Before You Trade: The Basics You Must Understand

Originally shared by Kira Engineer in our community's "Mindset & Learning" section, now moved here as a permanent, free resource.

These are the basics of the trading world. Everyone should be able to answer the following before putting money at risk:

1. What is trade size, and how do you calculate your trade size?
2. What is the risk-to-reward ratio, and how do you calculate it?
3. What is leverage, and how is leverage used in the markets?
4. What is margin, and how does margin affect your balance?
5. What is risk management in trading - the likelihood and ranking of risk?
6. How do you control your fear and greed?

If you don't understand these topics yet, it's worth pausing before trading - this is friendly advice, not judgement. Once you learn these basics, you can start trading with a much clearer head.

There are many resources out there - books and videos. Start with the fundamentals above and build from there. (See the starter glossary for plain-language definitions.)

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Educational content only - not financial advice. Trading involves risk of loss.