Beginner Foundation

Before any strategy, you need to know what changes hands when you click buy or sell. On most retail platforms you are not taking delivery of anything — you are opening a contract whose value moves with the price of an underlying instrument. That distinction matters because it explains why you pay a spread, why you can be short as easily as long, and why an overnight position can carry a financing charge.

The spread is the gap between the bid (where you can sell) and the ask (where you can buy). You cross it the moment you enter, which means every trade starts slightly negative. On a forex pair a pip is normally the fourth decimal place — 1.0885 to 1.0886 is one pip — except on JPY pairs where it is the second, so 157.10 to 157.11 is one pip. On indices and metals the platform quotes points or ticks instead. Always check what one unit of movement is worth in your account currency before you size anything, because that number is what turns chart distance into money.

Three order types put a plan into the market. A market order fills at whatever is available now — fast, but the price is not guaranteed. A limit order fills at your price or better, so it is what you use to buy into a pullback. A stop order fills once price trades through a level, which is what you use to enter on a break and, more importantly, what you use to exit a losing trade. Slippage means a stop's fill can be worse than its level in fast conditions; that is a normal cost, not a platform fault.

Worked through the journal: the SPX500 entry logged at 5,460 – 5,475 with a stop at 5,430 is a limit entry into a zone with a stop order below it. The distance from the middle of the zone to the stop, about 37 points, is the risk the rest of this course sizes from.

A trading plan is a written checklist, not a mission statement. It answers five questions before you are anywhere near a live decision: what you trade, when you trade it, what has to be true for you to act, where you are wrong, and how much you risk. If a rule cannot be checked by someone else reading your chart, it is not yet a rule.

Write it in this order. (1) Instruments — name two or three and nothing else, so you actually learn how they move. (2) Sessions — the hours you will be at the screen, plus the news events you stand down for. (3) Setup — the specific structure and trigger you are waiting for, stated so it can be answered yes or no. (4) Invalidation — the price beyond which the idea is dead, chosen from structure, not from the loss you feel like taking. (5) Risk — a fixed percentage of the account per trade, decided once and not revisited when you feel confident.

Then add the two clauses beginners skip: a no-trade rule ("if the setup has not appeared by the end of the session, I do nothing") and a stop-down rule ("after two losses in a day I close the platform"). These exist because the failure mode is rarely a bad entry — it is a good plan abandoned at the third hour of boredom.

Apply it to the journal entry linked below. Read the logged plan and try to reconstruct which line of a checklist produced each field: the entry zone came from the setup rule, the 5,430 stop came from the invalidation rule, and the position size came from the risk rule. If your own plan cannot produce all three fields for a chart in front of you, it has a gap.