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Watch the Three Basic Chord Types online guitar lesson by Erich Andreas from Nashville Number System Decoded

A chord is three or more notes played together. A triad is a three note chord. Our three naturally occurring diatonic (derived from the major scale) triads are: major, minor, and diminished.

If we take the 1, 3, and 5 from the major scale, we get a major triad:
Major = 1, 3, 5

If we flatten the 3 by a half step, we get a minor triad:
Minor = 1, b3, 5

If we flatten the 3 AND the 5, we get a diminished triad:
Diminished = 1, b3, b5

It's not crucial that you understand this in order to use the NNS, but for creating chords on the fly, we do need to know which notes are altered. Understanding this concept will supercharge your understanding of chord progressions, especially as we go further in the course.