Introduction to trading

Trading means buying and selling assets with the goal of making a profit. It’s exciting, but it also carries risk: prices move quickly, and not every trade goes your way.

With Fogo, trading will soon be possible directly on-chain through Ambient, a decentralized perpetuals exchange designed for high-speed execution.

Trading Statistics and Risk

Studies show that 70–90% of retail traders lose money over time.
The reasons are often the same: over-leverage, no risk control, and emotional decision-making.

Losses are normal in trading. The goal isn’t to avoid them completely, but to manage them so they never wipe you out.

Long and Short Positions

  • Long position: You buy an asset expecting its price to rise. Example: Buy BTC at $30,000, sell at $35,000.
  • Short position: You sell an asset you don’t own (borrowing it), expecting its price to fall. Example: Short ETH at $2,000, buy back at $1,800.

Long = bet on rising prices. Short = bet on falling prices.

Take Profit and Stop Loss

These tools automate your trade exits:

  • Take Profit (TP): closes your trade when your profit target is reached.
  • Stop Loss (SL): closes your trade if losses reach a defined threshold.

Good traders always use TP and SL to protect gains and limit losses.
Bad traders ignore them and let emotions decide.

Leverage and Liquidation

Leverage allows you to control a larger position than your balance by borrowing funds.
For example, with 10x leverage, $100 can control $1,000 worth of assets.

– If the price moves in your favor → gains are multiplied.
– If the price moves against you → losses are also multiplied.

⚠️ If losses reach a critical point where your collateral no longer covers your position, the protocol will trigger a liquidation.
This means your position is forcibly closed, and you lose your collateral.

Risk Management

The most important skill in trading is protecting your capital.
Strategies include:

  • Never risk more than 1–2% of your portfolio on a single trade.
  • Always set stop losses.
  • Diversify instead of going all-in.
  • Stay disciplined and avoid emotional decisions.

Trading isn’t about being right every time. It’s about surviving losses so you can keep trading.

Good Trader vs. Bad Trader

A Good Trader

  • Accepts losses as part of the game.
  • Uses stop losses and take profits.
  • Manages risk and avoids over-leverage.
  • Controls emotions and avoids revenge trading.
  • Focuses on consistency, not luck.

A Bad Trader

  • Trades without a clear plan.
  • Risks too much or uses extreme leverage.
  • Ignores stop losses.
  • Lets fear or greed control decisions.
  • Often blows up their account quickly.

In Summary

Trading can be rewarding, but it is also risky. To succeed, you must understand the basics (long/short, TP/SL, leverage), accept losses as normal, and always focus on risk management.

On Ambient, trading will be faster than ever — meaning you can win or lose money at incredible speed.
That’s why traders must exercise extra vigilance and discipline when trading on Fogo.

Lesson written by  @InvestingDams

Watch: Fogees Hub — With Doug Colkitt

“This is how we overtake Hyperliquid | Doug Colkitt on Fogo Chain & Ambient Perps”

Final Quiz

Please select or write the correct answer.

What does a long position mean ?