Want to trade but don’t know where to start?

If you are a newbie to trading, you will find yourself in the deep of a pool full of information over financial markets, strategies, and how you can make the profits. Even getting help from others, or trying to walk on the other trader’s path would be easier for you, to become a successful trader, you should have your unique goals and attitude to risk.

However, you need to know some critical steps that anyone looking to trade should follow, to make sure that they understand the rules of the game and principles of markets and how to choose when to trade and when to wait.

Build a secure basement of knowledge about financial markets, as the level of risk, strategies, and expertise required can differ between them. It is wise to start by searching and researching the markets you want to trade on and be sure you understand the logic behind it.

The next is to establish a trading strategy that will create you a clear idea of how you can generate profits in this kind of industry, and define precisely how you can enter and exit your trades. The trading strategy you have chosen is the driving force of your trading plan- it should address your goals, help you be consistent, and take care that you do not base your decisions on emotions.

 

The last step in becoming a trader is taking everything in your hands and trade yourself. But there is no specific destination: there is always something to learn, improve, redefine, and correct on your current trading strategy. You change the gears all the time, depending on the path you see towards you. So, in the first place, you should decide on something which works well for you by executing your strategy and back-testing the results.

The day when you will have enough experience will come soon, and this does not mean you risk all your capital on live markets, taking the process step by step is always the right solution.

 
Trading styles

There are four most common trading styles: Day Trading is the trading style of buying and selling assets inside a single day, to take quick profits from small price movements.

Scalping is a style of trading which consists of opening and closing of the positions quickly- within a few moments, or at most a few minutes – to profits from rapid and small changes in asset price.

Swing Trading is the practice of opening positions at the point the market is expected to change direction, taking advantage of the movements in assets price.

Market analysis

The methods for market analysis fall into two broad categories:

Technical Analysis is based on the principle that past events and trends can inform what might happen in the future. Traders can analyze charts and use indicators which are based on prices to build their trading strategy, creating a system that exploits price patterns and tendencies for profit.

Fundamental Analysis, traders use macro-economic data – including gross domestic product (GDP) figures and employment statistics – alongside news coverage and political commentary to identify opportunities.

Risk management

Here, ‘risk’ refers to a range of probability that your decisions will not bring the expected results. This can be interpreted in different ways, but most commonly that a trade will have a loss.

However, potential losses can be minimized by putting a strategy in practice to manage your risk.