Where to start trading: a step-by-step guide for beginners
Step 1: Understanding Trading
Before you start trading, you need to understand the basics. Learn the basic concepts and principles of trading, such as assets, markets, exchanges, orders, etc. This will help you build a framework of understanding and get into the terminology of a trader.
Example resources:
1. Larry Harrison’s book “Trading for Dummies.”
2. “Technical Analysis of Futures Markets” by John Murphy – This book covers the basic concepts of technical analysis and their application to futures markets. It covers chart analysis, indicators, formations and other techniques.
3. “Technical Analysis of Financial Markets” by John Murphy – A similar book, but with a focus on financial markets such as stocks, bonds and forex.
4. “Trading in Financial Markets” by Jack Schwager – In this series of books, the author talks to successful traders and studies their strategies and approaches to trading.
5. “How to Play and Win at the Stock Exchange” by Alexander Elder – the book describes the basics of technical and fundamental analysis, the psychology of trading and the importance of risk management.
6. “Trading Plan. How to Create and Apply” by Robert Deiler – this book will help you develop a trading plan, including goal setting, risk management and a description of your trading strategy.
7. “New Market Timing Techniques” by Tom Demark – this book offers unique technical analysis and market timing techniques for predicting trends and entry and exit points.
8. “How to Make Money in a Crisis” by Andrew Gertman – this book offers trading strategies applicable during economic crises and also explains the principles of the stock market.
Online courses, such as “Fundamentals of Trading” on the Udemy platform, video lessons, practical assignments, and communication with experienced traders will help you get the most complete understanding of the market.
4. Bloomberg (www.bloomberg.com) – is one of the leading financial information platforms that offers a wide range of news, data and analytical tools for studying the financial markets.
5. Seeking Alpha (www.seekingalpha.com) is a platform that publishes articles and analysis from experienced traders and investors. Here you will find many ideas, analytics and opinions about different assets and markets.
6. YouTube is a huge source of video tutorials and tutorials on trading and investing. Many successful traders and analysts share their knowledge and experience on YouTube, so you can find a lot of valuable information and training videos.
7. Forums and Communities of Traders – Participating in trading forums and social networks dedicated to trading can help you connect with other traders, ask questions, share experiences and get valuable advice.
8. Financial Times (www.ft.com) – The Financial Times is one of the leading financial publications, providing a wide range of news, analysis and articles about various financial markets.
9. StockCharts (www.stockcharts.com) – This is an online platform offering tools for technical analysis of markets. You can create charts, apply technical indicators and study technical patterns.
10. CNBC (www.cnbc.com) – CNBC is the world’s leading television channel providing financial news, commentary and analysis. They also have an online platform with various articles and videos.
11. Forex Factory (www.forexfactory.com) – This resource specializes in the Forex currency market. Here you will find an economic calendar, forums, analytics and trading tools.
12. Reddit – Reddit offers many sub-forums (subreddits) on trading and investing where traders and investors share ideas, strategies and discuss current events on the market.
13. Local Exchange Organizations and Associations – Many countries have local exchange organizations or associations that offer educational programs, seminars and resources for traders and investors.
14. Macroeconomic data and reports – Studying economic data and reports such as employment, inflation, GDP, etc. will help you understand the current market situation and make informed decisions.
15. Financial blogs – There are many blogs and online resources written by experienced traders and investors who share their knowledge and strategies.
16. Brokerages – Brokers such as PUPrime, Tickmill, Vantage and others often offer educational materials, research and analytics about the markets to their clients. You can take advantage of these resources provided by your broker.
17. Trading magazines and books – Trading magazines and books such as Trader’s Magazine, Active Trader, Technical Analysis of Stock Trends and others offer helpful articles, research and examples of trading strategies.
18. Webinars and Online Courses – Many traders, analysts and financial institutions offer paid or free webinars and online courses to help you learn various aspects of trading and markets.
19. Social media and professional platforms – LinkedIn, Twitter and other social media platforms offer the opportunity to subscribe to trading professionals and experts who share their insights and analysis of the markets.
20. Financial Universities and Academic Programs – Some universities and colleges offer programs in finance, trading and investing. Attending classes, watching lectures, and studying study materials can give you a deep understanding of the markets.
It is important to evaluate information sources critically and verify the accuracy of the information provided. It is advisable to use several resources to get a variety of information and opinions about the market. Also, remember that self-education and practice play an important role in understanding and succeeding in the marketplace.
The pitfalls:
– Don’t rely on just one source of information. Compare different sources and opinions to get a more objective picture.
– Be alert to “noise” in the marketplace, such as rumors and unofficial information. It could be manipulation or unreliable data.
Step 3: Develop a trading strategy
This is a key step for successful trading activities.
Determine your goals, such as capital appreciation or daily profits.
A strategy can be based on various factors such as market analysis, technical indicators, support and resistance levels, and time frames. It is important to have a clear system for entering and exiting trades, and establish risk management rules, including the use of stop losses and profit levels.
Example resources:
– Our article about strategies
– The book “Technical Analysis of Financial Markets” by John Murphy
– Online course “Trading Strategies for Beginners” on Investopedia
Pitfalls:
– Don’t build a strategy based on random trades or emotions. All decisions should be informed and based on analysis and proven approaches.
– Be prepared to modify your strategy according to changes in the market. Adaptability and flexibility are important for long-term success.
Step 4: Open an account with a broker
Choosing a reliable and licensed broker is an important step in your trading activities. Research different brokerages and consider factors such as commissions, available markets, technology platform, customer support and reputation. Once you choose, open an account with the broker and familiarize yourself with the trading platform.
Example resources:
– Lists reliable brokers on financial resources such as Forex Brokers, Investing.com or StockBrokers.com, here may be our brokers
– Reviews and ratings of brokerage companies from independent sources such as Barron’s or Finance Magnates
The pitfalls:
– Carefully review the broker’s terms and fees to avoid unexpected costs.- Check the broker’s license and regulator to be sure it’s reliable and your funds are safe. Check out our brokers reviews
Step 5: Demo Trading Training and Practice
Trading with a demo account allows you to practice without the risk of losing real funds. Use your demo account to test your strategies, explore your trading platform and gain practical experience. It is recommended to treat your demo account as a real account, and follow your strategy and risk management rules.
Example resources:
– Trading platforms with demo accounts, such as MetaTrader or TradingView
– Online courses and practice exercises on the Babypips platform
The pitfalls:
– Don’t forget that trading in a demo account carries with it differences from real trading, especially in terms of emotions. The trades you can make in a demo account may be executed at better prices than in a real situation.
– Don’t limit yourself to trading on a demo account. Gradually move on to real trading to gain real experience and get used to the psychology of trading with real money.
Step 6: Risk Management
Risk management is a key aspect of trading. Determine your stop loss and profit levels for each trade to limit potential losses and protect your capital. Develop a strategy to manage your position size and risk based on your capital and trading plan.
Example Resources:
– The book “Risk Management in Trading” by Wanta VanTharp
– Online articles and videos on risk management strategies on financial resources such as Investopedia or DailyFX
The pitfalls:
– Don’t risk too much of your capital in a single trade. It is recommended to limit your risk to 1-2% of your total capital per trade.
– Be willing to accept losses and don’t hold losing positions for too long in the hope of recovering. Follow your risk management strategy and do not risk more than you can afford to lose.
Step 7: Analysis and Planning
Before you start your trading day or session, analyze the market and make a trading plan. Study charts, technical indicators and fundamental factors to identify potential entry and exit opportunities. Determine profit goals and stop loss levels so you have a clear plan of action.
Stop Loss levels are a tool used by traders to limit losses on open positions. A stop-loss level is a predetermined price at which a trader automatically exits a position in order to protect his capital from further losses, avoid emotional decisions based on fear or greed, control his losses and set the risk-reward ratio on his trades.
However, it is important to understand that setting stop-loss levels is not a guarantee of protection against losses. In some cases, particularly during fast market moves or market gaps (gaps), price can overshoot the stop-loss level and a trade can be executed at a lower price than the set stop-loss level. This phenomenon is called “stop-loss jumping” or “sliding”.
Example Resources:
– Charts and technical analysis on the TradingView platform
– Economic calendar at Investing.com or DailyFX
Pitfalls:
– Be careful with excessive analysis. Don’t overload yourself with information and choose the most relevant factors to make decisions.
– Keep an eye on market conditions and adapt your trading plan as needed. The market is constantly changing and your plan should be flexible.
Step 8: Record and Analyze Results
Keep a log of your trades and results. Record details of each trade, including entry and exit points, position size, stop loss and profit levels, and reasons for your decisions. Analyze your records to identify the strengths and weaknesses of your trading strategy and make adjustments as needed.
Example Resources:
– An Excel spreadsheet trading journal or specialized trading applications such as Edgewonk or Traderve.
The pitfalls:
– Be honest when logging and analyzing results. Admit your mistakes and learn from them.
– Review your records regularly and analyze your results to improve your trading. Pay attention to recurring mistakes and try to eliminate them. Evaluate your performance and results, as well as your emotional state while trading. This will help you become a more conscious trader and improve your skills.
Example Resources:
– The Trading Journal book by Mark Douglas
– Online courses and simulators for traders such as TradeBench or Trademetria.
The pitfalls:
– Don’t neglect analyzing your results. It is a valuable tool to improve your trading decisions and progress in trading.
– Be objective in evaluating your results. Do not attribute successes or failures to external factors, but focus on your actions and decision-making.
Step 9: Gradually increase your position size
Once you have gained experience and confidence in your trading strategy, you can gradually increase the size of your positions. Remember, however, that increasing your position size also increases your risk. Stick to your risk management strategy and don’t risk more than you can afford to lose.
Example Resources:
– The book “Trading Plan. How to Create and Apply” by Robert Dahler
– Online articles on scaling positions and risk management on financial resources such as Investopedia or Forex Factory.
The pitfalls:
– Don’t rush into increasing the size of your positions. Make sure you are confident enough in your strategy and have positive trading experience.
– Gradually increasing your position size should not exceed your comfort level and willingness to accept possible losses.
– Be cautious of market volatility and news events, which can lead to sharp price movements. Increasing your position size during such events can increase your risk of loss.
– Continue to monitor your results and analyze them as you increase the size of your positions. Ensure that your strategy and risk management continue to be effective and appropriate for the new environment.
Step 10: Continuous Learning and Development
Trading is a continuous process of learning and development. Reading books, studying the markets, participating in webinars and seminars, and analyzing your results will all help you improve your skills and stay abreast of changes in the market. Be prepared to continually learn and adapt to new environments and strategies.
Examples of resources:
– John Murphy’s book Technical Analysis of Futures Markets
– Online courses and training from proven traders and financial training centers such as Coursera, Udemy and Investopedia.
– Subscriptions to financial magazines and news resources such as Bloomberg, CNBC and Financial Times.
The pitfalls:
– Be cautious when choosing resources to learn from. Make sure they are credible and verified by experienced traders or experts.
– Don’t dive too deeply into theory without practice. Putting what you learn into practice and trading regularly is important to develop and understand the markets.
– Don’t stop at one stage of learning. Markets are constantly changing and you need to be alert to changes and new trends. Constantly look for new and relevant material, learn from successful traders, and stay up-to-date on the latest news and developments in the financial markets.
Step 11: Managing Your Emotions
Managing your emotions is an essential part of successful trading. Emotions such as fear and greed can greatly influence your trading decisions and lead to mistakes. Be aware of your emotions and develop strategies to manage them. Set limits for yourself, stick to your rules, and don’t let your emotions influence your decisions.
Examples of resources:
– Mark Douglas’s book, Trading in the Zone.
– Psychological training and counseling for traders
The pitfalls:
– Don’t ignore or suppress your emotions. It is important to learn how to manage them and use them in the positive aspects of trading.
– Avoid making decisions under the influence of strong emotions. Give yourself time to think and reason before making important trading decisions.
– Consult a professional psychologist or coach if you are experiencing serious emotional problems that are preventing you from trading effectively.
Step 12: Constant Development and Adaptation
Markets are constantly changing, and successful traders must be willing to constantly evolve and adapt. No strategy will work indefinitely, so it is important to be flexible and willing to change your approaches according to changing market conditions. Learning new methods and strategies, analyzing your results, and regularly updating your trading plan will help you stay a successful trader over the long haul.
Examples of resources:
– Attending trading seminars and conferences
– Reading financial magazines, blogs and forums where traders share their experiences and new strategies.
– Taking part in trading communities and forums where you can discuss markets and exchange ideas with other traders
– Subscribe to financial information resources and get regular updates about news and trends in the market.
– Continue to learn and improve through online courses, webinars and training offered by proven financial training centers and traders.
The pitfalls:
– Be careful about the information you get from the Internet. Make sure the resources you use are reliable and vetted.
– Don’t dive into learning new strategies and methods without thorough research. Check the results and reputation of authors or traders before relying entirely on their advice.
– Don’t be afraid to change and adapt. Markets are constantly changing and you need to be willing to change your approaches and strategies to remain a successful trader. Be open to new ideas and ready to adapt to changes in the market.
It is important to remember that trading is a complex and risky process that requires time, patience and skill. It is important for beginning traders to remain realistic and willing to learn and practice. No guide or resource can guarantee 100% success, but with constant learning, practice, and persistence, you can develop skills and become a more skilled trader.
Have fun trading !