Trading 101 showed you how markets work. Trading 201 is the mechanics of actually buying and selling — free with a Traxent account.
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An order is just an instruction to your broker. Three cover almost everything you'll do — and knowing when to use each is the difference between a clean entry and a nasty surprise.
Rule of thumb: use limit orders when price matters more than speed, market orders when getting in or out now matters more, and always know where your stop is before you enter.
There isn't one price — there are always two. The gap between them is a small cost you pay on every single trade.
At any moment there are two prices, not one: the bid (the highest price buyers will pay) and the ask (the lowest price sellers will accept). The gap between them is the spread.
When you buy at market you pay the ask; when you sell at market you receive the bid. So the spread is a small, built-in cost of trading — you start every trade slightly "in the red" by the spread. Heavily traded markets (like major currencies or big stocks) have tiny spreads; thin, obscure ones have wide spreads.
You can profit whether a price rises or falls. Here's how both directions work — and why one of them needs extra care.
Going long is the familiar one: you buy expecting the price to rise, then sell higher for a profit. Buy low, sell high.
Going short is the mirror image: you profit when the price falls. Your broker effectively lets you sell first at a high price and buy back later at a lower one, pocketing the difference. It's how traders can make money in falling markets — but because a price can (in theory) rise without limit, a short that goes wrong can lose more than you put in, so it needs careful risk control.
Key point: prop firms and most trading platforms let you do both — being able to go short is what lets skilled traders profit in down markets too.
Leverage is the feature that makes small accounts interesting — and the one that wipes most of them out. Both, for the same reason.
Leverage lets you control a large position with a small amount of your own money. With 10:1 leverage, £1,000 of your cash can control a £10,000 position. The slice of your money set aside to hold that position is called the margin.
Leverage cuts both ways — it multiplies gains and losses by the same amount. A 5% move in your favour on 10:1 leverage is a 50% gain; a 5% move against you is a 50% loss. This is exactly why beginners blow up: not because they picked wrong, but because they used far too much leverage. Treat it as something to use sparingly, not a shortcut.
Each cost is tiny. Across hundreds of trades, they decide whether a strategy is actually profitable.
Beyond the spread, watch for:
None of these are huge on a single trade, but they add up over hundreds of trades.
You don't need to predict the news — but you do need to know when it's coming.
Prices move when the balance of buyers and sellers shifts — and that usually happens because new information arrives. The big drivers:
You don't need to predict the news. But you should know when major scheduled events (like a central-bank rate decision) are due, because prices can move violently around them.
The price you click and the price you get aren't always the same. Here's why — and how to keep the gap tiny.
Liquidity means how easily you can buy or sell without moving the price. A liquid market has lots of buyers and sellers, so your order fills instantly at the price you see. A thin market may not have anyone on the other side at your price.
Slippage is what happens when it doesn't fill exactly: in fast-moving or thin markets, the price you actually get can be a little worse (or occasionally better) than the price you clicked. It's usually tiny in big markets, and larger around news. Using limit orders and trading liquid markets keeps it under control.
Four questions. The answer and a short explanation appear as you click.
You can place a trade. Now learn the part that keeps you in the game — risk, psychology, and the path to a funded account.
Continue to Trading 301 →