Stock Trading
& Financial Market Education

A pump and dump is a type of stock scam that often targets penny stocks.

How it works:

1. Scammers “pump” up the stock price by spreading hype, false news, or misleading claims to get people excited and buying.

2. Once the price rises, the scammers “dump” their shares at a profit, causing the stock price to crash.

3. Investors who bought in late usually lose most or all of their money.

Simple takeaway:
A pump and dump is a fraudulent scheme that inflates a stock’s price so scammers can sell at a profit — it’s especially common with low-priced, thinly traded penny stocks.

A security is a financial instrument that represents ownership (equity), debt (loan), or the right to future profits. Securities are bought and sold in financial markets.

Common types of securities:

• Stocks: Represent ownership in a company.

• Bonds: Represent a loan you give to a company or government.

• Derivatives: Contracts whose value depends on an underlying asset.

Simple takeaway:
A security is basically something you can invest in or trade to potentially earn money or returns.

A commodity is a basic physical good that can be bought, sold, or traded, usually in large quantities. Commodities are often natural resources or agricultural products that are interchangeable with others of the same type.

Common examples:

• Energy: Oil, natural gas

• Metals: Gold, silver, copper

• Agriculture: Wheat, coffee, corn

Key point: Commodities are standardized, meaning one unit is essentially the same as another, which makes them easy to trade o

A derivative is a financial contract whose value is based on the price of something else — called the “underlying asset.”

• The underlying asset could be a stock, bond, commodity, currency, or even an index.

• Derivatives allow investors to bet on the future price of that asset without actually owning it.

• They are often used for hedging risk or speculating on price movements.

Common types of derivatives:

• Options: The right (but not the obligation) to buy or sell an asset at a set price by a certain date.

• Futures: An obligation to buy or sell an asset at a set price on a future date.

• Swaps: Agreements to exchange cash flows, like interest rates or currencies.

Simple takeaway:

• Think of derivatives as financial contracts tied to something else. They can protect you from risk or let you try to profit from price changes without owning the asset itself.

Firstly, you must be in the best stocks that have the highest chance at making a profitable run. These stocks can be priced in any range of my choosing and are found by analyzing certain technical indicators and as well by using stock screeners and scanners. I have developed personal search criteria that I plug-in to these screeners to better investigate the market each day. Once I find those stocks I will plot them on my charts and analyze my technical indicators to narrow down my search even further. By doing this it is my goal to find two or three stocks out of all of the thousands in the market that show the highest probability of an upward move in the short term.

1. Stocks

• A stock represents ownership in a single company.

• When you buy a stock, you own a small piece of that company and can benefit from price increases and dividends.

• Example: Buying shares of Apple means you directly own a portion of Apple.

2. ETFs (Exchange-Traded Funds)

• An ETF is a collection of many stocks (or other assets) bundled together.

• ETFs trade on stock exchanges like individual stocks, so you can buy and sell them throughout the day.

• They offer instant diversification because you’re investing in a basket of companies, not just one.

• Example: An S&P 500 ETF gives you exposure to the 500 largest U.S. companies in a single purchase.

3. Mutual Funds

• A mutual fund is also a collection of stocks, bonds, or other assets, but it’s usually actively managed by a fund manager.

• Mutual funds don’t trade on stock exchanges throughout the day; you buy or sell shares at the fund’s end-of-day net asset value (NAV).

• They often have higher fees than ETFs due to management costs.

• Example: A growth-focused mutual fund may invest in tech and healthcare companies and is actively adjusted by the manager.

Which one is best to buy?

There’s no one-size-fits-all answer — it depends on your goals, risk tolerance, and how much time you want to spend managing your investments.

• Stocks: Good if you want to focus on individual companies and don’t mind more risk and research. Can offer higher potential rewards but also bigger losses.

• ETFs: Great for beginners or anyone wanting instant diversification. Usually lower fees than mutual funds and easier to trade like a stock.

• Mutual Funds: Often better if you want professional management and are investing for the long term, but they can have higher fees and less trading flexibility.

Simple takeaway:

• For hands-on trading or picking favorites → stocks

• For easy, diversified investing → ETFs

• For long-term, managed investing → mutual funds

✅ Key tip: Many investors combine them — for example, holding a few individual stocks while putting the rest in ETFs for broad diversification.

Yes. To buy or sell stocks, ETFs, or other securities, you need a broker—a company or platform that executes trades for you. Many people use brokerage accounts offered by their bank, which can be convenient if you already have a checking or savings account.

How do I choose one?
When picking a broker, consider:

• Fees and commissions: Look for low costs, especially if you’re starting small.

• Ease of use: A beginner-friendly platform with intuitive tools helps you learn faster.

• Account types and offerings: Make sure they offer the securities you want to trade (stocks, ETFs, etc.).

• Educational resources: Some brokers provide tutorials, webinars, and articles that can help you grow.

• Customer support and reputation: Check reviews and ensure the broker is regulated by a reputable authority.

Simple takeaway:
You need a broker to trade, and your bank might already offer one. When choosing, focus on low fees, ease of use, and helpful resources—especially if you’re just starting out.

A stop loss is an order you place with your broker to automatically sell a stock or other investment if its price falls to a certain level. It’s a way to limit losses and protect your investment.

How do I use it?

• Decide the maximum loss you’re willing to accept on a trade.

• Set your stop loss at that price with your broker.

• If the stock price falls to that level, your broker automatically sells it, preventing further losses.

Simple example:
If you buy a stock at $50 and set a stop loss at $45, your stock will automatically sell if the price drops to $45, limiting your loss to $5 per share.

Key takeaway:
Stop losses help you manage risk and avoid emotional decisions by automatically selling if the trade goes against you.

Technical Analysis vs. Fundamental Analysis

1. Technical Analysis (TA):

• Focuses on price movements and patterns in charts.

• Traders use it to predict future price changes based on historical data, trends, and indicators.

• Example tools: moving averages, trendlines, volume analysis.

• Think of it as studying the market’s behavior to decide when to buy or sell.

2. Fundamental Analysis (FA):

• Focuses on a company’s financial health and long-term value.

• Investors look at revenue, earnings, debt, industry position, and management quality.

• Example tools: financial statements, earnings reports, P/E ratios.

• Think of it as studying the company itself to decide if it’s worth investing in.

Simple takeaway:

• Technical analysis: “When should I trade?” (timing based on charts)

• Fundamental analysis: “Is this company worth owning?” (long-term value based on fundamentals)

A trading plan is a written guide that outlines how, when, and why you will trade. It helps you stay disciplined and avoid emotional decisions.

Steps to create one:

1. Define your goals: Are you trading for extra income, long-term growth, or learning?

2. Decide what to trade: Stocks, ETFs, options, or other assets.

3. Set entry and exit rules: Determine when you’ll buy, sell, or use tools like stop losses.

4. Manage risk: Decide how much of your capital to risk per trade and set stop-loss limits.

5. Track and review: Keep a journal of your trades, review what works, and adjust your plan over time.

Simple takeaway:
A trading plan is your roadmap — it defines your strategy, risk limits, and goals so you can trade confidently and consistently.