This trading FAQ for beginners gathers the questions that come up most across our guides, answered briefly and without jargon. Each answer points to a longer page if you want the full working. For definitions of individual terms, see the glossary.
Three calculations every beginner should be able to do
Most questions below become easier once you are comfortable with three small sums. Each uses illustrative numbers.
1. A percentage move
Change ÷ starting value × 100. An index that moves from 5,000 to 5,040 has risen 40 ÷ 5,000 × 100 = 0.8%. Percentages let you compare moves in indices, shares or currencies that sit at very different levels, which is the second of the five checks on our homepage.
2. A yield
Annual income ÷ price × 100. A share paying $1.60 a year at a price of $50 yields 3.2%. The same arithmetic works for a fund's distribution or the interest on a deposit.
3. A cost in money
Percentage fee × amount. A fund charging 0.20% a year on $10,000 costs $20 a year; a 0.5% currency conversion on $2,000 costs $10. Turning percentages into money makes costs comparable, as our guide to trading fees shows in more detail.
Where to go next
- Shares and funds: how the stock market works and dividend investing basics.
- Currencies and derivatives: how forex trading works and futures accounts.
- Crypto: how crypto works, Bitcoin and USDT.
- Protecting yourself: choosing a broker and spotting scams.
Reader questions
Is CrimsonTicker an exchange or broker?
No. CrimsonTicker is an independent information website. We do not offer accounts, take deposits, execute trades, give signals or manage money. Anyone who contacts you in our name about investing is not connected to us.
Does CrimsonTicker show live prices?
No. We explain how to read the market and show which exchanges are open, but we do not display quotes. Check prices on the platform where you deal or on the exchange's own pages, and always look at the timestamp, because free quotes are often delayed by several minutes.
What is the difference between a share and an ETF?
A share is ownership of one company. An ETF is a fund, traded on an exchange like a share, that usually holds many companies and charges an annual fee. Buying one ETF can spread your money across hundreds of shares, while buying one share ties it to a single business.
Why do different indices move by different amounts on the same day?
They hold different companies and weight them differently. A market-cap index is driven by its largest members; a price-weighted index such as the Dow is driven by the highest-priced shares. Compare percentage changes rather than points, and check how many shares rose versus fell.
What is a dividend yield?
Annual dividends divided by the share price. $2.40 a year on an $85 share is about 2.8%. A high yield can signal risk, because it rises when the price falls, and it may be followed by a dividend cut.
How does leverage change my risk?
It multiplies both gains and losses on your deposit. At 30:1, a 1% move in the price equals 30% of the margin behind the position. That works in both directions, which is why position size matters more than the leverage figure itself.
Can I lose more than I invest?
With ordinary share purchases, no: the most you can lose is what you paid. With leveraged products you can lose your whole deposit quickly, and outside UK/EU retail CFD protections you may owe more.
What are the main costs of investing?
Spreads, commissions, currency conversion, fund charges, platform fees and, for leveraged trades, overnight financing. Small percentages compound over long periods, so it helps to convert each one into money for a full year of your own activity.
Is crypto the same kind of investment as shares?
No. Shares are claims on company profits. Most crypto-assets have no cash flow, so their price depends only on demand and can swing much further. They also trade around the clock and often without the investor protections that cover shares.
How can I tell if a trading platform is a scam?
Check the regulator's register yourself, confirm contact details match, and walk away if you see promised returns, pressure, payment in crypto or fees to withdraw. Contact the firm only through details listed on the register, never those given to you by the person promoting it.