How to start trading?

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.

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:

• Negative Balance Protection (NBP)
• Segregation of client money
• Know Your Client (KYC)
• Anti-Money Laundering
• Cash balance protection (FSCS)
• Market abuse

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.

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 Forex.com, 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 practice 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.

2. 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.

3. Start trading

Practice 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.

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.

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.

2. 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.

3. 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.

4. 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.

• Buy / sell
• Amount to trade
• Stop-loss orders
• Take-profit
• Leverage options

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.

 

If you have just 6 minutes a day …

…then that’s enough time to “copy & paste” my team’s trade suggestions that make it possible for you to go after an extra $4,076, $4,780 or even as much as $6,018 in just six minutes a day!

I created a new training video which highlights how you could bankroll your retirement in just 6 minutes per day thanks to my “6 Minute Income Secret.”

Watch my training video and prove to yourself how it can help you achieve your financial goals.

I look forward to working with you!

Sincerely,

 

 

Chuck Hughes

Creator of the Award-Winning

Hughes Optioneering®

 

The information provided by the newsletters, trading, training and educational products related to various markets (collectively referred to as the “Services”) is not customized or personalized to any particular risk profile or tolerance. Nor is the information published by Legacy Publishing, LLC (“Legacy”) a customized or personalized recommendation to buy, sell, hold, or invest in particular financial products. Past performance is not necessarily indicative of future results. Trading and investing involve substantial risk and is not appropriate for everyone. The actual profit results presented here may vary with the actual profit results presented in other Legacy Publishing LLC publications due to the different strategies and time frames presented in other publications. Trading on margin carries a high level of risk and may not be suitable for all investors. Other than the refund policy detailed elsewhere, Legacy does not make any guarantee or other promise as to any results that may be obtained from using the Services. Legacy disclaims any and all liability for any investment or trading loss sustained by a subscriber. You should trade or invest only “risk capital” – money you can afford to lose. Trading stocks and stock options involves high risk and you can lose the entire principal amount invested or more. There is no guarantee that systems, indicators, or trading signals will result in profits or that they will not produce losses.

Some profit examples are based on hypothetical or simulated trading. This means the trades are not actual trades and instead are hypothetical trades based on real market prices at the time the recommendation is disseminated. No actual money is invested, nor are any trades executed. Hypothetical or simulated performance is not necessarily indicative of future results. Hypothetical performance results have many inherent limitations, some of which are described below. Also, the hypothetical results do not include the costs of subscriptions, commissions, or other fees. Because the trades underlying these examples have not actually been executed, the results may understate or overstate the impact of certain market factors, such as lack of liquidity. Legacy makes no representations or warranties that any account will or is likely to achieve profits similar to those shown. No representation is being made that you will achieve profits or the same results as any person providing a testimonial. No representation is being made that any person providing a testimonial is likely to continue to experience profitable trading after the date on which the testimonial was provided, and in fact the person providing the testimonial may have subsequently experienced losses. The cost basis for some of the options in a portfolio may be reduced by rolling over profits at option expiration which is one of the Hughes Optioneering Trade Management Rules. Some income figures presented represent the total amount of option premium collected during the referenced period. Actual profits were less. Open trade profit results may have increased or decreased when the trades were closed out. Chuck Hughes’ experiences are not typical. Chuck Hughes is an experienced investor and your results will vary depending on risk tolerance, amount of risk capital utilized, size of trading position, willingness to follow the rules and other factors.