I remember the day I decided to start trading. I took a seat behind my computer, typed in the word ‘trading’, and got more than 4 million search results! I opened site after site with the most complicated information and terms I had never even heard of.
With this article I hope to simplify your experience as a new trader. In my opinion, trading is awesome; there are so many possibilities and the potential for profit is practically limitless.
Trading for beginners
As a new trader you will first need to get used to the financial world. Luckily, there are a lot of websites where beginners can try out trading, but what do you need to succeed as a beginning trader?
- Enough knowledge, you need to know the basics
- Experience, you can get experience risk free by practicing with a demo >
If you think it would be fun to start trading, you can start for free by opening a demo account with one of the best brokers for beginners.
Start trading as a beginner
As a beginner there are a few basic terms that will come in handy:
- Buy: you make money when the price goes up
- Short: you make money when the price goes down
- Leverage: you can make more with less money
- Order: with an order you can automatically open a trade at a certain price
As a new trader, it’s wise to start by predicting the price based on the charts. By analysing the charts within the user-friendly software of a broker you will learn how to predict the price.
Always keep an eye on the general direction. When the price is mostly going up it’s best to buy and when the price is mostly going down it’s best to short. Of course, you want to time your trade perfectly; buy at the lowest point and sell at the highest point.
How to learn as a beginner?
You can read the eBook for beginners, but it’s best to start trading right away! You learn by practicing in the real world and you can start doing that today. You can even start making money as a beginner today.
As a new trader it’s best to sign up at Plus 500. They will take care of you. You receive a demo of 40.000 pounds and you can also practice for an unlimited amount of time using a demo.
Active and passive traders
Traders can be divided into two groups: active and passive traders. Let’s see which profile suits you best.
The active trader checks his positions daily and goes for profit in the short term. By using leverage and the new possibilities of CFD brokers, the active trader can profit the most. By studying the market and devoting a lot of time to his activities, the active trader can make a lot of money.
The active trader opens and closes several positions every week and to determine what he will have in his portfolio, he analyses the charts as well as important news reports.
The passive trader doesn’t spend much time on his portfolio and will only check or change his position every few months. The passive trader often doesn’t have much time to spend on trading and mostly outsources this process. He tries to select the right stocks with the future in mind because he usually keeps the stocks in his portfolio for a year or longer.
The passive trader trades with traditional brokers without leverage and pays a commission when the position is opened. Passive traders earn less and focus on the future.
What to trade?
First of all, you need to decide what to trade in. Besides stocks, more and more traders are trading in Forex, indices and natural commodities. Compare the possibilities and choose a category to start with. In the beginning, it’s important to limit yourself to one or two instruments within this category. Study the charts and try to discover a pattern in the price.
Where to start as a trader?
There are a few options:
- Forex: trading currencies is easy and a perfect way to start trading.
- Stocks: stocks are a bit trickier because in general they are more volatile.
- Commodities: as a beginner trading commodities can be very interesting because it is easier to make a prediction.
Where to trade?
It’s important to find a broker that suits your needs. With a broker you can simply start trading using one of the above financial instruments. One of the benefits of a CFD broker like Plus500 or Markets.com is that they provide you with a free demo. This gives you the opportunity to practice with demo money without depositing.
Our overview of brokers will help you can compare different brokers and make your decision.