Are you a beginner trader who knows nothing about it? Like anything new, there is a lot to learn. Trading is no different! We’ll make sure you know the key things a beginner trader should know.
Do you think trading is like when you go shopping with your girlfriends and pick the clothes you find cutter?
Do you think it’s like choosing from 10 gorgeous guys at a bar which one will take you home?
It’s not that easy, girl. Usually, we know when the skirt – or the guy – we want fits us perfectly. It just takes one look.
We don’t have to study the colour, model, and the fabric of the skirt; we don’t have to have a measuring tape to measure the guys’ forearms or six-pack. You don’t need it to feel the attraction.
It simply happens.
I must warn you, though, trading is WAY different than that.
If you are a complete beginner, you shouldn’t just listen to your guts. You first have to know a few small things.
In this article, I’ll present you 10 things you should know as a beginner trader, and by studying those steps, you can start trading in a conscious way.
Here is a list of the ten things I’ll discuss in this article:
- Why you want to trade
- What is your trading style
- What asset class will suit you
- How will you fund it
- How to read a trading chart
- Learning Trading Jargon
- Where can you trade
- Your trading rules
- Chart patterns that you’ll look for
- Basic psychology behind trading
1. Why you want to trade
The first thing you wanna know is why you’re trading.
Do you want to have a source of income other than just being a stay-home mum?
You never got the chance to start college and you want to do it now?
Do you already work, but you want to create a new stream of income to, maybe, quit your job or retire earlier?
There might be many reasons why a person starts trading. It doesn’t matter which one is yours, but you HAVE to find a reason and stick to it.
Reasons motivate our tradings and even define them. If you want to reach financial independence, for example, you should invest in stocks that pay dividends: by doing this, you can pay your expenses only with the shares of the profit – which are the dividends – that the companies you chose are having.
2. What is your trading style
Do you remember when you were 14?
Were you a sweet little girl, a metalhead, a nerd?
This probably changed so far, right?
Yeah, people change. Our bangs in middle school would look awful today – maybe -, but what matters is: we never run out of style.
A beginner trader should know that there is style, even while trading. Style is a great part of our life, and in trading it’s not different.
It all depends on your motivations, your anxieties, your time and your profile – are you aggressive or lenient?
|Trading style||Holding period||Recommended when…|
|Scalping||seconds to minutes||you’re a badass. This type of trading is for focused and impatient people. You have to spend a lot of time on the computer and earn money while trading in an extremely short amount of time.|
|Day Trading||hours within a day||you work at home or can spare some time to trade at least twice a day. Day trading is not as urgent as scalping, but you still have to be focused/attentive to find out the best time to sell your shares within the day. It’s also good for impatient people, because it doesn’t take longer than a day for you to close the operation.|
|Swing Trading||2 days to a few weeks||you’re a patient person. When you’re swing trading, you see prices may vary a lot from one day to the other. On swing trading, you have to wait patiently until you see a profit – or until stop loss.|
|Position Trading||weeks to years||you’re an EXTREMELY patient person. In this case, people hold the money for a really long time, because they believe the company they bought shares of will rise in the next months or years. Usually, this type of trading is made when you have a personal interest in the company and you don’t have time to look at the charts every day. It has lots in common with investing.|
3. What asset class will suit you
When we go out shopping, we usually know what we’re going to buy, right?
Based on our needs, we know if we are going out to buy a shoe, a purse, a shirt or a skirt – unless you don’t make plans.
An asset class is like a kind of piece of clothing you want to buy, based on what you need/want. Something any new trader should know.
These are the main asset classes:
|Asset classes||Assets within the classes||Benefits|
|Stocks or Equities||Stocks or Equities||You own a piece of a company and you can sell later with some profit.|
|Fixed-income investments||Bonds, Government bonds, Certificates of Deposit||You lend money for interest. It’s the safest investment. You’ll receive the interest on a regular basis if you want.|
|Money Market instruments||Cash, Treasury bills and commercial paper||Your money is as safe as it is at a bank.|
|Tangible assets||Real State, Commodities: gold, petrol, sugar, etc.||As the name says, it’s tangible, so you’ll have a sense of actually owning something.|
|Cryptocurrencies||Digital currencies such as Bitcoin, Ethereum and Litecoin (also known as altcoins).||You own a digital only currency or stake in a company based around digital markets.|
For example, “purse” can be considered a class, but there are many different purses you can buy within the class “purse”. The same thing is with assets: if you want the benefits of the “Tangible assets”, you’ll have to choose if you’ll trade Real State, gold or wheat, for example.
Each of those asset classes trade in a specific financial market and is subjected to different laws and regulations.
You can also choose to diversify your tradings, which I recommend the most. Learn a bit more about that in here.
4. How will you fund it
Do you work? Do you rely on your parents or on your husband? How do you get money?
We have to have some money to trade, in the first place. If you earned some kind of heritage or earned money in the lottery, good for you! But most of us are not as blessed.
Earning some extra money to trade is a great option. Are you good at baking? Do you love taking care of kids? Are you fluent in a second language?
Start using your skills to earn some extra cash and trade all of it! The right way, of course. You can also get some ideas on how to save an investment pot. Sounds such an obvious thing, but you’ll be amazed at how many new traders don’t know!
5. How to read a trading chart
You must be already knackered, right dear?
Don’t worry, we can learn fast.
Trading charts are those things you see on a trader’s computer screen. Like this:
It seems complicated, but it’s not!
Reading trading charts is a science, so if we study we’ll learn.
I’ll help you with that, there is a whole article on how to read trading charts. It’s really important for you to read it before you trade.
6. Learn Trading Jargon
When you are taking baby steps in a new world, you realise some of the things people discuss don’t make sense at all.
Are you a mom? If you are, you probably know some of the motherhood’s lengo, right?
With trading is the same, before – or during – you trade, you’ll learn how to speak like the big girls in the field.
When you enter a finance blog (like this one) or even a forum, you see people are blabbering about things like indexes, stocks, passive investments.
If you know nothing, read this article and learn some of the words that are part of the trading jargon. A must for beginner traders.
7. Where you can trade (demo and real)
Now the best part! Here is an article where you can learn WHERE you can actually trade!
In some of the websites, you can create Demo accounts, where you can practice the skills you’d already seen here.
Read The Best Platforms To Trade Online and learn more.
8. Trading rules as a beginner trader
When we open a new business we have to be attentive to the rules of the niche.
If we decide to have kids, we should at least trace some rules for their education and well-being.
Practice doesn’t make perfect.
Perfect practice only leads to improvement.
In trading is not different. In this page, there is a set of rules I prepared to myself as a beginner trader. You don’t get better simply by doing, but by continuously review progress and trading behaviours – and the safest place to do this is in a demo trading account.
If you want, you can use the same rules I used but you can also create your own and use mine as a model – after all, which mother has never at least searched online how to educate properly their kid?
9. Chart patterns new traders should look for
We’ve said charts before, but will say it again as they’re such an important thing any new trader should know. They are extremely helpful and important if you want to take trading seriously. Trading charts are not a puzzle if you learn what to look for.
Patterns in trading charts are not only for seasoned traders, we should also learn them as beginners too!
When we, traders, analyse the charts, we can find patterns everywhere. See this example taken from this website:
In this case, the patterns contribute to long-term trading. They are seen and marked with a line rising from bottom-up. If you’re more of a patient woman, you can earn lots of money in between the months of February and December, for example.
In here, we can see the image zoomed up to a short-term view. In this case, you could lose some money, if you were not patient and attentive to the rising patterns seen by the end of November.
If you want to be introduced on trading charts there are two articles in this blog that can help you with that
How to Read Trading Charts < This one is really good at helping you seeing patterns!!
10. Basic psychology behind trading
Trading is not all about brains. Well, it actually is, but not only about the thinking part of our brains.
Psychology plays a huge role in trading. When we trade, we’re subjected to thousand of subconscious thoughts that maybe we had no idea that existed!
Here are some articles that might help you tame the beast of your subconsciousness. Don’t ever underestimate its power, and always – I really mean ALWAYS – rely on these things you should know before you start trading.
Also, don’t forget: the theory is pretty good, but we should pay attention to our instincts! Especially if you’re a mother, remember, your mind always has good intentions and a lovely defence mechanism 😉