What Is Trading?
Trading means buying and selling something, often with the aim of making money from changes in its price.
Buy low, sell high — or not
Before considering any costs or taxes, that's the basic idea behind trading.
📅 Long-term investing
Usually focused on years, often based on the expectation an investment will grow over time.
⚡ Trading
Often involves buying and selling more frequently, focused more on price movements.
Neither is automatically better — they're different approaches with different risks.
A few examples
Trading is not a guaranteed way to make money. Prices can move quickly and unpredictably, and trading costs and taxes can affect results too.
Uncertainty, front and center
Trying to make money from short-term price movements involves significant uncertainty — the same risk and reward ideas apply here too.
A share that could go either way
A share costs $20. You buy one. Scenario A: it rises to $25. Scenario B: it falls to $15. What happened to your investment in each case?
In Scenario A, your $20 grew to $25 — a $5 gain. In Scenario B, your $20 fell to $15 — a $5 loss.
Could you know for certain which one would happen before you bought it?
No. Nobody can know for certain how a price will move in advance.
This lesson is educational — please don't encourage your child to trade. For younger children, focus on the difference between buying something to own long term, and buying/selling based on price movements.
Where to next
More on investing and cryptocurrency.