Trading for beginners – What is trading exactly and how to start?

In this short trading for beginners course, we will discuss what trading exactly is and how you can start trading online. In this article, I will go back to the bare essentials of trading and investing and I will explain to the absolute beginner trader what it’s all about. Welcome to trading for beginners 2.0!

What is trading exactly?

Trading means in English exactly what it says: trading and that’s what a trader does. A trader might trade stocks, where he buys and sells them, aiming to make a profit.

Trading is thus nothing more or less than buying and selling. As a trader, you want to buy at a low price and sell at a higher price. The difference is your profit.

Unfortunately, as a trader, you don’t have much saying at the price of a stock. The price of a stock is determined by demand and supply and the trick is thus to buy and sell at the right moment.

If you’re right often enough, you can earn quite a good living with it. If you cluelessly start trading, you are most likely to lose your hard-earned money.

What is the difference between trading and investing?

Beginner traders often think trading and investing are the same thing, however, there is most certainly a difference. The difference between trading and investing mostly comes from the time frame.

– Trading: short term (from seconds to several weeks)
– Investing: mid-long term (several weeks to several years)

I myself both trade and invest. Most of the time I buy and sell within a maximum of a few days though, so I’m more of a trader than an investor.

Which markets can I trade?

Nowadays all kinds of markets are available for beginner traders. Back in the days, you had to do everything via your bank or a third-party middleman but now trading for beginners is a lot easier.

These are the most important markets you can trade:

– Stocks
– Commodities
– Forex
– Cryptocurrency

To start trading as a beginner, you will need a broker and a trading platform, that gives you access to the financial markets.

Some brokers specialize in a specific market and others give you access to all markets. For example through CFDs.

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How much money do you need as a beginner trader to start trading?

This is a difficult question and I would say $ 0, to be honest. Trading for beginners should just involve a demo account to start with. Luckily, most brokers have a demo account available where you can practice with fake money on.

Only when you make a profit on your demo trading account, the time has come to see which amount of money you could possibly use as a starting capital to start trading with real money. At most brokers, you can already start with very small amounts of like $200, and by the use of leverage, you can already make relatively big trades.

The higher your starting capital, the higher your trade size and the more profit you can make, however, only trade with money you can afford to lose.

How to start trading and what do you need?

Now that you know what trading is, but you still don’t know what you need to start trading and what you can expect by trading in the financial markets.

Shopping list for the beginner trader:

– A laptop, smartphone, or tablet to trade with
A demo account with a broker
A profitable trading strategy
A Positive mindset
– A lot of coffee

Out of these five bullet points, number three is the most important one. The rest you can arrange very easily.

I started trading when I was 18 and I now trade the financial markets for over 12 years and am a professional introducing broker with contracts at more than 100 financial institutions. I always tend to say: if I can do it, everyone can do it. It’s not rocket science after all.

Apart from a good strategy, the most important thing for beginner traders evolves around controlling emotions. Are you mentally capable of trading? I wrote some articles on Medium about this subject which might be interesting to read.

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Of course, there’s only one way to find out. By opening a demo account at a broker and see if trading is something for you.

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