General Education

Every category has its own glossary. This one covers the words used everywhere.

Five common types. None is "better." The best one fits your actual life — your job, your time, your stress tolerance.

Pick wrong, and trading will feel miserable. You'll either be glued to a screen when you should be working, or watching positions go nowhere when you crave action. Pick right, and the work feels natural.

1.1The Five Trader Types

Holds for months or years. Bets on the company, not the candle. Lowest stress.

Holds days to weeks. Checks charts a few times a day. Most common style for people with day jobs.

Holds hours to one day. Watches the screen for big stretches. Needs real time.

Uses contracts that give you leverage — bigger gains and losses on smaller moves. Every contract has a deadline. Higher reward, way higher risk if you size wrong.

Opens and closes every trade the same day. Never overnight. The hardest style.

1.2How to Pick Your Style

Ask yourself three honest questions before you settle on a style:

1. How much time do you actually have? Full-time job? You can't day trade from your desk. You're swinging or investing.
2. How much pain can you handle? If a 20% drawdown would keep you up at night, you're not ready for options yet. Start with stocks.
3. What do you actually want? Building wealth slowly? Investor. Looking for action? Active or day trader. Want income from existing stocks? Options seller (way later).

Trading and investing are different things. People confuse them all the time. They buy a stock to "invest," then panic-sell when it drops 5%. That's not investing. That's trading badly.

2.1Trading vs. Investing

Trading means buying and selling to profit from price moves. You don't care about year 10. You care about the next few days or weeks.

Investing means buying and holding for years. You're betting on the business, not the chart.

Most members do both. Long-term positions in companies they believe in. Plus swing trades on setups.

2.2The Five Asset Classes

An asset is anything you can buy that holds value. Five main types.

1. Stocks — the foundation, the slowest movers
2. Forex — moderate, until you add leverage
3. Crypto — bigger swings, 24/7 chaos
4. Options — leverage and a deadline
5. Futures — leverage on top of leverage

This assumes you trade them normally. Add leverage and anything becomes the riskiest thing on the list.

Trading and investing are two different ways to use any asset. You can invest in crypto. You can trade stocks. Pick your approach before you pick the asset.

Every blown account was technically capable of making money. The trader couldn't follow their own rules. That's the whole game.

Protect your capital first. Profit comes second. No money tomorrow means no trades tomorrow.

3.1Split Your Money Into Buckets

Don't treat all your money as one pile. Split it by asset class.

The main bucket. Holds most of your money. Long-term growth and swing trades.

Smaller bucket. Leveraged trades. Bigger moves, bigger risk. Ammo, not savings.

Separate bucket. High volatility. Walled off so a bad week doesn't kill your stocks.

Optional. Active trading, separate rules.

3.2How Much to Put in One Trade

Your broker has different ways to place an order. Each trades speed for price control. Pick wrong and you pay for it.

4.1Market Order

You say: "Buy now, any price." Fills instantly. You don't pick the price you pay.

• Fills immediately
• No control over your fill price
• Can get a bad price on stocks that don't trade much

Use when: the stock trades heavily, the bid and ask are close together, and you need to be in or out right now.

4.2Limit Order

You say: "Buy only at $10 or lower." You pick the price. Might never fill if the stock doesn't get there.

• Full control over your fill price
• No bad surprises
• Might not fill at all
• You might miss the move waiting for a perfect price

Use when: you have a planned entry zone, the spread is wide, or you're trading anything thin (most options, small-cap stocks, after-hours).

Default to limit orders. They're slower but they protect you.

4.3Stop Loss

Auto-sell if the price drops to a level you set. Caps your loss when the trade goes against you.

When the price hits your stop, the order turns into a market order and sells at whatever price it can. Fast fill, but can have slippage in a crash.

Hits your stop, becomes a limit order at your set price. More control, but might not fill in a fast drop.

For most members, stop-market is fine. The protection is worth the occasional bad fill.

4.4Bracket Order

A combo: entry + stop loss + take profit, all set at the same time. You buy, the stop is set, the target is set. If either hits, the other auto-cancels.

• Removes emotion from the exit
• Forces you to plan the trade before entering
• Great for swing traders who don't watch the screen

Not all brokers support brackets. IBKR does. Wealthsimple's basic platform doesn't. Check first.

The most common reason members lose more than they planned: they never set the stop. The trade goes against them. They hope. They hold. They lose 3x what they should have.

Enter → set stop. Every time.

A headline tells you something happened. The chart tells you when to act. Beginners read a headline and panic-trade. The pros wait for a setup.

News tells you why. Setups tell you when.

5.1Company News

Things that move a single stock.

• Earnings (how much money the company made)
• Guidance (what they expect next quarter)
• New products
• Partnerships and contracts
• Leadership changes
• Buybacks (company buying its own shares)

5.2Market News

Things that move the whole market at once.

• Big index moves (S&P 500, Nasdaq)
• Sector rotation (money moving between tech, energy, etc.)
• Overall mood (greedy or scared)

5.3Economic Events

Big-picture data that moves everything.

• CPI — inflation report
• Fed meetings — interest rate decisions
• Jobs report — employment numbers
• GDP — total economic output

Scheduled dates. Know when they're coming. Markets often quiet before, explode after.

5.4Crypto News

• Government regulations
• ETF approvals
• Exchange listings or delistings
• Network updates and token unlocks

5.5Reading News Like a Trader

• Catalyst + clean setup = highest confidence trade
• Clean setup, no catalyst = still tradeable
• Big news, no setup = wait, don't chase

Almost every blown account was technically capable of being profitable. The trader couldn't follow their own rules. They knew the right move. They did the wrong one anyway.

6.1The Five Traps

Buying because everyone else is. The biggest killer of new accounts.

Forcing a trade after a loss to win it back. One bad trade becomes five.

Trading on emotion instead of your plan. Hits after losses, big wins, or stress.

Trade works at 3% size. Next time you size 5%. Then 8%. Then you blow up.

"I'm down $500, I can't sell." The market doesn't care what you paid. Ask: would you enter this trade right now? If no, get out.

The Five Discipline Rules

1. Write the plan before every trade. Entry, stop, target, size. One sentence each.
2. Set the stop loss the same minute you enter. No exceptions.
3. Never size up after a loss. Cut size in half until you're back on track.
4. Never size up because you're "feeling it." Confidence isn't a strategy.
5. Take breaks. After 3 losses in a row, walk away for the day. After a big win, also walk away. Both emotions cloud judgment.

6.2Journaling — The Single Most Important Habit

The one thing that separates members who improve from members who plateau is a trade journal. After every trade, write down:

• Ticker, date, time
• Entry, stop, target
• How much you put in
• Why you took the trade
• What happened
• How you felt before, during, and after
• What you'd do differently

Review weekly. Look for patterns:

• Setups that work for you and ones that don't
• Times of day when you trade well or poorly
• Sizes that match your stress tolerance
• Emotional states that lead to bad trades

A journal turns experience into data. Without one, you'll repeat mistakes for years.

6.3The Long Game

Trading is a skill. The members who do well treat it like learning an instrument.

• Slow at the start
• Ugly for months
• Boring stretches with no progress
• Then one day, fluent

Most people quit during the ugly months. The ones who don't, get good.

Every mistake on paper is free. Every mistake with real money costs you. Paper trading is step one — not the whole journey, but you can't skip it.

7.1What Paper Trading Teaches You

• How to actually place an order (harder than it looks)
• How fast prices really move
• How to size positions in your head
• Sitting with an open trade without panicking
• The habit of writing down every trade

7.2What Paper Trading Can't Teach You

• Real emotions when real money is on the line
• FOMO at full intensity
• The fear of actually losing
• Slippage on stocks that barely trade

That's why it's step one — not the whole thing.

7.3Where to Paper Trade

Most major brokers have a built-in demo or paper mode. Pick the one you'll use live so the interface feels familiar.

• Stocks / Options — IBKR, Webull, Moomoo, Tastytrade
• Crypto — Bybit, Binance, OKX (testnet/demo)
• Day Trading — TradingView with sim, NinjaTrader, Tradovate

7.4How to Paper Trade Properly

If you treat fake money like fake money, it teaches you nothing. Treat it like real money.

1. Use the same position sizes you'd use live. If your real trade would be $500, put $500 on paper. Not $50,000.
2. Set the same stop losses. Same risk per trade.
3. Write down every trade. Same journaling rules as Chapter 6.
4. Do at least 20–30 paper trades before going live. One good week isn't proof.
5. Review every weekend. What worked? What didn't? Why?

No exceptions. One good paper week isn't proof. Members who paper trade for 2–3 months first build real skill.