Trading vs Investing
Investing is buying something and holding it for the long term — months, years, decades. You believe the asset will grow in value over time. Think Warren Buffett buying Coca-Cola stock and holding it for 30 years.
Trading is buying and selling over shorter timeframes to profit from price movements. You're not necessarily interested in the long-term value of the asset — you're interested in where the price is going next.
Key Concept
The core difference
Investors ask: "Is this a good company to own?"
Traders ask: "Is this price about to move — and which direction?"
Markets You Can Trade
There are several major markets available to retail traders:
Stocks
Shares in companies like Apple, Tesla, Barclays. Trade on exchanges like NYSE, LSE.
Forex
Currency pairs like GBP/USD, EUR/USD. The largest market in the world — $7.5 trillion daily volume.
Crypto
Bitcoin, Ethereum, and thousands of altcoins. 24/7 market, high volatility.
Commodities
Gold, oil, natural gas, wheat. Prices driven by supply, demand, and geopolitics.
Indices
FTSE 100, S&P 500, NASDAQ. Track the performance of a group of stocks.
Who Trades?
Markets are made up of different participants:
- Institutional traders — Banks, hedge funds, pension funds. They move markets.
- Market makers — Provide liquidity. They profit from the spread.
- Retail traders — That's you and me. We're the smallest fish in the pond.
- Algorithms — Automated trading systems. They account for 60-70% of stock market volume.
Example
When you buy 10 shares of Apple on your trading app, an institutional trader on the other side might be selling 10 million shares. The market is not a level playing field — and understanding this is crucial.
The Honest Truth
The stats are brutal:
- 70-80% of retail traders lose money (FCA data)
- 90% of day traders quit within a year
- The average retail trader underperforms a simple index fund
This isn't to scare you away. It's to make sure you go in with open eyes. The traders who survive and profit are the ones who treat this as a skill to develop — not a get-rich-quick scheme.
Why Learn Anyway?
Despite the brutal stats, there are genuine reasons to learn trading:
- Financial literacy — Understanding markets makes you a better investor even if you never actively trade.
- Income potential — The minority who become skilled can generate significant returns.
- Flexibility — Trade from anywhere, on your own schedule.
- Intellectual challenge — Markets are endlessly fascinating. Every day is different.
Key Concept
The real edge
The edge in trading isn't a magic indicator or secret strategy. It's risk management, discipline, and understanding how institutions move price. That's what this course teaches.