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HowBuy & Sell Works
A complete guide for beginner investors. Understand trading basics in 10 minutes and take your first step toward financial freedom.
Up Trade — BUY (Long)
When you open a BUY trade, you physically purchase the asset — a stock, cryptocurrency, gold, or currency pair — expecting its price to rise.
Imagine you bought Apple stock at $150. After a week it is worth $170. You sell it and pocket the $20 difference. This is the profit from a BUY trade.
Step-by-Step Example
Analyze the market
You see Tesla stock rising on positive news
Open a BUY position
Buy 10 shares at $200 each. Investment = $2,000
Price rises
Stock reaches $240. Your position is now worth $2,400
Close the trade
Sell 10 shares at $240. Profit = $400 (20% per trade)
Down Trade — SELL (Short)
A SELL trade works differently. You do not own the asset — you borrow it from a broker, sell it now at the current price, and later buy it back at a lower price to return to the broker. The difference is your profit.
Imagine: you see a stock is overvalued. You borrow 10 shares from a broker and sell them at $100 each. After a week the stock drops to $80. You buy back 10 shares for $800, return them to the broker, and pocket $200 profit.
Step-by-Step Example
Analyze the market
You see Overvalued Corp stock overheated by all indicators
Borrow and sell
Borrow 10 shares from a broker, sell at $100 each. You receive $1,000
Price drops
Stock crashes to $75. You are ready to close the position
Buy back and return
Buy 10 shares for $750, return to broker. Profit = $250 (25%)
SPOT vs LEVERAGE
How It Works Physically
Let us break down the difference between a regular purchase and trading with borrowed funds
Spot
Regular purchase
With spot trading, you physically own the asset. You bought a stock — it is recorded on your brokerage account. You bought Bitcoin — it sits in your wallet.
Example
You have $1,000. You buy 0.1 BTC at $10,000. Physically, 0.1 BTC appears in your wallet. If the price rises to $12,000 — you sell and receive $1,200. Profit = $200.
- You really own the asset
- You can withdraw it to your own wallet
- Risk is limited to your investment
- No overnight holding fee
Leverage
Margin trading
With leverage trading, you trade with borrowed funds. The broker lends you 2x, 5x, 10x, 50x or even 100x more than you have. You do not own the asset — you are betting on the price direction.
Example with 10x leverage
You have $1,000. The broker provides 10x leverage — you trade as if you have $10,000. You buy 1 BTC at $10,000. Price rises to $11,000 (+10%). Your profit = $1,000 — 100% of your deposit! But if the price drops 10% — you lose your entire deposit.
- You do not own the asset — it is a contract
- You can trade on price drops (short)
- Profit and loss are multiplied by leverage
- There is a liquidation risk (lose everything)
Comparison in Numbers
| Parameter | Spot | Leverage 10x |
|---|---|---|
| Your deposit | $1 000 | $1 000 |
| Buy BTC at $10,000 | 0,1 BTC | 1 BTC (borrowed $9,000) |
| Price rose 10% | Profit: +$100 (+10%) | Profit: +$1,000 (+100%) |
| Price dropped 10% | Loss: -$100 (-10%) | Loss: -$1,000 (-100%, liquidation) |
INDICES
What Is a Stock Index
An index is a «basket» of dozens or hundreds of companies. When you buy an index, you invest in all these companies at once.
NASDAQ-100 — A Gathering of Tech Giants
NASDAQ-100 includes 100 largest non-financial companies traded on the NASDAQ exchange. It is not one company — it is a hundred, and their combined dynamics form the index value.
When you buy a NASDAQ-100 ETF (e.g. QQQ), you are not buying one stock — you are buying micro-shares of all 100 companies. If Apple rises 5% while the rest are flat — the index rises by about 0.6% (due to Apple's 12.5% weight).
Indices reduce risk: even if one company crashes, the other 99 may hold the index. This is diversification in one click.
Largest Companies in NASDAQ-100 by Weight
Index weight: 12,5%
Index weight: 11,8%
Index weight: 7,2%
Index weight: 5,4%
Index weight: 4,1%
Index weight: 3,8%
Index weight: 3,5%
Index weight: 2,9%
Total companies in index:100 companies
Top-10 companies account for:~55% of the index
Current value (approximate):
~19,000 points
MARKETS
All Market Types in One Place
Commodities
Gold, oil, gas, metals
Funds
ETF, mutual funds, REIT
Indices
S&P 500, NASDAQ, MOEX
Crypto
Bitcoin, Ethereum, DeFi
Forex
Currency pairs EUR/USD
EXAMPLES
Real Trades in Numbers
Gold (XAU/USD)
BUY: $1,920 → $2,010
Profit: +$90 per ounce
Bitcoin (BTC/USD)
SELL: $31,000 → $26,500
Profit: +$4,500 per coin
EUR/USD
BUY: 1.0750 → 1.0950
Profit: +200 pips
S&P 500
BUY: 4,200 → 4,450
Profit: +250 points
COMPARISON
Spot vs Leverage
Same price movement — different result. Compare earnings with and without leverage.
Spot
Regular purchase
You buy an asset with your own money and actually own it. Profit equals the price growth percentage.
Deposit $1,000. Bought 0.1 BTC at $10,000. Price rose 10% — sold for $1,100. Profit: +$100 (10%).
Leverage
Futures / Margin trading
The broker lends you funds. You trade a price contract without owning the actual asset. Profit is multiplied by leverage.
Deposit $1,000, leverage 10x. Bought contract for 1 BTC at $10,000. Price rose 10% — profit +$1,000 (100% of deposit).
Example: BTC rose 10%
| Parameter | Spot | Leverage 10x |
|---|---|---|
| Your deposit | $1 000 | $1 000 |
| Buy BTC at $10,000 | 0,1 BTC | 1 BTC |
| Price +10% → $11,000 | Profit +$100 (+10%) | Profit +$1,000 (+100%) |
| Price −10% → $9,000 | Loss −$100 (−10%) | Loss −$1,000 (−100%, liquidation) |
PRACTICAL TIPS
Tools of a Successful Trader
Three simple principles that help you trade consciously and keep emotions under control
Diversification
Don't put all your capital into one asset. Split it across different markets — stocks, bonds, commodities. If one market falls, another may rise and offset losses.
Stop-Loss
It's an automatic order that closes a trade when a set loss is reached. You decide in advance how much you're willing to lose, and the system watches it — without emotions or doubt.
Trading Plan
Before every trade, write down: why you're entering, at what price you'll exit with profit, and where you'll place the stop-loss. A plan removes spontaneity and helps analyze results.
RESOURCES
Continue Learning
A curated collection of the best books, courses and tools for developing your investment skills
LIBRARY
10 Books on Financial Markets
Classics of investing, trading and financial literacy — from basics to professional level
Rich Dad Poor Dad
Robert Kiyosaki
The foundational book on financial literacy. Explains the difference between assets and liabilities, and why the rich invest in assets while the poor spend on expenses.
Think and Grow Rich
Napoleon Hill
Classic guide to the mindset of the wealthy. 13 principles of success: purpose, faith, persistence, teamwork — and how to apply them to money.
The Richest Man in Babylon
George Clason
Ancient parables about building wealth by saving 10% of income, investing wisely and protecting capital. Timeless laws of money.
A Random Walk Down Wall Street
Burton Malkiel
A beginner's guide to the stock market. Explains the randomness of price movements, market efficiency and why index funds often beat active managers.
The Intelligent Investor
Benjamin Graham
The bible of value investing. Concept of margin of safety, investing vs speculation, financial report analysis. Warren Buffett's textbook.
Money: Master the Game
Tony Robbins
A modern guide to personal finance. Breakdowns of legendary investors' strategies, portfolio investing, tax optimization and achieving financial freedom.
I Will Teach You to Be Rich
Ramit Sethi
A practical handbook for beginners: how to calculate interest, understand loans, choose investments and build a personal budget. Clear and to the point.
Trading for a Living
Alexander Elder
A professional trader's experience: how to choose a broker, set up a platform, read charts and manage risk on real trades.
Technical Analysis of the Financial Markets
John Murphy
The encyclopedia of technical analysis. Candlestick patterns, trend lines, RSI and MACD indicators, trading volumes — everything for price forecasting.
Trading in the Zone
Mark Douglas
Why 90% of traders lose money not because of strategy but because of psychology. How to overcome greed, fear, overconfidence and build discipline.