TSBC
Back to Learn
Beginner12 min

Trading Basics

Understand how traders profit from price movements in any market.

What is Trading?

Trading is the act of buying and selling financial assets (such as stocks, crypto, or commodities) with the goal of profiting from price changes. Unlike long-term investing, traders typically aim to capture short- and medium-term price movements, buying low and selling high, or short-selling when they expect prices to fall.

Types of Trading

Day Trading

Highly active

Opening and closing trades within the same day, holding no positions overnight.

Swing Trading

Days to weeks

Holding trades for several days to weeks to capture medium-term price moves.

Scalping

Seconds to minutes

Making many rapid trades to take small profits from tiny price movements.

Long-Term

Months to years

Holding positions for months or years, focusing on fundamental growth.

Options Trading (Calls & Puts)

Contracts

Trading contracts based on price movement instead of directly owning the asset.

How Trades Work

You place a trade through a broker or exchange using orders. A market order executes immediately at the current price, while a limit order only fills at your chosen price. When your order matches another participant's, the trade executes and your position stays open until you close it.

What Moves the Market

News and economic events
Supply and demand from buyers and sellers
Corporate earnings and fundamental data
Market sentiment and investor emotion

Basic Chart Concepts

Support

A price level where buying tends to be strong enough to halt a decline.

Resistance

A price level where selling tends to be strong enough to halt an advance.

Trends

The overall direction of price: uptrend (rising), downtrend (falling), or sideways.

Risk Management Basics

Risk only a small percentage per trade (1-2%)
Use stop-loss orders to cap your losses
Define your exit before entering a trade
Seek trades with a strong risk-reward ratio

Options Trading (Basic Intro)

Options trading is a type of trading where you trade contracts based on price movement instead of directly owning the asset. These contracts are called options.

Call Options

You make money when the price goes UP.

Put Options

You make money when the price goes DOWN.

Example: If you buy a call option on a stock and the price rises, the option increases in value.

Key Terms

Strike price = Price level of the contract
Expiration date = When the contract expires
Premium = Cost of the option
Time decay = Options lose value over time

Options Moneyness (ITM / OTM)

ITM (In The Money)

An option is ITM when it already has real value if exercised right now.

Call option (ITM)

Stock price is above the strike price

Strike: $100
Stock: $110
→ Call is ITM (you could buy at $100 and it's worth $110)

Put option (ITM)

Stock price is below the strike price

Strike: $100
Stock: $90
→ Put is ITM (you could sell at $100 while market is $90)

OTM (Out of The Money)

An option is OTM when it currently has no intrinsic value.

Call option (OTM)

Stock price is below the strike price

Strike: $100
Stock: $90
→ Call is OTM (not profitable yet)

Put option (OTM)

Stock price is above the strike price

Strike: $100
Stock: $110
→ Put is OTM (not profitable yet)

Options Greeks (Basic Intro)

The Greeks measure how an option's price reacts to market changes:

Delta = How much the option price moves when the stock moves
Gamma = How fast Delta changes
Theta = Time decay (how much value options lose each day)
Vega = Sensitivity to volatility (how much price changes when volatility rises or falls)