Trading 101: What Is Trading and Which Markets Can You Trade?
By Doji Works
If you're new to trading, the jargon can feel overwhelming. This guide covers the basics: what trading is, the main markets you can trade, and the three most common trading styles -swing, day, and scalp trading. By the end you'll have a clear map of the landscape.
What is trading?
Trading means buying and selling financial instruments with the aim of making a profit from price moves. Unlike long-term investing, where you might hold assets for years, trading usually involves shorter timeframes -from seconds to months -and often uses leverage, derivatives, or both. Traders try to profit when prices go up (going long) or when they go down (going short, where allowed). Success depends on strategy, risk management, and discipline, not luck.
What is a market?
A market is where buyers and sellers agree on prices and exchange assets. Financial markets can be exchanges (e.g. a stock exchange), over-the-counter (OTC), or decentralised (e.g. some crypto). Each market has its own opening hours, liquidity, volatility, and rules. The main ones retail traders use are stocks, forex, indices, and crypto.
Stocks
Stocks (equities) are shares in a company. When you buy a stock, you own a small piece of that company. Stock markets -like the NYSE or NASDAQ -have set session times. Stocks can pay dividends and are influenced by company results, sector news, and broader economic data. They suit traders who like researching individual businesses and can handle company-specific risk.
Forex
Forex (foreign exchange) is the market where currencies are traded in pairs, e.g. EUR/USD or GBP/JPY. It’s one of the largest and most liquid markets, open 24 hours on weekdays. Moves are driven by interest rates, economic releases, and geopolitics. Many traders use leverage, so risk can be high. Forex suits those who like volatility and round-the-clock access.
Indices
Indices (e.g. S&P 500, NASDAQ 100, FTSE 100) track a basket of stocks. You typically trade them via derivatives (CFDs, futures, or options), not by buying the index itself. Indices smooth out single-stock risk and reflect broader market sentiment. They’re popular for swing and day trading and for hedging a portfolio.
Crypto
Crypto markets trade digital assets like Bitcoin and Ethereum. They run 24/7 and can be very volatile. You can trade spot (buy/sell the asset) or use derivatives. Regulation and infrastructure vary by region. Crypto suits traders comfortable with high volatility and weekend/weeknight moves.
Swing trading
Swing trading means holding positions for days to several weeks. You aim to capture part of a larger move, using charts and sometimes fundamentals. Swings require less screen time than day trading but more patience. It’s a common style for stocks and indices.
Day trading
Day trading means opening and closing positions within the same day. No overnight exposure; you rely on intraday price moves and often technical analysis. It demands more time and focus and fits liquid markets like forex, indices, and large-cap stocks.
Scalp trading
Scalp trading (scalping) targets very small profits on short timeframes -seconds to minutes. Trades are frequent; execution and costs matter a lot. It’s common in forex and crypto and suits those who can stay focused and manage risk tightly.
Understanding markets and styles is the first step. Next, focus on a market and style that match your time and personality, then learn a clear strategy and risk rules before risking real money.