Master the basics and make your first trade

Your five-step trading primer

Picture this: you slip $1000 into an envelope on your bedside table. 12 months later, you peel it out and there's still $1000 on paper, but in reality it now buys you less than when you tucked it away... thanks inflation.

Now imagine instead you’d put that cash to work by buying a slice of Apple, a barrel of oil or a handful of Bitcoin . Your money would’ve had room to grow (or shrink), all hinging on one thing: your ability to predict the next move.

That is the thrill and the power of financial trading.

Step 1: Grasp the core principle🔍

At its essence, financial trading is simply forecasting whether an asset’s price will rise or fall.

• Get it right and you profit
• Get it wrong and you take a loss

That’s why solid research, clear strategies and disciplined preparation are your most powerful allies.

Step 2: Know what you can trade 📊 

Financial instruments come in four main “flavours” and each offers a different way to play price moves without owning the underlying asset:

• Shares: Tiny slices of ownership in companies like Nvidia or Microsoft
• Indices: Price benchmarks tracking baskets of stocks, e.g. ASX 200 or S&P 500
• Forex: Major currency pairs such as AUD/USD 
• Commodities: Physical goods like gold, ​natural gas, or Arabica coffee

Most traders aren't after the actual asset, they're all about buying low and selling high.

Step 3: Find the market that suits you 🌐

Markets are where buyers and sellers meet under rules that shape costs, speed and product choice. For new traders, two arenas stand out. For new traders, two key arenas stand out:

1. Physical Exchanges (ASX)
   Auction-style venues for shares, ETFs and derivatives—offering clear price discovery, robust clearing and strict regulation.
2. Electronic Networks (Nasdaq & FX platforms)
   Fully digital order books and OTC hubs—delivering millisecond execution and vast liquidity across stocks, indices and currencies.

By aligning your schedule, preferred instruments and risk profile with the right market venue, you can achieve smoother execution, better pricing and the regulatory safeguards necessary for confident trading.

Step 4: Balance risk & reward ⚖️

Idle cash slowly loses purchasing power to inflation, while trading can boost gains, it does so at the cost of potential losses. Smart traders strike the right balance by:

• Defining your risk appetite with clear stop-loss levels and maximum drawdown limits
• Sizing positions so a single trade can’t derail your overall portfolio
• Targeting upside using risk-reward ratios (e.g. aiming to make $3 for every $1 risked)
• Diversifying across instruments and markets to smooth out volatility

By planning how much you’re willing to lose versus what you aim to gain before each trade, you put yourself in control of both risk and reward.

Step 5: Choose your style 🎯

Financial trading comes in two broad flavours. Pick the one that matches your goals, schedule and risk tolerance:

1. Investing: A long-term approach where you buy and hold assets for months or years (think retirement plans or ETFs). This approach may offer lower stress and fewer trades, along with potential tax benefits.
   
   However, it also means your capital is tied up for longer periods, gains may be slower and you're exposed to market downturns.
    
2. Active trading: A short-term approach focusing on price movements, operating on a timeline of minutes to weeks. This strategy targets quick profits and seizes opportunities in volatile markets.
   
   While it can yield rapid returns, it also involves higher transaction costs, emotional strain and a greater risk of swift losses.