Question 1

Why do serious traders keep a journal?

Accepted Answer

Memory is unreliable. Without a written record, traders tend to remember winners more vividly than losers. A trade journal creates an objective log of every decision, including the setup, entry rationale, position size, outcome, and emotional state. Over time it reveals patterns that are invisible in the moment.

Question 2

What are equities (stocks)?

Accepted Answer

Equities represent ownership shares in a publicly traded company. The two primary US stock exchanges are the New York Stock Exchange (NYSE) and NASDAQ. Regular trading hours run from 9:30 AM to 4:00 PM Eastern Time, Monday through Friday.

Question 3

What are futures?

Accepted Answer

A futures contract is a legally binding agreement to buy or sell a specific asset at a predetermined price on a set future date. Futures are standardized and traded on regulated exchanges, primarily the CME Group. They trade nearly 24 hours a day, 5 days a week, and are highly leveraged.

Question 4

What is a proprietary trading firm (prop firm)?

Accepted Answer

A proprietary trading firm provides traders with access to the firm's capital to trade financial markets. Instead of risking your own money, you trade the firm's funds and keep a percentage of the profits, known as a profit split. The firm enforces strict risk rules including daily loss limits and maximum drawdown limits.

Question 5

What is backtesting?

Accepted Answer

Backtesting is the process of applying a trading strategy to historical price data to simulate how it would have performed in the past. It lets you evaluate a strategy's logic, profitability, and risk profile before risking real capital.

Question 6

What is algorithmic trading?

Accepted Answer

Algorithmic trading uses computer programs to execute trades automatically based on a predefined set of rules. These rules can be based on price levels, technical indicator values, time of day, or statistical relationships between assets. It removes emotion from execution and can operate at speeds impossible for a human trader.

Question 7

What is trend following?

Accepted Answer

Trend following seeks to enter trades in the direction of an established price trend and hold until evidence of a reversal appears. Common tools include moving averages, trendlines, and momentum indicators. It works best in strongly directional markets.

Question 8

What are ETFs (Exchange-Traded Funds)?

Accepted Answer

An ETF is a fund that holds a collection of assets and trades on a stock exchange just like an individual share. Buying one share of an ETF provides exposure to every asset inside the fund, providing instant diversification. ETFs can track an index, a sector, a commodity, or a fixed-income category.

Question 9

What is margin and leverage?

Accepted Answer

Margin is collateral deposited with a broker to open and maintain a leveraged position. Leverage allows you to control a larger position than your account balance would otherwise allow. It amplifies both gains and losses proportionally. A margin call occurs when account equity falls below the broker's required minimum.

Question 10

What is a stop loss?

Accepted Answer

A stop loss is a pre-set exit order that closes your position if price moves against you to a specified level. Its purpose is to cap potential losses on a trade. Setting it before entering a trade helps remove emotion from exit decisions.

Learn the fundamentals of trading and financial markets.

The Importance of Trade Journalling

Financial Markets

Trading Styles

Key Terminology

Order Types

Risk Management

Technical Analysis Basics

Traditional Investing Products

Proprietary Trading Firms

Trading Bots and Algorithms

Common Trading Strategies

Backtesting