We have all been faced, one day, with this question when we started as novice traders: how to learn to trade? A large and complex lexicon is offered to laymen. Various notions and strategies collide in the minds less well prepared for online trading. It is to answer all these questions that we have designed a trading tutorial for dummies: choice of broker, target profiles (beginner, intermediate, professional), best practices and a set of practical tips to get started on financial markets.
Getting started is the best way to learn online trading
In our opinion, the best way to learn online trading is to put it into practice in real conditions with a competent broker who offers optimal trading conditions. We have made a selection of 4 brokers, which crystallise in France and in Europe, the best user opinions: eToro, Libertex, BDSwiss.
eToro is a well-known online broker in the market. For several years, it has monopolised the place of leader thanks to:
Its very intuitive user-friendly trading platform offering a wide range of essential tools for beginner traders;
Its social trading functionalities: communication network between users and copy trading (CopyTrader and CopyPortfolio);
Its large catalog of financial assets CFDs with leverage: forex (currency pair), stocks, commodities, stock market indices (ETF) and crypto currencies;
Its very competitive brokerage fees, especially on each forex currency pair;
Its live stock market offering on the stock and cryptocurrency market (in certain regions of the world).
The eToro broker is strongly recommended for novices because it brings together a rather complete starter pack. Customer service is pretty good. The demo account is a good way to learn trading for free. The progressive training program is very interesting to discover the basic workings of the financial markets in the underlying products. It is a duly regulated broker, all over the world, which continues to expand its range of services to adapt to the expectations of its clients.
The Libertex broker is another market leader who has carved out a place of choice for those who want to trade efficiently, at a lower cost and in complete safety. Founded in 1997, the broker Libertex has several arguments in its favour:
Large panel of CFD financial assets: forex currency pairs, commodities, crypto currencies, indices (ETF), stock selection;
Very good online platform in browser and mobile version;
Attractive fee policy;
Rich training section with a renewable and unlimited demo account;
Different types of accounts depending on the trader profile - beginner, intermediate, professional - with varying levels of leverage.
Libertex makes an impression with a responsive design dimension well integrated into the trading experience. Whether on computer or mobile device, traders experience pleasant and secure brokerage sessions. The broker meets the regulatory requirements in force in many geographic areas, including France and Europe. An excellent choice for traders with a small capital, who want to learn trading with confidence.
Learn Trading For Free: Is It Possible?
There are many ways to learn trading for free without necessarily having to deposit money into a client account.
The brokers mentioned in our selection all have a demo account which gives access, for a more or less limited time, to a wide range of features present on their platform:
Opening and closing a position by defining the desired volume, leverage, Stop Loss and Take Profit (for risk management);
Access to a selection of popular assets: Euro / dollar currency pair for example or the price of gold or the price of an international share;
Technical analysis directly on graph with application of various financial indicators: moving averages, Ichimoku cloud, RSI, etc;
Fictitious capital to be used on each position in real conditions: current price, past trend and forecast of future price;
Fictitious portfolio with the summary order by order for a detailed and precise follow-up of the strategies put in place.
Using the Internet, it is also possible to find a book to learn trading for free. Brokers and / or specialised sites provide access to reference books or, at least, to the fundamentals to be mastered in order to become a successful trader. In a few clicks, as part of a web search, a guide to learn pdf trading can be downloaded with unlimited consultation.
Finally, tutorial videos and guide for beginner traders have multiplied. Youtube is a virtually limitless source of information with great quality content that summarises in key points the things to know before embarking on real money investing:
functioning of the stock exchange and financial markets
price analysis of an asset
in which situation to use the different indicators
the rules of money management
the best strategies to apply according to your trading style
Finally, many platforms offer live trading sessions for dummies. A financial advisor leads during a one-hour webinar (in the vast majority) a session in real conditions, with his own capital, by placing orders by explaining the how and the why. It is a good way to develop your capital while limiting the risk of losses, without incurring an additional cost. In our opinion, the best practical method to learn trading and make money.
Trading for Dummies: Who is Trading for?
Opinions are quite divided on this subject. Some expert sites recommend getting into CFD trading last because it is surely the most technical discipline in financial investing. It is true that it is better to know a few tricks before committing your money. The proof is: more than 70% of traders in the CFD segment lose their capital. For the vast majority, these are knowledgeable clients who hope to make their fortune from speculating on Markets by making a ridiculously low deposit and abusing leverage.
However, the success rates, position after position, are much better for all those who prepare upstream by respecting some good practices:
Establishment of a thoughtful strategy in line with its financial objectives;
Disciplined monitoring of reasonable money management in line with its ambitions and resources;
Knowledge (at least basic) of the functioning of a broker, the markets (shares, currency pairs, commodities, cryptocurrency, stock market index);
Learning to read graphs to define a trend and forecast the evolution of the price of an asset using technical indicators;
Writing of a trading journal to compare the success rate of positions with the strategy put in place;
Portfolio diversification to reduce exposure to the risk of capital losses.
In conclusion, we could say that trading is for all profiles, even the most ignorant. Indeed, brokers now offer comprehensive and rich training courses to increase the chances of success for traders. There is a large amount of qualitative content available for free on the web for learning trading. Popular works are published regularly. Paid, educational and customisable training is also emerging and is not reserved for professional profiles. It is simply essential to keep in mind that trading is a risky activity and that the probability of losing funds is high.
Become an expert in a specific market
When you enter the market, a strong trend emerges: to become an expert in a specific market before moving on to another family of financial products. In which market should you learn to trade?
Learn Stock Trading
The stock market is in a way the sacred temple of the stock market in the eyes of the general public. It is about buying securities of companies listed on the stock exchange in the hope that the price of these will rise in the weeks, months and years to come. It is one of the most liquid markets because billions of dollars are traded every day between traders.
In long-term strategy, it is relevant to call on a specialised broker (with CTO or PEA). For short-term speculation, a CFD broker is the best choice with the use of leverage. The price trend of each security is influenced by supply and demand, which varies depending on the earnings announcements of the companies involved.
Learn Forex Trading
The forex market (currency pair exchange) includes every pair of currencies traded between investors on every platform that offers this service. It is a very liquid and very volatile segment that is ideal for scalping and day trading, with short positions and high leverage. More than 5,000 billion dollars are traded every day on this market alone.
In view of its extreme volatility, it is imperative to master technical analysis and to make good use of the Take Profit and Stop Loss functions to frame your money management. The opportunities are varied with a large selection of currency pairs, divided into 3 groups: major (EUR / USD for euro / dollar), minor (EUR / GBP for euro / Pound Sterling), exotic.
Learn commodity trading
Raw materials include all the raw products that can be bought, sold and stored. In our case, it is a question either of buying a raw product by wishing to sell it later at a better price, or of speculating on the evolution (upward or downward) of the trend of its price on more or less long time periods.
Within the commodity market, we find agricultural products such as wheat or milk, energies such as oil or gas and precious metals such as gold or silver. Brokers offer different and more or less important offers in the context of CFD trading. Learning to trade in this market requires a good mastery of a particular sector and it cannot be improvised.
Learn to trade derivatives
We call derivatives all financial instruments that are inspired by another product that it is not possible to trade. They are also called ETFs, for Exchange Traded Funds, or trackers. Schematically, these are baskets of assets (shares in particular) which fully or partially reproduce benchmarks.
For example, to trade the CAC 40 index, an investor must use a CAC 40 ETF which replicates the price movement of all (or the selection made by the investment fund) of the assets comprising it (i.e. the 40 actions of the largest French companies).
It is a very liquid and very dynamic market where there are many opportunities with sometimes significant volatility.
Learn Cryptocurrency Trading
Crypto currencies are known for their extreme level of risk because they are subject to large variations every day. This is why the leverage effect authorized in Europe on these assets is very limited (2:1). This type of trading should be practiced with reason and measure. Stop Loss and Take Profit are required to minimise the risk rate. In moments, big wins can turn into big losses.
Like forex currency pairs, on CFD platforms, the trader speculates on the evolution of the price of one virtual currency against another.
Is it too late to learn how to trade?
No, it will never be too late to learn how to trade. The volume of transactions keep increasing every year with a strong trend on the trading of currency pairs. The service offers are becoming more democratic and professionalized with ever more demanding quality standards.
Training and educational resources become easily accessible and free. Paid and expert apprenticeships are multiplying.
It is worth remembering that you have to be patient before measuring the first real performance results in trading. From a few months to several years.
Trading for Dummies: How Much to Start?
There is no golden rule about this. In essence, the larger the initial deposit amount, the greater the margin of error. But, with the democratization of opening a trading account with a low deposit (from $10 or no minimum amount), on paper, it is possible to start with very small amounts. To learn trading, there is nothing better than getting started.
Despite everything, several opinions point in this direction, a first deposit of 1000 dollars (or euros) is an additional guarantee of making money in the medium term, because it offers more negotiating room. Each trader must do with his own means, without borrowing money, or endangering the balance of his budget. The DCA method is a preferred method of financing for small portfolios who are learning to trade.
Learn Trading: How Much Does It Pay?
The profits earned depend on the risk rate taken, the leverage used and the amounts invested. An offensive trader will normally earn more but expose himself to more risk. A defensive trader cash less but better secures each position and its capital. Starting with a goal of 1% capital increase is a reasonable strategy.
Trading for Dummies: What Mistakes to Avoid?
Emotions are not an investment guide
Do not keep a trading journal
Fraudulent sites abound on the web
Not respecting your money management
Trading strategies and techniques for dummies
Learn day trading
Day trading consists of buying and selling assets during the same trading session. 3 advantages:
avoid overnight fees
take advantage of opportunities without being stuck in front of your screen
smooth the gain / loss rate with a programmed closing of positions.
Learn social trading
The social trading is set of features that allows for (or give) advice from other traders via a dedicated platform and automate each position by replicating that of a trader referent with the copy trading.
Learn trading with a demo account
The demo trading or demo account is a service offered by a large majority of forex CFD brokers which allows to discover in real conditions the online platform with fictitious capital.
Learn swing trading
Swing trading is a strategy which aims to speculate on the price of financial assets in the medium and long term. Unlike day trading, swing trading is a strategy that offers the possibility of making profits over a term of a few days or weeks. The technical analysis tools are coupled with those of fundamental analysis.
Free resources to learn online trading
Trading and financial markets are universes which are constantly evolving and which are the subject of much ink. Stay informed about investments at all times.
There are many materials available today that allow you to learn about trading and any other subject. Books and articles are available, as well as videos on the internet. The brokers themselves also offer resources for online trading education.
Internet is a source of unlimited knowledge where it is possible to find everything that one needs to a certain extent. So take advantage of it and educate yourself constantly. Moving averages, trader psychology, economics, finance, don't limit yourself to one topic and try to learn new things all the time.
SafeNetTrading also offers files to teach you trading, for example the Ichimoku indicator which allows you to establish trends at a glance.