Trading: what it is in simple words
The word came from English: trade means "to trade". What trading means in practice: you buy an asset when you expect it to rise, and sell when the price reaches the target or it becomes clear you were wrong. The essence of trading is the difference between the entry price and the exit price. That's why trading is called speculation: income comes from price changes, not from owning the asset. Dividends and company growth over the years barely interest a trader.
You can also earn on a fall. Buying in anticipation of a rise is called a long. A trade on a fall is called a short: the trader borrows shares from the broker, sells them, and later buys them back cheaper and returns the debt.
A hypothetical example, not real quotes. Price in rubles per share, broker commission not included.
The chart shows two trades. The trader bought a share at 250 rubles and sold at 262: 12 rubles per share. Then the price reversed, he opened a short at 261 and bought back at 254, another 7 rubles. With 100 shares that's 1,200 and 700 rubles before commissions. If the price had gone down after the purchase, the same 12 rubles per share would have been a loss.
People trade various financial instruments: stocks and bonds on the exchange, futures, currencies, cryptocurrencies. Traders view charts in the broker's terminal or on services like TradingView.
Trader: who it is and what they do
A trader is a person who decides for themselves what and when to buy or sell, and earns on the price difference. Who a trader is by place of work: a private individual with their own account at a broker, an employee of a bank or fund who trades the organization's money, or a prop trader who trades a prop company's account.
Trades take less time than it seems. The trader spends most of the day waiting. Before entering, they decide three things: at what price they'll buy, where they'll close the trade at a loss (stop-loss) and where they'll take profit (take-profit). After exiting, they record the trade in a journal: what they did, why, and how it ended. A month later, the journal shows whether their strategy works.
You can trade at different paces. The shorter the trades, the more hours are spent at the screen.
- Trades within a single day, positions are not held overnight. A scalper holds a trade for seconds and minutes and enters dozens of times a day.
- several hours at the screen every day
- A position lasts from a few days to a couple of weeks.
- checking the chart once a day
- Trades lasting weeks and months, closest to investing.
- checking once a week
Investing and trading: what's the difference
An investor and a trader buy the same stocks, but for different reasons. An investor buys a security for years and waits for dividends, coupons and business growth. A trader waits for price movement and exits as soon as it happens or doesn't happen.
| Investor | Trader | |
|---|---|---|
| Trade duration | Years | From minutes to weeks |
| Source of income | Dividends, coupons, business growth | Price difference |
| What they study | Company reports | Chart, volumes, news |
| Time per week | An hour or two | Hours every day |
| Trades per year | Units | Hundreds |
- Investor
- Years
- Trader
- From minutes to weeks
- Investor
- Dividends, coupons, business growth
- Trader
- Price difference
- Investor
- Company reports
- Trader
- Chart, volumes, news
- Investor
- An hour or two
- Trader
- Hours every day
- Investor
- Units
- Trader
- Hundreds
An active minority trades. According to the Moscow Exchange, in September 2026, 42.7 million people had a brokerage account, while almost 3 million concluded trades. Yet these people are noticeable: individuals accounted for 66.5% of the volume of stock trading.
Source: Moscow Exchange press release dated 09.10.2026. The share was calculated by us: 3 million out of 42.7 million, rounded to whole numbers.
Trader and broker: who is responsible for what
A trader and a broker are different roles. The trader decides what to buy. The broker executes their order. Under the law on the securities market, brokerage activity is the execution of a client's orders for transactions with securities and derivative instruments under a brokerage service agreement. A broker in Russia operates under a license from the Bank of Russia and charges a commission for transactions and servicing.
A retail trader submits an order to the Moscow Exchange through a broker. The broker also checks beginners: since October 1, 2021, a non-qualified investor must pass a test on understanding risks before buying a futures contract.
- Who they are
- Decides for themselves what and when to buy or sell. Holds a trade from minutes to weeks.
- How they earn
- On the difference between entry and exit price: long on a rise, short on a fall.
- What they risk
- With their own money. A mistake with leverage can wipe out the account.
- Who they are
- Buys stocks, bonds or funds for years.
- How they earn
- On dividends, coupons and growth in the value of the business.
- What they risk
- With the money invested: a security can be worth less than the purchase price for years.
- Who they are
- An intermediary licensed by the Bank of Russia. Passes the client's orders to the exchange and maintains their account.
- How they earn
- On commissions for trades and servicing.
- What they risk
- Profit and loss on trades are yours; the broker does not make decisions for you.
- Who they are
- A venue where buyers' and sellers' orders are matched, for example the Moscow Exchange.
- How they earn
- On exchange fees for trades.
- Who they are
- Lets those who pass a paid evaluation (challenge) trade on its account.
- How they earn
- On fees for challenges and its share of traders' profits.
- What they risk
- With payouts to traders. The trader risks only the fee for the attempt.
The scheme is simplified: between the broker and the exchange there are also a depository and a clearing center. A trader's account at a prop firm is usually simulated.
The broker is not responsible for your loss: it executed the order, and you made the decision to trade.
Why trading is dangerous
Most retail traders lose money. In 2018, the European regulator ESMA collected data from national supervisors: 74-89% of retail accounts trading CFDs (contracts for difference) were in the red. The average loss per client ranged from €1,600 to €29,000.
An even harsher study of Brazilian day traders. Economists took everyone who started trading futures on the exchange in 2013-2015 and did not quit for at least 300 days. 97% ended up in the red, and only 0.4% earned more than a bank teller ($54 a day).
Sources: ESMA, 23.03.2018; Chague, De-Losso, Giovannetti, "Day trading for a living?". Percentages are taken from the sources as is.
After these data, ESMA banned the sale of binary options to retail clients in the EU and limited leverage on CFDs: from 30:1 on major currency pairs to 2:1 on cryptocurrencies.
Where to get capital: your own deposit, a broker, or a prop firm
With a broker, a trader trades with their own money. The entire deposit is at risk, but all the profit is yours, and you set the rules for yourself.
The second path is prop trading. A prop firm lets you trade its account if you pass a paid evaluation according to its rules. In the PropMarketCap catalog, typical conditions for two-step challenges are: first phase target 8%, second 5%, daily loss limit 5%, overall 10%, trader gets 80% of profit. These are medians of 46 programs as of 22.10.2026, not a promise of income.
At risk: the entire deposit
Profit: all yours, minus commissions
Rules: your own
At risk: attempt fee
Profit: usually 80% to the trader
Rules: 8% and 5% target, 5% daily limit
A two-phase $10,000 challenge costs $99 at Hash Hedge and at Era Trade. Both prop firms accept traders from Russia and other CIS countries. Other programs, prices and terms are collected in the prop firm catalog.
The challenge is paid, most participants do not pass it, and the fee is not refunded on failure. The account is usually simulated: the prop firm pays the payout from its own funds under the terms of the contract. There is no Bank of Russia supervision over prop firms.
A prop account does not make a trader more experienced. It only changes what you risk: instead of your entire deposit, the price of an attempt. How the phases, limits and payouts work is explained in the Academy lesson on prop trading.
Setup, equity, FOMO: what these mean in trading
- Setup - a set of conditions on the chart under which a trader enters a trade. No setup - no trade.
- Equity - what the account is worth right now, taking open trades into account. The balance changes after a trade is closed, equity changes every second.
- FOMO - the fear of missing out on a move. A trader sees a strong rally and buys at the very top without a plan.
- Retest - the price returning to a level it has just broken through. On the chart below, this is the touch of 300 from above.
- RSI - a momentum indicator from 0 to 100. Values above 70 are usually read as overbought, below 30 as oversold.
- ATR - the average price range over a period. It is used to set a stop so that normal fluctuations do not hit it.
- FVG - a section of the chart that the price moved through in a burst: an empty space remains between the wick of the first and third candles.
- Expiration - the date when a futures or options contract expires.
- Funding - a regular payment between buyers and sellers of perpetual futures on crypto exchanges. It keeps the futures price close to the price of the coin itself.
A hypothetical example, not real quotes. The price broke through the 300 level from below, returned to it from above, and continued on.
A trader who waited for the retest buys at 300 and places a stop just below the level. If the price goes back under 300, the breakout turned out to be false, and the loss will be small.
How a beginner should start trading
Start with a demo account: the same charts and orders, but no money. Trade on it for at least a month and keep a trading journal. If in a month you never once broke your own stop-loss, you can think about a real account or a challenge.
If you're already choosing a program, the PMC challenge calculator shows the price, targets and limits of all prop firms in the catalog on one screen.
Summary
Trading is earning from the difference in prices, and the trader decides when to buy and sell. An investor holds securities for years, a broker executes trades on the exchange and takes a commission. Most retail traders lose money, so start with the basics: PMC Academy open lessons explain for free how prop trading works and how to read challenge rules.
Learn the rules while it costs nothing
Lessons on drawdown, challenge stages and payouts in plain language. Some lessons are open for free.
Start with a free lessonNo payment: open Academy lessonsTrading on financial markets involves a risk of losing funds. A challenge fee is not an investment and may not be returned. The material is informational and is not financial advice.