How to get off to a good start in trading

Trading is a vast subject. There are thousands of books, courses and seminars out there. Each have their advantages and disadvantages:

Books

Books are a cheap way to gain lots of information and give you a general understanding however they tend to be very in depth, going into the intricacies of trading which doesn't make them ideal for a beginner in trading. Visit this site if you would like to learn: How To Do Online Trading.

Courses

Courses give you the middle ground. They are typically an online course that may be delivered via email or your progress can be tracked via a website or a combination of both. They cost a bit more than books but they are better in terms of the cost and time required for the applicable knowledge you will learn. You do get free courses when you sign up with a trading platform which is well worth exploring, but again, with free courses you don't know what is the most valuable information.

Seminars

If you are serious about trading then a seminar is the way to go. They're not for everybody because they can be very expensive. Trading is a probability game so going to a seminar should put you way ahead of amateur traders that have learned from a couple of books and their own mistakes.

What you need to know

Trading is risky, you should only ever risk money you can afford to lose. It is also a psychological game, you must think logically rather than emotionally. Learning the psychological side of trading is the most important. After that, what you need to learn about trading will vary depending on how you want to trade.

How to be safe

There are facilities available with trading accounts such as stop losses that get you out of a trade if it goes a certain amount against you, or even get you out automatically in profit where the share becomes uncertain so you don't have to sit in front of the computer. You can also set up a 'trailing stop loss' so that as your share goes up, your stop loss moves up with it, getting you out when the share starts to go back down again.

Timeframe

Whether you want to trade short, medium or long term - How long you want keep your trades open for: day(s), days to weeks, months and years. If you are trading short term then you need to make sure that your commissions are low because you will be making more trades. A spread betting account is best for this but is only available in the UK.

Leverage

Different types of account allow you to invest in a way that your money is multiplied. This allows you to make more money but is a lot more risky and certain types of account allow you to risk more than your initial deposit, i.e. You can lose more than you actually have in your account. Only trade on leverage if you know what you are doing.

Leveraged accounts include spread betting and CFD accounts.

Brokers

The broker is who you place your trades through. Today, it is easy to set up an account provided that you meet their criteria. When you place a trade you can do it through their platform without having to speak to anyone. This is easy to do and therefore easy to lose money if you don't know what you're doing. The type of trading you do and the account you need may narrow down the brokers that are suitable for you.

Some brokers are:

Software

The software you use to actually place the trades will be governed by the broker you use. In most cases you will need charting software. Here are a few things you might want to look for in charting software:

  1. Offline data storage - This makes it a lot faster to switch from chart to chart because you don't need to wait between downloads. You may need to wait for the initial bulk download but you can always leave your computer to do this. Often this isn't an issue because you can set up your computer to automatically download the latest data in the background. Offline data storage is most useful when you are doing technical trading and flicking through charts quickly. If you have a smaller selection of companies you want to look at then this isn't so important.
  2. Custom formulas, filters or scripts - When you have learned specific strategies you can often use your software to narrow down your list of prospective companies and save yourself a lot of time.
  3. News feed - You should know what's happening in the news otherwise a company that looks good could change direction just after you've bought it.
  4. Deal through - This can be convenient by allowing you to set up trades through your charting software rather than having to go to your broker's website. This software is usually a lot more expensive.

Here are some charting programs:

Sources of information

Here and there on the internet there are little nuggets of information when used correctly will stop you getting in a trade that looks good but turns out being bad or even highlight a company you may never have considered. Things you can try are following Twitter accounts and company blog posts or news articles. One of the best sources of information is the Forex Factor calendar even if you're trading shares rather than foreign currency: www.forexfactory.com/calendar.php

If you would like this information and more in one convenient package then feel free to buy my book in PDF format for $14.95.

I wish you success with your trading.

Oliver Polden