How to Start With Trading. Millions of people are getting into trading every year, but most do not reach their potential and leave the market after they encounter huge losses. It is because they do not have much patience and do not follow the right steps to become a successful trader. It is important to master the basic needs to earn profits from trading.
Here are a few things that you need to do to start trading and make your place in the market while avoiding risks:
- Learn to read the market
If you want to earn from the financial markets through trading, then you must learn how to read the market so you can predict future market movements accurately. You may obtain your knowledge from financial articles, books on forex trading, stock market books, website tutorials, and more. When you are in the trading game, it is important not to focus on one single aspect too narrowly. Instead, make sure to study everything market-wise, including concepts and ideas that you may feel, are not relevant immediately. With a broad knowledge, you will be able to decide which financial asset would be suitable for you for the time being, as well as your trading style and strategy would be easy to determine.
- Choose an online broker
This is the most important step in your trading career. If you choose the wrong broker, then you might face a number of problems. While selecting your broker, keep your eyes open for the tools that match your requirements. Generally, if you are a beginner, you should give priority to qualities like account and trade minimums, customer support, and educational resources. Also, consider the accessibility and convenience of using the online broker’s trading software. New traders need a platform that is streamlined and easy to navigate. Another very important factor is the demo account. You need to learn trading with a demo account before you start trading on a live account. Why? We will come to that later.
When it comes to online brokers, IQ Option sets a great example. It is an ideal broker for new traders with low minimum deposit, low minimum trade, and unlimited demo account.
- Grasp and hone the skill of analysis
Once you have gathered knowledge about the market, you need to study the basics of technical analysis and read the price charts. There are thousands of them in different timeframes. It may seem that fundamental analysis provides a better opportunity for profits because it tracks revenue streams and growth curves. However, traders depend on price action to a great extent that differs from underlying fundamentals sharply.
The experience of a trader with charts and technical analysis make them more skilled in price prediction. Theoretically, securities can only go lower or higher which encourages a short sale or long-side trade. Prices can also do several other things, like chopping sideways for many weeks at a time or whipsawing in both directions violently, leaving both sellers and buyers shaken.
At this stage, the time horizon becomes extremely crucial. Financial markets grind out trends and trading ranges with fractal properties. Independent price movements are generated by these fractal properties as short-term, intermediate-term, and long-term intervals. It means that a security or index can carve out a short-term trading range, an intermediate downtrend, and a long-term uptrend at the same time. Instead of predicting in a complicated way, you can unfold most trading opportunities by interacting among these time intervals.
Buying the dip provides a classic example, where a strong uptrend sells off in a lower period and traders jump into it. The best way you can examine this three-dimensional field is by looking at all securities in three timeframes; with 60-minute, daily, and weekly charts.
- Practice trading
Although trading is a great way of earning, you must know that huge risks are associated with it. Lack of knowledge and experience can lead you to make wrong trading decisions which may result in losing all your money. Now, as a beginner, it is obvious that you do not have enough knowledge, skills, or experience. Therefore, you should first practice trading before putting your money at risk.
Paper trading or virtual trading provides an ideal solution. It allows you to follow real-time market actions and you can also make buying and selling decisions from the outline of a theoretical performance record. It generally uses a stock market simulator that appears as an actual stock exchange’s performance. You may execute lots of trades by using different timeframes and trading strategies. It also lets you analyse the results for obvious flaws.
Remember we mentioned the importance of a demo account in one of the previous points?
Now that practicing trading is being discussed, it is time to explain that. The demo account is one of the most important and useful features of online trading. Also known as a practice trading account, a demo account allows beginner traders to get familiar with the different mechanisms of trading and margin trading without risking real money. Apart from beginners, it is also useful for pro traders when they want to test new trading strategies.
Good online brokers always offer demo accounts for their clients. For example, IQ Option has a superior demo trading account that is an ideal resemblance to its live trading account. Traders can enjoy accurate simulated trading with this account that would prepare them for live trading with real money effectively. The demo account does not expire. You can have hands-on experience with margin trading with this account to trade forex, stocks, crypto, ETFs, options trading, and more. It only takes three clicks to switch between demo and live accounts.
So, start your journey with proper education on the financial markets, get the right broker, and then use the education to practice and increase your experience in trading. It may take some time and you may face failure in the beginning, but it is worth it because you will learn from those mistakes.