Trading essentials

The basics of trading: What is trading?

Trading is the act of buying and selling financial instruments with the aim of making a profit, and involves speculating on the price movements of stocks, currencies, commodities, indices, and other assets. Trading derivatives typically involves leverage, meaning you can control large positions with a relatively small amount of capital. However, leverage can amplify your losses as well as your profits, meaning careful risk management is advisable. Traders use a variety of strategies and tools to predict whether an asset's price will rise or fall. These can include fundamental factors such as macroeconomic drivers, or technical influences such as key support and resistance levels.