This week we focus on how to become a trader. Do you want to learn how to trade but don’t know where to start? With all of the courses and resources out there, it is easy to become overwhelmed. We have designed this step by step guide to help you get started with trading the markets.
“To trade the markets, you definitely need to learn and understand the foundations of trading. It’s like when you start a new business, you need to think about the location, the target audience and what to sell. Trading is similar; think of it as a new business venture. Trading is different from a regular business but you still need to know the tools you require to start trading.”
Step One: Invest In A Good Trading Education
We cannot stress this enough. The best traders out there all have one thing in common. They invested in a well-rounded education and had coaches helping them along their trading journey. Try to immerse yourself in trading knowledge and take the time to learn about the markets, strategies and trading terminology. The more you know, the more you will benefit and be able to see great results and consistent profits. There is a wealth of knowledge out there; sometimes it can be overwhelming to know where to begin and who to trust in the world of trading. An example of something to look for when searching for a trading education is to confirm that your trading coach is a certified financial technician and fully qualified member of the STA Society. Getting a trading education is a great way to build your confidence and skill level. Taking the time to learn about trading will ensure you have a solid background to get started in trading the markets.
Step 2: Choosing A Market And Times To Trade
Depending on your desires and your broker, you can trade almost anything! There is a huge list of markets available out there, such as Foreign Exchange (Forex), Stocks/Shares, Commodities, Bonds, Options and more! You want to trade on markets that have good volatility and low commissions. Familiarise yourself with these markets and names.
Below is a list of the most popular markets to trade in:
- Forex: The exchange of one currency for another
- Commodities: A basic good that is used in commerce
- Indices: An index is a statistical measure of the changes in a portfolio of stocks
- Stocks: A holder of a stock (shareholder) has a claim to a part of the corporation’s assets and earnings
Dependent on what market you choose to trade, you will need to ensure you know the operating times well so that you can fit them around your schedule, whether you work full-time or are a stay at home parent or a day or swing trader. The main stock markets around the globe are Tokyo, London, New York & Sydney. There are a few overlaps in the global market time zones – remember as traders we want overlaps because, during these times, moves start, consolidate and end and generally there is great volatility at these times.
Step 3: Choosing Your Chart Package & Broker
As Technical Analysts, we use our charts to analyse the market and inform our trading decisions. You will need a chart package and there are numerous chart packages out there including Esignal, MT4, Trade Station and Multicharts. Most of our coaches use Pro-Real Time.
The broker is where you place your trades after you do your analysis of the charts. Your broker is the middleman between you and the counterpart and charges a commission for executing trades placed by investors; in other words, your broker will find you a seller. Every broker focuses on different instruments and markets. Not every broker allows you to trade shares, for example. Ensure the broker you choose allows you to trade the market you are interested in. There are hundreds of brokers out there, so the first question is, which is the right broker for you? There is only one important point to ensure- you want a broker who is regulated by The Financial Conduct Authority (FCA). Most of our coaches use IG Index because they allow trading in shares, commodities, Forex, and Indices. Finally, make sure the commission you get charged per trade is not expensive.