distinct time periods when major financial centers around the world are open for business, creating a continuous 24hour market from Sunday evening to…
Crypto
13 answersHow does cryptocurrency mining work
Cryptocurrency mining is the process of adding new transactions to a blockchain and creating new coins. Miners use specialized computers to solve complex math problems. The first m…
Difference between Bitcoin and Ethereum
Bitcoin and Ethereum serve different purposes. Bitcoin is digital gold – a store of value and payment network. Ethereum is a decentralized computer – a platform for running applica…
What is Bitcoin and how does it work
Bitcoin is a digital currency that operates without a central bank or single administrator. It was created in 2009 by an anonymous person or group using the name Satoshi Nakamoto. …
What is a stablecoin
A stablecoin is a cryptocurrency engineered to maintain a fixed value, typically pegged 1:1 to a fiat currency like the US dollar. Its core purpose is to offer the speed and border…
What is market cap in crypto
Market cap, short for market capitalization, is the total dollar value of a cryptocurrency. It is calculated by multiplying the current price of one coin by the number of coins in …
What is an NFT
An NFT, or nonfungible token, is a unique digital certificate of ownership recorded on a blockchain. The term "nonfungible" means the asset is not interchangeable on a onetoone bas…
What is a smart contract
A smart contract is a selfexecuting computer program stored on a blockchain that automatically enforces the terms of a digital agreement when predefined conditions are met. Think o…
What is proof of stake vs proof of work
Proof of Work (PoW) and Proof of Stake (PoS) are the two dominant consensus mechanisms that blockchains use to validate transactions, add new blocks, and secure the network without…
What is the difference between a CEX and DEX
A centralized exchange (CEX) is a platform where a company acts as an intermediary, holding user funds and matching buy and sell orders. A decentralized exchange (DEX) is a peertop…
What is staking in crypto
Staking is the act of locking cryptocurrency in a proofofstake (PoS) blockchain to help validate transactions and secure the network, earning token rewards in return. It replaces t…
What is a crypto wallet and how to use one
A crypto wallet is a tool that stores the private keys required to access and manage cryptocurrency on a blockchain. It does not hold the coins themselves; those exist as entries o…
How to trade cryptocurrency safely
Trading cryptocurrency safely means protecting both capital and personal data through a combination of exchange security, selfcustody, strict position sizing, and independent proje…
What is DeFi and decentralized finance
Decentralized finance (DeFi) is a blockchainbased financial ecosystem that lets users lend, borrow, trade, earn interest, and access complex financial products without banks, broke…
Risk Management
13 answersWhat is position sizing in trading
Position sizing is the process of deciding how much capital to put into a single trade. It answers one question: given your account size and the distance to your stop loss, how man…
How to manage risk in trading
Risk management in trading means controlling how much money you can lose on any single trade and across your whole account. Without it, a few bad trades can wipe out your capital. …
What is a stop loss order
A stop loss order is an instruction to close a trade automatically when the price reaches a specific level you set in advance. Its job is to limit how much you can lose on a single…
What is a trailing stop loss
A trailing stop loss is a dynamic order type that automatically moves the exit price as the market moves in a favorable direction. Instead of a fixed stop level, the stop "trails" …
What is a trading plan and why do you need one
A trading plan is a written document that spells out every rule for your trading, from which markets to trade to exactly when to enter and exit, and how much to risk on each positi…
How to handle a losing streak
A losing streak is a normal part of trading, but how it is handled separates longterm survivors from those who blow up their accounts. The direct answer is to immediately reduce ri…
What is hedging in trading
Hedging in trading is a deliberate risk management technique that involves opening a second position designed to move in the opposite direction of an existing trade. The goal is no…
How to avoid overtrading
Overtrading is the practice of executing too many trades or holding positions that are too large relative to account size, typically driven by emotional reactions rather than analy…
What is the 1 percent rule in trading
The 1 percent rule in trading is a risk management principle stating that no more than 1 percent of total account equity should be risked on any single trade. For an account with a…
How to set a take profit level
A take profit level is a predetermined price at which a trader closes a winning position to secure gains automatically. It is executed as a limit order, meaning the trade will only…
What is portfolio diversification
Portfolio diversification is a risk management strategy that mixes a wide variety of investments within a portfolio to reduce exposure to any single asset or risk. The core idea is…
How much capital should I risk per trade
The standard guideline among professional traders is to risk no more than 1% to 2% of total account equity on any single trade. This means that if a trade hits the stoploss, the lo…
How to calculate risk reward ratio
The riskreward ratio measures how much capital is at risk compared to the potential profit on a trade. To calculate it, divide the dollar amount you stand to lose if the trade goes…
Commodities
8 answersWhat affects gold prices
Gold prices move on four main forces: real interest rates, the U.S. dollar, geopolitical fear, and central bank buying. That is the short answer. The longer answer digs into how ea…
What drives agricultural commodity prices
Agricultural commodity prices are driven by a combination of supply and demand factors, weather conditions, government policies, input costs, currency fluctuations, global economic…
What is a futures contract
A futures contract is a standardized legal agreement to buy or sell a specific asset at a predetermined price on a set future date. These contracts trade on regulated exchanges and…
Why do people invest in silver
People invest in silver primarily as a store of value, an industrial commodity, a portfolio diversifier, and a hedge against inflation and economic uncertainty. Silver has a dual n…
What is the difference between WTI and Brent crude
WTI and Brent are the two most widely traded crude oil benchmarks, used as reference prices for oil contracts globally. WTI stands for West Texas Intermediate, a light, sweet crude…
How does OPEC affect oil prices
OPEC affects oil prices primarily by coordinating crude oil production levels among its member countries, which directly influences global supply. When the Organization of the Petr…
What is natural gas trading
Natural gas trading is the practice of buying and selling financial instruments whose value is derived from the price of natural gas. The primary goal is to profit from price fluct…
What is crude oil trading
Crude oil trading is the act of buying and selling contracts tied to the price of unrefined petroleum to capitalize on price movements. The two primary global benchmarks are West T…
Indices
5 answersHow to invest in an index
To invest in an index, you buy a financial product that tracks the performance of a specific market index, such as the S&P 500 or the FTSE 100. The most common and costeffective me…
What is the VIX index
The VIX index, formally the CBOE Volatility Index, measures the market's expectation of 30 day forward volatility for the S&P 500. It is often called the fear index because it tend…
How is the S&P 500 weighted
The S&P 500 is weighted by floatadjusted market capitalization. This means the index gives more influence to companies with a larger total market value of freely traded shares. The…
What is the Russell 2000 index
The Russell 2000 index tracks the performance of approximately 2,000 smallcap U.S. publicly traded companies. It is maintained by FTSE Russell and serves as the standard benchmark …
What is the Dow Jones Industrial Average
The Dow Jones Industrial Average (DJIA) is a stock market index that tracks the performance of 30 large, publiclyowned companies in the United States. It is one of the oldest and m…
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