CADET · Module F01: Your First Steps · About 20 minutes
Before we begin: You do not need an account, a chart, a calculator or any money to complete this lesson. We will learn using imaginary examples. Nothing here is a promise that trading makes money.
Your mission today
By the end you will be able to explain what trading means, what buying and selling do, how profit and loss arise, and why practising first matters.
1. What does “trading” actually mean?
Imagine you buy a bicycle for $100 and later sell it for $120. You received $20 more than you paid. That is the basic idea behind a trade: you buy something at one price and sell it at another.
Now imagine the bicycle only sells for $85. You received $15 less than you paid. That is a loss. Losing is not something that happens only to careless people. Prices can change in ways nobody knows in advance.
Financial trading follows a similar idea, except people trade things such as company shares, currencies or contracts linked to gold. They usually use an app rather than carrying an object to a market.
Trading means opening and later closing a position because you think a price may change. A position is simply a trade you currently have open. Buying means taking the side that benefits when the price rises (for a simple buy trade). Selling to close means ending that buy trade. We will learn the other type of sell trade later.
2. Where does the money come from?
A trade has two prices: the price when you start and the price when you finish. For a simple purchase of one unit, the difference is your gain or loss before fees.
Example A: Price goes up. Buy one share for $10, later sell for $12. The price difference is +$2. If the total buying and selling costs are $0.50, the amount left is $1.50.
Example B: Price goes down. Buy one share for $10, later sell for $8. The price difference is −$2. If the total costs are $0.50, the total result is −$2.50.
Costs matter because paying fees makes a small winning move worth less and a losing move more painful. For now, remember just one rule: money made or lost depends on the move, the amount you traded, and the costs.
3. Trading is not the same as investing
People often mix up these two words. Investing usually means buying an asset to hold for a longer time because you believe it has lasting value. Trading usually means making shorter-term decisions about changing prices. There is no fixed number of days that magically changes one into the other.
Someone may invest in a basket of company shares for years. Someone else may buy and sell a share over a few days. Both can lose money. The important difference is the plan, not whether one sounds more impressive.
A common beginner mistake is buying something for a short trade, watching it fall, then declaring, “I'll keep it forever.” That does not repair the loss. It just changes the story after the event.
4. Do you need to use real money?
No. Our Cadet course starts with practice only. Many platforms offer a demo account, where prices move on a screen but the balance is imaginary. A demo lets you press the buttons and understand the numbers without risking your savings. It cannot perfectly copy real trading conditions, but it is the sensible place to learn.
You do not need to deposit money to learn what a candlestick is. You do not need to make a trade every day. And a good decision can be to make no trade at all.
5. Three words to remember
- Price: How much one unit costs at this moment.
- Profit: Money left when the result is positive after costs.
- Loss: Money you no longer have because the result is negative after costs.
If you remember only one sentence today, remember this: Trading is making a decision about a changing price, and that decision can lose money.
Your first practice mission
On paper, write the results for these imaginary purchases. Ignore costs for the first calculation, then subtract the stated total cost.
- Buy for $20 and sell for $24. Total costs: $1.
- Buy for $20 and sell for $17. Total costs: $1.
- Buy for $20 and sell for $20. Total costs: $1.
Check yourself: +$3, −$4 and −$1. Even when the price finishes unchanged, costs can create a loss.
Before your next lesson
You should be able to tell a friend what a trade is in one sentence, explain why a falling price can cost you money, and say why a demo account is useful.
Coming next: The different things people trade, explained without the alphabet soup.
