Remember Day when you Learn Car Driving, In Starting you must have felt some difficulties like you may press Accelerator in the place of Break. I have experienced this event as well. Gradually, By Practicing this all enters in mind and becomes our intelligence. The same happens when you learn to trade whether Its Forex Market or Stock Market or Some Other Financial Derivative Markets. The Steps are very Simple
Step 1 : Understand the basics of Markets
Learning basics is first of all task to every new trader. Terminologies for different markets are different like if we choose stock markets to trade we have to understand all its terminologies and basics like what is share, dividend and their ratios. In Forex market you have to know most about different countries’ currencies, which currency pair have large volume etc.
You can read our post How does the stock markets work which is fully written for beginners like you. Next Step to learn to trade is identification of factors that generally affects the market.
Step 2 : Identify the factor that effects the Market (Concepts)
We are assuming You have the choose the financial derivatives which suits you and have known the basics of your chosen financial derivatives. Now your task is to know the factors that are affecting the markets. For example, stock markets have many factors involved which affect stocks price. The main factors that mostly affect stock markets are company balance sheet, Employment, GDP and Inflation of countries where you are investing. You have to read and apply microeconomics in stock markets. Below We have recommended books for learning Micro Economics. In Forex trading you have to focus mainly on overall country growth measurement like GDP, inflation, Manufacturing Index etc. These are fundamental indicators. To know more you should read books on Macro Economics. Below We are providing you the best books which you shall read for fully understand the markets.
Principal of MiroEconomics
Step 3 : Develop your Strategy and back-test it on historical Data
After understanding of market basics and factors that directly or indirectly affects the markets. Now it’s time to develop your own trading strategy. Trading on your own strategy can be done in two ways manual trading and Automated Trading. In Manual trading you have done some chart analysis which is also called as technical analysis and read some news (fundamental analysis) of companies or Currencies you are trading on. After analysis you manual put orders or buy stocks for a particular company. Other way is to trade automatically through developing same strategy you are trading manually. Automated Strategies are hard coded in different languages which can be varies from brokers to brokers. Most of the stock brokers prefers python and java for automated strategies and forex brokers use MQL language which is just like C++ language. All the brokers provide historical data for testing your strategies. Therefore, it’s better for the traders to test your strategies before trading on real money.
Step 4 : Practice your Understanding in Demo Trading Account
Every trader or investor should never in hurry to start trading with your real capital without testing your strategies on demo trading account. It will be fool to know that strategies you have made are successful. No strategies are successful and it must be improved according to current markets to make profits and reduce market risks for long term. Test your strategies for minimum six months on demo trading account and then move to real trading account if that strategies are doing well.
Here is the link which guide you how to open demo trading account for both stock markets and forex markets.
After practicing your strategies, now you can taste the water of trading, means you are ready to trade. In this Article we have mentioned the content and support materials which will be useful to learn to trade.
Stocks Picking Strategies for Beginners – Fundamental Analysis, for knowing what things you should consider before picking up stocks to buy.
Best Way to Trade Support and Resistance: Technical Approach – A simple and powerful strategies to find out profitable level to buy stocks.
Which is better Forex or Stock Market: Pros and Cons – If you are beginner and confused which market is suits for you then you should read this blog post.
Simple Money Management Techniques – Know how to make a good money management strategies.
4 Technical Tools For Predicting Stock Markets Trend – Which technical tools professional traders for prediction of share price.
Remember, as more as you Practice better will be your observation. This will improve your Trading Style.