Is it possible to learn to trade for free?
Of course those who start investing in the stock market or OTC trading want to get the best possible return. Thus appropriate material is needed to furnish the knowledge required for well-designed trading. We have collected the most important information so that newcomers do not have to invest extra money in teaching materials about trading. This way you can deal with the various investment products and learn the basics.
To be able to make meaningful trade decisions, it is not necessarily obligatory to buy additional materials or attend paid courses. Many brokers also offer free training. These usually take the form of webinars with successful traders and financial experts talking about a specific topic. Participants can ask questions via the chat function and can actively participate in the webinar.
Besides investors should regularly update their knowledge about the current situation on the financial market, as this affects the expected values in trading and can be made a meaningful part of the individual investment strategy. Again, many banks and brokers offer free news.
It makes more sense to deal with the basics first and to implement them, than procuring extensive material about more complex strategies and methods that often can not be optimally applied without the appropriate basic knowledge.
In which financial products should newcomers invest?
The market offers a very large selection of tradable financial products. Which one of these an investor decides to trade depends not least on personal preferences. But the willingness to take risks and the time available also play a major role. Whether someone wants to invest in stocks, learn CFD trading or prefers to trade commodities should be well considered. Using the linked articles you can either learn trading online or invest in over-the-counter products. Among other things, we comprehensively present the characteristics of the following financial products:
- Forex and CFDs
It is not necessary to limit yourself to one of the available financial products. Many banks and brokers allow investment in multiple products to spread capital even better and sometimes reduce risk. Trading with several different providers is practiced by many traders as well. For beginners, it is advisable to get an overview of the possibilities, then select a product suitable for the individual requirements and study it intensively before starting to trade. Thus one can learn the basics comprehensively and at best avoid many typical beginner errors.
Learn trading: the most important methods of analysis
Usually making investment decisions „from the gut“ does not make sense. Professional traders conduct thorough analyses before investing. Even this is no guarantee that trading will ultimately be profitable, since there are too many unpredictable factors affecting trading prices. But a good analysis can significantly raise the expected value of a transaction, increasing the chance of a profit.
If you want to learn trading you should therefore study the essential methods of analysis. There are two different approaches to this:
- market analysis
- technical analysis
Market analysis uses the data of the financial market. Various factors may be included, among them recent events, but pending policy decisions and announcements of figures relevant for the market may be included as well.
With technical analysis, however, it is assumed that the key information about the future price performance is already included in the chart. Here, various drawing tools and indicators are used to forecast the development of an underlying and make trading decisions.
Many traders combine both methods to avail themselves of as much information as possible. Depending on the selected investment product and chosen trading strategy, individual analysis methods are more or less useful.
Many providers in our broker comparison give customers access to the latest expert analyses. These can help in decision-making and provide insight into the mindset of professional traders.
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Trading risk: what should traders know in advance?
Learning to trade is becoming more and more popular, as it is possible to achieve significantly higher returns with the invested capital than with traditional investment products such as call money or time deposits. But one should not forget that there is also a corresponding risk. Even professional traders cannot expect a fixed profit, because there are too many unpredictable factors that may lead to losses. Therefore, before deciding on a commercial product, investors should always ask what losses they are willing to accept and where their personal limits are.
In our articles we inform beginners about the different risk classes used to classify financial products. While some speculative financial products have a comparatively low risk of loss, with others one may quickly lose all of the invested capital. Even faced with potentially high returns investors should always be aware of this and always invest in such products only capital that is not otherwise needed medium or long term, and in the worst case can easily be written off.
During registration banks and brokers legally protect themselves by asking questions about the financial circumstances and previous investment experience of prospective clients. We have researched the significance of these questions and whether traders can still choose a higher risk class.
How much capital should you invest?
Learning to trade sooner or later raises the question of how much capital should be invested. This cannot be answered once and for all, as it always depends on the financial circumstances of the individual trader.
While more conservative and diversified investment products are well suited to long-term financial planning, such as pensions, with high-risk products one should only invest money not needed for other expenses, the loss of which is bearable.
Therefore before learning how to trade investors should ask themselves what they expect from the investment and what risks they are willing to take. Thus the suitable form of investment can be selected. The following questions are helpful for self-assessment:
- How much free capital do you have at hand?
- How do you deal with a loss?
- Won‘t you need the invested capital after a few years?
When presenting individual investment products we also take the associated risk into account, so you can inform yourself about it right from the start. It should be noted that even within individual asset classes there are significant differences in trading risk. For example, funds may be invested conservatively or in a much more speculative manner. Besides, when trading financial derivatives, the lever used plays a role that should not be underestimated.
Day trading or long-term investment? An question of individual preferences
For how long should an investment be planned? There is no standard answer to this question, because while some investors like to hold their shares for years and thus participate in the long-term performance of different companies, day traders often sell after only a few minutes and invest directly in other promising assets.
Therefore it is important to find the best solution for the individual investment type. For example, if you do not want to spend a lot of time in trading, you can build up a portfolio of stocks or funds, and just rebalance them a few times a year. For other traders, however, it is interesting to study markets intensively. Often they want to learn chart analysis and not let smaller fluctuations in value pass by, but actively benefit from them.
Especially those who place many trades within a short time should pay attention to the costs. This raises the question of whether to trade on the stock market, or if the less costly off-exchange trading is an alternative. Anyone who carefully informs himself about the various trading approaches in advance can not only develop a suitable personal strategy but will also know what to look for when choosing a provider so as not to lose money through unnecessarily high costs.
Risk management: often underestimated by newcomers
Even professional traders do not always make profits, because not all factors influencing the development of trading prices can be calculated. Therefore in all speculative investment forms the occurrence of losses must always be expected. This can not be avoided completely, but thoughtful risk management can significantly reduce the risk of high losses. Among other things, we provide information about the following strategies used in our articles:
- Spreading investments widely: Traders who invest just in one or two assets suffer heavy losses if they develop in the wrong direction. As a result, many traders invest their capital broadly and can often offset losses on one investment product with profits elsewhere.
- Setting stop loss: Whenever losses occur, it may be useful to get out in time to limit the damage. Therefore, a stop loss can be set: The trader decides upon buying a product which maximum loss he is willing to accept and when to get out, thereby avoiding further losses.
- Choosing the suitable risk class: Although speculative financial products carry a degree of risk, with some this is higher than others. Therefore traders should always ask themselves before deciding on an investment product if they want to take the risk associated with it.
- Identifying phases of increased volatility and avoiding them if necessary: During certain phases significantly greater price fluctuations occur. Some traders use this specifically to get on and off at the right moment. Others avoid highly volatile phases and thus lower their risk.
Tax aspects: These taxes should be taken into account
Capital gains are taxable, which is why aspiring traders should be informed about the issue. For better trading it should be clear from the outset what taxes are due. Failure to pay taxes on the income earned by trading can result in costly consequences that are avoidable.
Also, those who are well versed in the taxes on trading income can often save money because there are several benefits traders can use.
Learning to trade therefore includes dealing with the taxes due, too. For example frequently an exemption order must be submitted so as not to have to pay tax on a certain amount. Whoever fails to do this pays taxes that might have been avoided.
With brokers or banks abroad traders often receive particularly favorable terms. But in these cases it is especially important to find out if additional documents are required so as not to unnecessarily pay taxes in two countries. Anyone who informs themselves in detail about the legal conditions can ultimately save money.
Investors who deal with several financial products and possibly also with different providers often face many questions for the tax return. Once these are fully understood, it is much easier to avoid mistakes and not pay unnecessarily high taxes.
The demo account: useful or superfluous?
This simulates trading without financial risk. Beginners can use a demo account to study various commercial products intensively and thus make their first steps without their own capital being t risk. Together with the appropriate educational materials and information one can really easily learn trading with a demo account. But it should be noted that a profit achieved does not say much about the actual capabilities of a trader. All speculative financial products are subject to a certain variance. This causes objectively good trading decisions to lead to losses and objectively bad decisions to make profits. Ultimately, all trading strategies are designed in the long term to achieve more profits than losses, thus maintaining a positive overall balance. Short term fluctuations, on the other hand, are normal and must be accepted even by experienced traders. Therefore newcomers should not plunge into trading with their own capital directly after their initial success with a demo account, but should first focus on the chosen investment product instead, and the available trading opportunities and methods of analysis.
Commercial Psychology: Avoid making rash decisions
Trading can be a lot of fun when the hoped-for profits come in and the capital increases. In phases of unfavorable price courses, on the other hand, frustration arises. Anyone who wants to seriously learn trading should not think in a result-oriented way, but keep asking themselves whether a trade decision made was right or wrong based on the available information. If prices develop differently but the decision can be reasonably justified, this should not be a reason for self-doubt.
Conversely, it is also crucial not to be blinded by short-term gains. Although these are gratifying they may occur not only on the basis of correct decisions, but also just by chance. For a long-term oriented strategy it is important not to give too much importance to individual results.
Investors should always be aware of this when learning trading strategies. Anyone who is aware of the psychological factors involved in trading will recognize faster when he begins to make emotional decisions. This happens occasionally to professional traders, but should largely be avoided. Under certain circumstances it may make sense to take a short break from trading and to be aware of the basis on which trading decisions should be made.
Learn trading online is possible
Although speculative financial products do not offer guaranteed returns and losses must be accepted, at least occasionally, over and over again, trading provides an attractive alternative to traditional investments for more and more investors, because on average significantly higher yields are achieved.
Those who choose to invest in stocks, funds, CFDs or other investment products should first familiarize themselves with the basics of trading. This does not necessarily require additional money for expensive teaching material, because regardless of whether you want to learn stock market trading or invest over the counter, the most important information is available online for free.
When learning how to trade it is important not only to understand the different products and strategies but also to always question whether they are suitable for the individual requirements. While some traders prefer products of higher risk classes, as they can at best quickly earn high returns with them, others favor products with lower risk. Experience also plays an important role, because not all investment possibilities are unrestrictedly suitable for beginners.
Take a look at our articles on learning to trade and familiarize yourself with the differences between each financial product and the main trading methods. This way you can avoid unnecessary mistakes and find a suitable personal trading opportunity on the financial market.