How to learn trading from scratch
The word trading comes from the verb “trade” and means making transactions with securities, goods or currencies in order to make a profit.
Traders are called participants in exchange trading, earning on exchange rate differences.
Investors are those who are aimed at obtaining benefits in the future by investing (investing) financial resources.
A broker is a company that provides individuals and legal entities with access to stock exchanges.
A personal advisor is often an employee of a broker or other financial institution. He does analytical work for the client and can give investment advice or develop a complete investment strategy.
Depending on the strategy used and the duration of transactions, trading is conditionally divided into several types.
High frequency. All operations are performed by a computational algorithm. In accordance with a given program, he places a lot of orders – orders for buying and selling (from the English high-frequency trading, HFT). All transactions are carried out in seconds or even faster. It follows that a high-frequency trader must have knowledge of trading algorithms and programming skills. In addition, such a strategy is very risky. It requires high material costs for appropriate equipment and provision of dedicated Internet access. A good communication channel is a prerequisite to avoid any time delays during the trading session. This trading strategy is not suitable for beginners.
scalping. Transactions, as in high-frequency trading, are carried out for short periods of time, but last longer – from several seconds to several minutes. Scalping is also based on a certain strategy, according to which a trader filters out securities with the required volatility (trading volume) and other specified parameters. The purpose of transactions is to withdraw a small profit in each trade.
Day trading. As the name implies, the trading period in this case is a day. The trader conducts transactions manually. Current positions require constant monitoring, since they should all be closed before the evening. This requirement is also related to the peculiarity of trading – the use of a broker’s leverage. The discount not only allows you to increase profitability, but also significantly raises the risks. Therefore, the commissions of brokers for the use of borrowed funds overnight (until the next day) are quite high and can reduce the expected profit from the transaction to nothing. Methods for conducting day trading on the Moscow Exchange differ depending on the type of instruments used. The strategy can be based on indicators and technical analysis signals, as well as price fluctuations due to the influence of the news background.
Swing trading. For this type of exchange trading, the period for concluding a transaction can last several days. Swing trading relies on technical analysis of charts, recognizing price fluctuation cycles and making the most of those movements. It requires deep knowledge, strict discipline and a clear strategy for making decisions on opening / closing a position and intermediate profit taking. As part of this strategy, the trader tries to minimize possible losses by constantly adjusting stop orders (orders that will be executed if the price starts moving in the opposite direction to the open position).
Medium term trading. Designed to capture significant price fluctuations and earnings on trends (long-term unidirectional movements). Here, a trader cannot do without both technical and fundamental analysis. The decision to open a position is made on the basis of data on macroeconomic factors, information on the state of the economy of the country, industry, reports on the activities of the company and its competitors. This type of trading is similar to long-term investing, but differs in duration.
You can start your acquaintance with trading by learning scalping and day trading. These types are most popular with beginners, as they do not require large investments and complex special knowledge. As experience accumulates, a trader determines what is more interesting to him and delves into a specific area.
Studying the trading terminal and applications
In trading, a trading terminal acts as a tool for accessing the exchange. To make a trade quickly and accurately, a trader must be aware of all order types available in his program. It is worth exploring the possibilities of using hotkeys to quickly open the desired windows and tabs. This will save you a lot of time and make your job easier. You also need to pre-configure the interface for your purposes.
In our country, the two most common terminals are QUIK and MetaTrader. Separate training video courses are devoted to each of them, and regular free seminars on configuration and usage features are held.
However, studying the theoretical part is not enough. Only practice will help you understand what functionality you need and how best to place it on the terminal. For these purposes, some brokers provide access to a demo account. Here, trading with virtual funds, you can both test the strategy and test the trading platform.
To become a successful trader, desire alone is not enough. People come to the stock exchange with burning eyes and a great desire to earn money, but many leave with nothing. Why is it so? Psychology plays an important role in successful trading. Knowledge about the technical side of trading does not insure against errors and distortions in the perception of reality when opening a position. Therefore, let’s see what skills a beginner needs to develop in himself in order to become successful in this business.
Discipline. The job of a trader is hard work. Before the opening of the next day of trading on the stock exchange, a beginner should have time to do a lot: to analyze completed transactions, if necessary, adjust the strategy for the next day, study additional information, choose an assumption to check. In order to have enough time for all this, it is important to observe strict time management. During the day, you need to stay focused and not lose focus.
Stress resistance. It is impossible to make only profitable trades. Everyone who wants to learn trading should come to terms with this thought. And since human psychology has a tendency to perceive the loss of a certain amount as twice as hard as gaining it, it is not surprising that most people quickly quit trading on the stock exchange without having achieved success. Understanding that every mistake is an experience is given to many with great difficulty. The good news is that resilience can be trained.
Rationalism. There is no place in trading for such words as “I think” or “I believe”. A good trader can always explain why he opened a position and why he exited it. For this, he must have an absolutely unemotional logical reason, based on knowledge, strategy, and not on faith or intuition. Careful selection of ideas and critical perception are essential skills for a trader.
Ability to make decisions quickly. This is a useful quality that is worth training. Of course, the success of the decision will largely depend on preliminary preparation. But during trading, speed is no less important for a trader. Seeing lost opportunities is no less difficult than bearing losses.
Trading for a beginner is a real full-time job. A certain time must pass until the necessary experience is accumulated to create your own strategy. Further, more free time will appear and trading will enter a stable rhythm. But a trader should never forget that the market is constantly changing: what worked today may stop generating income tomorrow. Therefore, those who have made trading their profession are constantly looking for new options and strategies.
Anyone can become a trader. This job has many benefits:
- – earnings opportunities are unlimited;
- – distant work;
- – free chart, tied only to the trading session;
- – lack of leadership.
But there are also disadvantages:
- – high risks;
- – lack of stable income;
- – no social security;
- – high stress factor.
What is important
In the minds of many, the typical trader is like a millionaire in a movie who does nothing but spend his huge fortune and work a couple of hours a day. Yes, this is possible, but not immediately. Heights are reached only by the most stubborn and persistent, ready to put a lot of effort and energy into the cause. In principle, this is the secret of success in any business.0 Like
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