How to Start Trading

Start trading
Updated: 22 September 2020

This review will introduce you to the functionality of booking a trade. It’s a user-friendly process, but guidance from experienced traders might help you avoid some of the potential pit-falls. It will then layout how to incorporate the other features of trading – the items that can help you make a profit. Read on to explore the processes of:

  • Choosing a broker
  • Education and learning
  • What are demo accounts?
  • How to open a demo account
  • Researching trade ideas
  • How to open a live account
  • What does trading actually look like?
  • The bottom line1638

Choosing a broker

If you’re looking to start trading, it’s very important to remember two key points. The first is that trading itself is actually very easy to do. The process of registering for an account and booking a trade is very simple, as is waiting to see if it makes a profit.

The second point is that the skills required to make a long-term return are harder to master.

There are a lot of good brokers to choose from. Thankfully a lot of the leg-work required to grade them has already been done. A broker comparison table, such as the one below, can be found here.

Compare CFD Brokers AskTraders

A more in-depth analysis can be done by considering a review of those brokers that are currently topping the rankings. Reviews such as these are sometimes tailored to specific markets or sectors, so if you’re looking for a broker that is good for beginners, for example, you could start your journey here.

In addition, it’s possible to get down to a granular level on each broker with in-depth and insightful reviews being freely available. Award-winning firms such as Pepperstone, eToro and IG have all been analysed with their strengths and weaknesses broken down for you.

You’ll soon come to recognise the names of the better and more reputable brokers. Taking advantage of comments and reviews by individual traders is also worth considering. The trading community is quite active online and soon picks up on any broker that has upgraded its service or is letting standards slip.

A final and essential rubber-stamp is regulatory approval. Brokers that operate under license from a tier-1 authority will be required to maintain a ‘duty of care’ to their clients. This can include:

Education and learning

The next stage is sometimes quite tricky for beginners to work through. Trading can be an exciting and profit-making venture, but the aim is to try and scale back on the excitement and raise up the profit-making.

For this to happen, you need to be up to speed with the mechanics of trading, how the markets work, and how to protect your cash. This involves investing some time and effort in research and learning.

eToro Education and Learning

Source: eToro

Fortunately, the first-rate brokers found in the mentioned reviews all provide free written and video material to ensure you can learn the basics. The information supplied is a great way to get started. They help with:

  • Explaining the jargon – to ensure technical terms don’t get in the way of your trading
  • ‘How to… style videos covering topics ranging from ‘wiring funds’ to ‘place a trade’
  • ‘What is…’ topics covering subjects ranging from ‘risk management’ to ‘CFDs’
  • The bigger and better brokers also provide materials for intermediate and advanced traders

What are demo accounts?

Big firms, which make consistent returns, do not trade a strategy until it has been thoroughly tested.

After the research and analysis stage, new trading ideas are put to work trading the markets using virtual funds. You can do this with free demo accounts that are offered by reputable brokers such as, AvaTrade and Fineco Bank.

In many cases, gaining access to a demo account is simply a case of entering your email address and setting up a password.

Advantages of trading a demo account

There are many advantages associated with starting trading in a Demo account, they include:

  • Fast-tracked learning – Hands on practise of putting on and closing out trades is hard to beat in terms of getting to know how processes work
  • Try and break it – Demos can be used to book sell trades as well as buy trades. Use them to try new ideas that you might not naturally consider
  • Explore new markets – Always trade new markets in demo mode first
  • Be demanding – There are a lot of good demo accounts out there, so shop around to find the one that suits you
  • Learn to check – Even experienced traders make mistakes inputting trades. Become familiar with the ways to check you actually traded what you thought you did

How to open a demo account

  1. Create your demo account

Complete a simple online registration form – this will typically involve providing your name, email address, phone number and password.

  1. Download your trading platform

Some brokers offer web-based trading platforms, which simply appear on your screen once you’re registered. Others offer third-party platforms, which may require downloading to get full functionality.

  1. Start trading

Practise your trading strategies with virtual funds and real market pricing. Your portfolio and trading profit and loss will be in-line with what you’d see if you were trading on a live account.

Demo Trading Account IG

Source: IG

Researching trade ideas

Once you’re set up with a regulated broker and have a better understanding of the markets, the next question is ‘what to trade’.

Having a plan is essential and will ideally include trade ‘entry-points’ and trade ‘exit-points’. This encourages an approach based on expectation rather than hope.

Forex Report Pepperstone

Source: Pepperstone

A good example of strategy planning is provided by the IG trade of the week feature. Award-winning broker, Pepperstone, shares similar ideas in its Trader Insight report. These kinds of reports should not be considered investment advice, but they do outline what a trading strategy looks like.

The key elements of successful trading are discipline and a willingness to learn. These can be explained by understanding the standard methodology implemented by professional traders. The top-traders research, test and research again (known as optimisation). Only then, do they ‘implement’.

There will be a continued review and appraisal.

  • Is the strategy working as well as it can?
  • Have market conditions changed – making the strategy ineffective?
  • Would the strategy work better in another market – forex, commodities, equities, indices and cryptocurrencies?

The implementation phase either involves ‘paper trading’ using virtual funds or trading in the smallest size possible. Scaling up into any kind of size is something that happens, very, very gradually.

If you want to make consistent returns, you would do well to ensure your trading copies the approach of the professionals.

How to open a live account

If you have already set up a demo account, upgrading to a live account starts at ‘step 2’.

  1. Create your login

Complete a simple online registration form – this will typically involve providing your name, email address, phone number and password.

  1. Take an appropriateness test

Regulated brokers have a duty of care to their clients. As a result, they are required to follow the ‘Know Your Client’ protocols. This involves new users completing a short questionnaire to assess whether trading particular products is appropriate for you.

  1. Confirm your ID

You’ll be required to supply copies of Passports and / or driving licenses. This can often be done by taking a photo of the ID and uploading to the broker site.

If there are any issues with your application, your broker will likely get in touch with you, and if you would rather be more proactive, the better brokers provide customer support on a 24/5 basis.

  1. Fund and trade

Once your application is approved, you can log in and fund your account. You are then ready to put on your first Live trade.

What does trading actually look like?

Whether you trade in demo or virtual format, the trading functionality should appear quite similar.

The screen used to book a trade will have certain data fields. These are fairly standard across brokers and include trading fundamentals and some aspects of risk-management.

eToro Open Trade

Source: eToro

Tips from experienced traders

Don’t over-trade – It is a common problem for beginner traders. The frictional costs eat into your profits and half-hearted trades very often turn against you.

Some of the best trades you do, are the trades you don’t do – No-one ever puts a trade on thinking they are going to lose money. It can often be more profitable to ‘sit on your hands’ and watch the market rather than trade it and lose.

The bottom line

Once you’ve mastered the basics of trading, you’ll be in a good position to develop the next set of skills. The question at that stage is ‘where do I start?’

Just spending a few minutes booking trades on a demo account will probably have given you a glimpse of the life-time’s worth of learning available to you. The trick to profitable trading is knowing which skills to use and when, and to trade with discipline.

If your trading is going off-track, take a break and switch to demo trading. Losses are part and parcel of trading, but there is no need to incur self-inflicted hits on your profit and loss account.

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