Trading Explained Simply: 8 Steps to Understand How It Works

[00:01] something complicated. Some graphs, indicators, a bunch of incomprehensible words. And all this scares people away even before they understand something. But in fact, trading is one of the simplest ideas in the world, which each of

[00:14] you encounters every day. And in this video, I'll explain from scratch how it actually works. By the end of the video, you'll understand what traders actually do, how prices move, and why most people lose money

[00:26] trading. And if you explain all this in normal human language, then everything turns out to be surprisingly simple. To make it easier for you, I've broken down the entire trading process into eight simple steps. Here they are. Let's go through them in order from top to

[00:39] bottom, and in the end you'll have a complete picture, and trading will no longer look like some kind of lottery. So, point one. What is trading? In fact, trading is buying something with one goal: to sell it later, at

[00:52] a higher price. That's it, we bought an asset for $100, the price went up. sold for 110. And it turns out that 110 - 100 you already have 10 dollars of profit on hand.

[01:04] That's all there is to trading in one sentence. Roughly speaking, it's like tickets to a concert. You bought a ticket in advance while it was cheap. Then all the seats are taken, there are more and more people wanting to go, and you sell your ticket, but for more than you paid for it. And the

[01:17] difference is yours. In trading, it's essentially the same thing , only instead of a ticket, you have Bitcoin, Ether, or any other coin. And here is an important point that immediately removes half the questions. The trader actually doesn't care at all what he

[01:31] buys. He only cares about one thing: whether the price will go up or down. Not the coin itself, but its movement. It is on this movement that the trader makes money. It turns out that trading is the only tool in the world where you

[01:44] can earn quickly, a lot, and without starting capital. But there is an important point, with an equally big risk, but I’ll tell you about that a little later. Point two. Trading or investing. And here, beginners often get confused about the difference between trading and

[01:58] investing. Let's figure it out. Investments are for the long term. You buy an asset and hold it for years because you believe it will grow over time. In crypto, there is a classic example here. Take Bitcoin or Ethereum and just hold it there for

[02:11] 5-10 years without twitching at every move. Bought and forgotten. But trading is something else. Here the horizon is very short, and you are not interested in where the coin will be in 10 years, but in its movement right now. And the transaction can last

[02:25] minutes, hours, days, sometimes even a couple of weeks. An investor buys Bitcoin and holds it for 10 years, and a trader catches this short price movement, enters and exits, and takes profit over a short period of time. Roughly speaking, an investor

[02:39] boards a train and travels to the final destination, while a trader gets off at every convenient station, where he can collect his profit and board again. And neither one, nor the other, is better. These are simply two different approaches. But in this video we talk only

[02:51] about trading, specifically about short trades. And it is precisely in them, unlike the buy and hold strategy, that much more skill is required. But before that, knowledge that I am telling you is universal. And it doesn’t matter at all what

[03:05] you trade. In crypto, I trade on these exchanges. Here I mainly have BYБиит, and in metals, stocks and currencies I have these . Choose the one that is more convenient and comfortable for you. I left the links in the description. Point three. How the price moves.

[03:18] Before we talk about how they make money, we need to understand what moves the price in the first place. And the answer here is one and very simple: buyers versus sellers. That's the whole foundation. If there are more buyers than sellers, the price goes up. If there are

[03:32] more sellers, the price goes down. Roughly speaking, it’s all like an auction. One says 100 dollars, another interrupts him and says 105, a third 110. There are many people wanting it, and the price, naturally, creeps up. But when there are no more people willing to buy

[03:47] and there is no one to outbid, the price simply rises. Let me show you on the diagram. One line is demand, that is, the desire to buy. The second is an offer, that is, a desire to sell. Where they intersect, the price stands still. This is

[04:01] our balance. If demand increases, the meeting point rises and the price goes up. If the supply increases, the dot drops and the price goes down. And this is what happens in crypto every second across all coins at once. But the essence is very

[04:16] simple. On one side there are buyers, on the other side there are sellers. The stronger one, the higher the price will go. And further in the video we look at the chart using exactly this approach. Point number four - charts and candles. This is where beginners usually get

[04:29] scared. A bunch of stripes, red, green, nothing clear. Let's break it down now and it will become simple. A chart is just a picture of how the price has moved over time. Vertically we have price, horizontally we have time. And these

[04:44] stripes are called candles. Each candle is a history of what happened to the price during one period. The exact segment depends on the time frame. Roughly speaking, a timeframe is like a zoom on a camera. You are photographing the same

[04:58] object, but you can zoom in and see the details, or zoom out and see the whole picture. And now the candle itself. It has four points, and that's all you need to know. Opening price, closing price, maximum and minimum. Opening is

[05:15] when the price was at the beginning of the segment. Closing where it ended up. The maximum is the highest point, the minimum is the lowest. But now the main thing is, what is all this for? This is the color of the candle. A green candle means that

[05:30] the close is higher than the open. That is, during this segment, buyers turned out to be stronger, and the price closed higher than it opened. The red one, on the contrary, closes below the opening. The sellers pushed and the price went down. You see, we are now reading

[05:45] the chart not just as some incomprehensible multi-colored stripes, but as a concrete struggle between buyers and sellers. Green means the buyers won. Red means sellers. And further, only deeper. Point number five. What a

[05:59] real deal looks like. To do this, I keep in mind a simple four-step procedure. In English, the abbreviation is IPE, based on the first letters of the words. But it is not necessary to remember the abbreviation itself. Logic is important. Let's take it step by step. Step

[06:12] one. I look at the market and form an opinion about where the price is most likely to go. Roughly speaking, it's like a weather forecast. I don't know the future for sure, but because what is happening now, I conclude what will be more likely: up or down. Step

[06:26] two. I decide exactly how the price can get there. Sometimes the price goes straight up, and sometimes it rolls back down first and only then reverses. I keep both options in mind in advance. Step three. I'm waiting for my moment to enter.

[06:41] I have a set of rules by which I understand that now you can come in. And not just because I wanted to, but because the conditions that I had written down for myself worked out. Step four. I'm entering into a deal. And then I've already

[06:55] I'm entering into a deal. And then I've already decided for sure whether I'm buying or selling, where I'm entering, where the stop-loss will be if I'm wrong, and where the target is, where I'll take the profit. Let me be clear. Stop loss is the level at which I close a losing trade

[07:08] to avoid losing more than I am prepared to. And take profit or target is the level where I fix the profit. See what the trick is? A trader doesn't sit and guess. He has a specific procedure that he repeats from deal to deal.

[07:21] So, we have covered five of the eight points . We're making good progress. But before we go any further, I want to say one important point. To start trading, it’s not enough to it, I’m already a trader.” No, everything needs to be consolidated in practice. If you still

[07:35] don't know how to calculate and set the risk per trade, don't know how to calculate the volume per trade, don't know how to set multiple stop-losses and take-profits, don't know how to move the stop to breakeven, and generally haven't yet

[07:47] consolidated the basics of trading in practice, then it's too early to trade on a real account . First you need to master the basics. So here's the plan: watch this video to the end, then put into practice everything I

[08:00] listed in our trading chat, and only then start trading with real money. And here's to help you understand what awaits you in the trading chat. First, short practical lessons that will give you a foundation. Secondly, separate

[08:13] online seminars on levels with traders. And every day live entry points with market analysis. And all this base and personal attention for only 24 euros per month. I left the link in the description or via this QR code. But let's return to

[08:27] our developments. Point six. Risk and reward. And without this, all other trading is meaningless. It's risk and reward. Let me explain it simply. Risk of profit is how much I am willing to lose in a trade versus how much I

[08:41] expect to make. Let's say I risk one dollar to make two. This is a ratio of 1 to 2. or I risk one to gain five. This is already one in five. And the newbie strives to guess as often as possible.

[08:56] It seems to him that the main thing is to be right. But the truth is, you can be right less than half the time and still come out ahead . Let me show you with numbers. Let's say you have a 1:T ratio. You risk one dollar, you take back three.

[09:10] Even if you only guess right four times out of ten, you're still in the black. Let me show you the math. Four profitable trades give you $12, while six losing trades take only $6. The result is plus 6 dollars, given that

[09:25] you were wrong more often than you guessed. And this is the power of risk to profit. You make money not because you are right more often, but because your winnings are bigger than your losses. Therefore, a realistic goal for a beginner is to be wrong nine

[09:39] times out of ten. This doesn't happen. No. Maintain a healthy risk- to-reward ratio and be right a little more often than wrong. This is already enough. But here I will add an important caveat. First of all, this is not financial advice, and no

[09:53] ratio will make your trade a win-win. Second. Losing trades happen to everyone all the time. And that's just part of the job. And the only question here is whether the winnings, on average, cover the losses. All. Therefore, point number seven. Why do

[10:07] most people lose? This is the very point for which many came. Why do most people lose money in trading? Although the idea of ​​trading itself seems simple. I boiled it down to three reasons. And just remember them,

[10:20] because almost all plums are one of these three. The first reason is the lack of tools. The person hasn't figured out the platform, is trading blindly, and doesn't understand how charts and databases work in general . In fact, he gets behind the wheel without

[10:33] knowing where the pedals are. The second reason is lack of discipline. This is generally the main bill killer. A person takes too large a volume, enters into transactions that he should not be in, risks half of the deposit in one transaction, and so on. And

[10:45] most likely he has a small account. He puts on a huge leverage and one unsuccessful deal and that's it , the account is gone. Let's be clear. Leverage is when the exchange allows you to trade with an amount greater than you actually have. Both profit and loss

[10:59] multiply. But the reality is that for a beginner this is more often a trap than an opportunity. Reason three. There is no strategy with an advantage. And here is the key word, which in English is called how. Edge is the advantage, your

[11:13] advantage over the market. This is not magic or a secret indicator. If you break it down, the advantage consists of four simple things. First, you know your statistics, that is, on average, your transactions bring in profit. Second, you have

[11:27] discipline. Third, you have a clear plan and set of rules. And fourthly, you have enough endurance to calmly carry out this plan deal after deal. This is the advantage. And what do the majority try to do ? They are trying to

[11:41] get rich quick. Small account, huge leverage, risk half the deposit in one trade, and the account simply goes to zero. And not because trading doesn’t work, but because there were no tools, no discipline, no edge. And here is the

[11:55] important video, for which I started this whole video in the first place. Look, trading is a skill. It's like flying a plane, like a surgeon performing an operation. It's like professional sports. It takes work, time and discipline.

[12:09] just after watching videos on YouTube. You understand, it’s not enough. So point number eight: how to study correctly. Everything seems to be okay, but it’s not entirely clear where to start and what to grab onto right

[12:22] now. So here's the order of actions, the specific six steps I would recommend you follow to get started in trading. Step one. Learn to read charts and candlesticks. That is what we started with today.

[12:35] This is the base, and without it you can’t go anywhere. Step two. Take or assemble a strategy that already has, that is, this advantage that we talked about today. Not a set of random indicators, but clear rules of when to enter and when to

[12:49] exit. Step three. Check it out on a demo account. A demo account is a training mode on the exchange where you trade with virtual money, not real money. losing a single dollar. Step four. Understand

[13:04] point, which we have already discussed. Profit risk, risk size per trade, account protection during drawdowns. This is what separates those who stay in the game from those who fade away. Step five. Enter the transaction diary. Write down

[13:21] literally every transaction, what you did and why. What you measure is what you manage. No records. You're just repeating the same mistakes. Step six. Use these recordings to become better. See what

[13:36] works and what doesn't, and adjust accordingly. So, in a circle again and again. And I'll tell you honestly right away, this is not a story where you become profitable once and then the money just starts trickling in, and you do nothing. In reality, it is a

[13:49] constant cycle. Learn, test, keep a diary, improve. That's all. Eight points and trading has transformed from a set of incomprehensible stripes into a remember where we started. Most people lose not because

[14:04] trading is difficult or unfair. No, it's because most people treat trading as a lottery rather than a skill. And here is the next practical step for you, so that everything lies on a solid foundation, and does not hang in the air. And to help you

[14:17] put together your own complete trading system, watch this video. Consider this the trading course available online. A total of 12 blocks from the basic spark plugs will be useful for both a beginner and a practicing trader.