Core terms
The bid is the highest displayed price buyers are currently willing to pay. The ask is the lowest displayed price sellers are currently willing to accept. The spread is the difference between them. Liquidity describes how easily an asset can be traded without large price impact. Volatility describes how much price tends to move.
These basics affect every strategy. A setup with a small theoretical edge can be destroyed by wide spreads, slippage, commissions, or poor execution.
Order types
A market order prioritizes execution. It can fill quickly but may receive a worse price in fast or illiquid markets. A limit order sets a maximum buy price or minimum sell price, but may not fill. A stop order activates after a trigger price and is often used for risk management or breakout participation. A stop-limit adds a limit after the stop trigger, reducing price uncertainty but increasing non-fill risk.
No order type is perfect. The choice depends on urgency, liquidity, spread, risk, and the trading plan.
Leverage, margin, fees, and slippage
Leverage increases exposure relative to account size. Margin is collateral required to hold a leveraged position. Both can magnify losses. Fees and slippage are also real costs. Slippage is the difference between expected execution and actual execution. Beginners often ignore these because charts do not show them cleanly.
If a strategy only works when costs are ignored, it does not work as traded.
Beginner trading workflow
- Define the instrument and session.
- Check spread, liquidity, and expected volatility.
- Know the order type before clicking.
- Define invalidation and maximum loss first.
- Calculate position size before entry.
- Record the plan, result, mistake, and lesson.