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Beginner trading cheat-sheet
Dollar Man Learning · dollarmanlearning.com · Educational use only, not financial advice.
Key terms
- Long / buy
- You expect the price to rise.
- Short / sell
- You expect the price to fall.
- Pip
- Small price unit: 0.0001 (0.01 for JPY pairs).
- Lot
- 1 standard lot = 100,000 units; mini 0.1; micro 0.01.
- Spread
- Difference between buy and sell price; a trading cost.
- Leverage
- Borrowed exposure. Magnifies losses as well as gains.
- Margin
- Money set aside by the broker to keep a trade open.
- Stop-loss
- Closes the trade at a set loss to protect your account.
- Take-profit
- Closes the trade at a set profit.
Order types
- Market
- Buy or sell now at the current price.
- Buy limit
- Buy below the current price.
- Sell limit
- Sell above the current price.
- Buy stop
- Buy above the current price.
- Sell stop
- Sell below the current price.
Candle anatomy
Pre-trade checklist
- Is this setup in my written trading plan?
- Do I know where my idea is wrong (stop-loss)?
- Have I sized the position to risk 1% or less?
- Is the risk/reward at least what my plan requires?
- Is there major news due soon?
- Am I calm, or am I trading to win back a loss?
Formulas
- Risk amount = balance × risk %
- Lots = risk amount ÷ (stop-loss pips × pip value per lot)
- Break-even win rate = 1 ÷ (1 + reward/risk)