Module 1: Start Here · Lesson 1 of 6 · Back to course
If you’ve seen adverts or social media posts about trading, you’ve probably seen people with laptops on a beach, screenshots of big wins and promises of “financial freedom”. This course isn’t going to do that. Before you learn a single chart pattern, you deserve a clear, honest picture of what trading is, how it works and what the real odds look like.
By the end of this lesson you’ll know:
- what trading actually means
- how it’s different from investing and from gambling
- who’s on the other side of your trades
- what the published figures say about how many beginners lose money
- why this course puts process before profits
What trading actually means
At its simplest, trading is buying and selling something to profit from changes in its price over a relatively short period.
That “something” might be a currency pair such as GBP/USD, a stock market index such as the FTSE 100, a commodity such as gold or oil, or shares in a single company. We’ll look at each market in Lesson 1.2.
A trader is usually trying to answer one question: is the price more likely to go up or down from here, and is the possible reward worth the risk? Then they place a trade, decide in advance where they’ll get out if they’re wrong, and manage it until it closes.
The time a trade stays open varies a lot:
| Style | Typical holding time | What it involves |
|---|---|---|
| Scalping | Seconds to minutes | Many small trades, very screen-intensive |
| Day trading | Minutes to hours, closed by the end of the day | Watching markets during a session |
| Swing trading | Days to a few weeks | Fewer trades, less screen time, overnight risk |
| Position trading | Weeks to months | Overlaps with investing |
There’s no “best” style. The right one is the one that fits your life, your temperament and the rules you can stick to. We cover this properly in Module 10.
Trading vs investing: what’s the difference?
People often use the words interchangeably, but they’re quite different.
Investing usually means buying an asset – such as shares in a company or a fund that tracks an index – and holding it for years. You’re aiming to benefit from long-term growth and, sometimes, dividends. Many UK investors do this through a pension or a Stocks and Shares ISA.
Trading is shorter-term. Most retail traders in the UK don’t buy the actual asset at all. Instead they use products such as spread bets or contracts for difference (CFDs), which let you speculate on the price going up or down without owning the underlying thing. These products use leverage, which means a small deposit controls a much larger position. Leverage makes both gains and losses bigger – it’s the main reason trading is riskier than investing. We’ll go through exactly how this works with numbers in Lesson 1.3.
A simple way to think about it:
- Investing: “I believe this will be worth more in ten years.”
- Trading: “I believe this price is more likely to move in a particular direction in the next few hours or days, and I’ve decided exactly how much I’m prepared to lose if I’m wrong.”
Neither is guaranteed to make money. But for most people, short-term leveraged trading is a much harder game.
Is trading just gambling?
It’s a fair question, and the honest answer is: it can be.
Trading without a plan – clicking buy because a price “feels” like it’ll go up, risking more after a loss to win it back, or taking tips from strangers online – has a lot in common with gambling. In fact, under UK tax rules spread betting is treated as betting rather than investing for most individuals (we explain this in our UK trading tax guide).
What separates disciplined trading from gambling isn’t the product. It’s the process:
- A defined method with written rules for when to enter and exit
- Risk control – a pre-decided, small loss limit on every trade and every day
- Testing – checking the method on past data and on a demo account before risking money
- Record keeping – a journal so you can see what’s actually happening, not what you remember
- Accepting uncertainty – no single trade is predictable; you’re thinking about results over many trades
Even with all of these, there’s no guarantee of profit. A good process gives you a fair chance of learning and of limiting losses. It doesn’t remove risk.
Who is on the other side of your trade?
Every trade needs a buyer and a seller. When you trade a spread bet or CFD with a UK provider, the provider is your counterparty – you’re trading with them, not directly on an exchange. They may hedge their exposure in the wider market, or they may not. Behind the prices you see are banks, hedge funds, market makers, pension funds, companies hedging currency risk and millions of other traders.
Many of those participants have more information, faster technology and more experience than a beginner at a kitchen table. That doesn’t make it impossible to learn, but it’s a good reason to be humble. If a strategy looks like easy money, assume you’ve missed something.
You also pay costs on every trade – the spread (the gap between the buy and sell price), and sometimes commission and overnight financing. These costs mean that, on average, a trader who placed random trades would slowly lose money even if the market went nowhere.
The honest numbers: most retail traders lose money
This is the part many trading websites hide in small print. We’d rather put it front and centre.
In the UK, firms that offer CFDs and spread bets to retail clients must show a standardised risk warning that includes the percentage of their own retail client accounts that lose money. The Financial Conduct Authority (FCA) made this a permanent rule in 2019 (FCA PS19/18).
Here are the figures some well-known UK providers were showing on their UK websites when we checked on 17 October 2026:
| Provider (UK website) | Published figure | Source |
|---|---|---|
| IG | 70% of retail investor accounts lose money when trading spread bets and CFDs with this provider | ig.com/uk |
| Pepperstone | 73.6% of retail investor accounts lose money when trading spread bets and CFDs with this provider | pepperstone.com/en-gb |
| Spreadex | 61% of retail investors lose money when trading spread bets and CFDs with this provider | spreadex.com/financials |
Providers update these figures regularly, so they may have changed since we checked. We’re not recommending or ranking these firms here – they’re simply examples of published figures.
Before those rules were brought in, the FCA looked at a sample of client accounts and found that 82% of clients lost money on these products, with an average loss of £2,200 per client over a year (FCA CP16/40).
Prop firm challenges (which we cover in Module 15) have their own version of these odds. You pay a fee to attempt an evaluation, and most people who attempt one don’t pass. Firms rarely publish independently audited pass rates, so treat any figure you see quoted online with caution.
What do these numbers mean for you? Not that you should never trade – but that losing money is the normal outcome for beginners, not the exception. If you decide to trade, you should do it in a way that keeps losses small while you learn, and with money you can genuinely afford to lose.
Why this course puts process before profits
You can’t control whether the next trade wins. You can control:
- how much you risk
- whether you follow your rules
- whether you practise before using real money
- whether you record and review what you do
- when you stop for the day
That’s why the course is structured the way it is. You’ll learn how markets and charts work first, then spend a whole module on risk management and position sizing and another on psychology, before you see a single strategy. You’ll then backtest, practise on a demo account and keep a journal. Only at the end do we cover prop firm challenges – and we’ll be honest about their costs and odds.
If you only take one thing from this lesson, make it this: your first goal isn’t to make money. It’s to learn without losing much.
Who trading probably isn’t for (right now)
Be honest with yourself. It’s probably not the right time to trade with real money if:
- you’d be using money you need for bills, rent, a mortgage or debts
- you’re hoping trading will get you out of financial difficulty quickly
- you find it hard to stop once you’ve started losing at something
- you haven’t yet practised on a demo account
If money worries are weighing on you, free, impartial help is available from MoneyHelper. If you feel trading has become a compulsion, GamCare offers free, confidential support.
Key takeaways
- Trading means buying and selling to profit from shorter-term price changes, usually with leveraged products such as spread bets and CFDs in the UK.
- Investing is long-term ownership; trading is short-term speculation with higher risk.
- What separates trading from gambling is a tested, written process with strict risk control – and even that doesn’t guarantee profit.
- UK providers’ own published figures show most retail accounts lose money.
- Your first goal is to learn without losing much.
Quick quiz
- What’s the main thing that makes CFD and spread bet trading riskier than long-term investing? (Answer: leverage – it magnifies both gains and losses.)
- In the UK, who is usually the counterparty to your spread bet or CFD trade? (Answer: the provider you trade with.)
- True or false: a good trading process guarantees profit. (False.)
- What do UK CFD providers have to publish in their risk warning? (The percentage of their retail client accounts that lose money.)
- What does this course say your first goal should be? (To learn without losing much.)
Try this
Write down, on paper, the maximum amount of money you’d be prepared to lose in total while learning to trade – an amount that wouldn’t affect your bills or wellbeing if it all went. Keep it. We’ll come back to it in Lesson 1.5.
FAQ
Can you teach yourself to trade? Yes, many people learn from free resources like this one. But “learning to trade” doesn’t mean you’ll be profitable – most retail traders aren’t. Treat it as a skill that takes months of practice, with no guaranteed outcome.
Do I need a lot of money to start? No. You can learn everything in this course with a free demo account and free charting software. We’d strongly suggest you do.
Is trading legal in the UK? Yes. Trading through firms authorised by the FCA is legal. Always check a firm on the FCA Register before opening an account – we show you how in Module 2.
Disclaimer: This page is general education, not financial, investment or tax advice or a personal recommendation, and it doesn’t take your circumstances into account. Examples are hypothetical, for illustration only, and not an invitation to buy or sell. Learning a strategy doesn’t guarantee profits. Past performance is not a reliable guide to future results. Futures, spread bets and CFDs are complex and carry a high risk of losing money quickly because of leverage, and most retail traders lose money. With a real futures account, losses can exceed your deposit. Only trade with money you can afford to lose, and speak to an independent FCA-authorised adviser if you’re unsure. Published loss figures are the providers’ own, checked 17 October 2026, and may have changed. Read our full risk warning.