How to start a game on the stock exchange on the Internet? How can a beginner learn how to play the exchange correctly and win? What trading tools are suitable for novice traders?
Internet Exchange Features
Previously, stock players gathered in huge buildings and made trading operations together. Now the need for it has disappeared – you can sit at home in front of the monitor screen and calmly engage in trading.
Stock Market Online Trading, Forex or commodity exchange allows you to use the latest analytics and keep abreast of any economic news. This is a definite advantage for beginners, and for the pros.
In addition, multifunctional tools are available only during transactions through the network. Price changes are displayed on the charts, any graphical tools or indicators can be connected.
Is worth, but, remember that, that trading through the network makes it impossible for us to see the most accurate currency quotes. Unscrupulous brokers can cheat customers, showing not quite real market situation on the chart.
Therefore, cooperate with services, reputable, it does not follow, so as not to cry later on about lost money.
How to learn to play on the stock exchange — review of the top 3 trading tools
You can trade in the financial market with a variety of instruments. Below we list the three most simple and popular options.
Tool 1. Stocks
Stocks are traded on a stock exchange, trades open as offline (traders gather in London buildings, Moscow, Tokyo and other exchanges), so over the internet.
There is a group of shares (usually, issued by recent companies), which cost only a few dollars. Naturally, to purchase them, quite a small deposit.
Stocks – securities, the purchase of which means investing money in the total capital of the company. Shares may generate dividend income, they can be sold and earn on course changes.
However, most securities are very expensive. for instance, Facebook stock price at time of writing — 130 dollars, Berkshire Hathaway – Warren Buffett Company – 145$ and so on.
You can not trade shares, not knowing the specific features of this tool. for instance, after dividend payment, the stock may lose 10-30% its value.
Tool 2. Futures
Futures also belong to a group of securities and are traded on the same market segment, as stocks.
Futures – security paper, under the terms of which one party undertakes to transfer to the other any product after a certain period of time at a fixed price.
for instance, oil company issued futures to the company, buying oil, according to its conditions, six months later, the buyer will receive some amount of black gold at the agreed price.
If, after the agreed period, the price of oil rises, the buyer will be able to sell raw materials at an increased rate and earn. If the price drops, sales of purchased products will be unprofitable.
Expiration Date – moment of time, which futures are repaid.
When do we buy futures, it does not mean, that someone will supply us with oil, because on the day of expiration our security is listed «will be extinguished», we will either earn, either lose money.
Tool 3. Currency
We trade forex in currency pairs, which is nowhere localized and traded on «interbank». For transactions with currency it is not necessary to have huge capital, 100-200 will be enough$ to start.
Currency trading also has many of its own characteristics. for instance, Forex works five days a week (Saturday and Sunday — weekends), round the clock. There are many strategies for different time periods.
If you need to buy real money instruments in the securities or goods market, then on Forex we trade through leverage. It allows you to open large transactions with a small deposit.
Where to start the game on the stock exchange — choose the right strategy
There are a lot of trading strategies on the exchange, we have identified five main, which can be successfully applied in any market – as with currency trading, and with speculation in goods, indices, stocks and other.
Option 1. Following the trend
Trend Shows Crowd Expectations – mass of traders, gambling. Follow the trend, like a pilot fish after a shark, – the most reasonable option for trading.
The logic of following a trend can be easily explained using an example. Imagine, what we are at the station, where so many people. Suddenly a panic begins and the crowd rushes in some direction.
If we try to go against her – she will sweep us away and not notice it, much wiser to move the same, like the bulk of the people.
Trend following example – equidistant trading. As soon as the price breaks the previous top – we open a deal. goal – reaching the upper boundary of the channel. To determine her – draw a straight line on a broken candle:
We only open a position, when the candle, broken level, will close. If you open earlier – the candle may fall, leaving only a shadow, the signal will be false.
Trading in an equidistant channel, we made a profit of 20% with 1000 dollars of seed capital, so the technique really works.
You can search for profitable deals yourself, but you can read analytics, published on the websites of major brokerage firms.
Option 2. Investment strategy
Almost every broker (we wrote about the most popular companies in «Forex Brokers») offers a PAMM account service – you can choose an object for investing money, invest and make a profit.
Profitability can be very different, in our opinion, do not invest under promises of more than 30% monthly income, for the higher the profit, the greater the risk.
Sometimes, an investment strategy means opening deals based on fundamental analysis – we enter the market, studying the financial situation and focusing on long-term trading (several weeks or months, sometimes — years).
To understand the essence of fundamental analysis, watch the video:
This job is not for beginners, because to form a complete picture of the market – not an easy task.
Option 3. Patterns
Patterns – a great opportunity to earn for beginners. They are very easy to find, no serious experience is required to correctly set Stop Loss and Take Profit.
Pattern – figure, priced, which indicates a forthcoming reversal or continuation of the trend.
There are many patterns, we will look at the two most popular. The first – Head and shoulders. It will look like this:
The price reaches a maximum, and then the trend changes direction, forming two shoulders and a horizontal line of the neck. Everything, what do you need – measure head to neck and set it down, defining Take Profit point.
Another interesting pattern – rectangle. We will present it schematically:
Price moved in a certain direction, then entered the corridor. When we break through the corridor, we enter into a deal. By measuring the distance between support and resistance, put it off support and get Take Profit line.
Features of pattern trading:
|1||Timeframes||We trade at large time intervals – not less than an hour (H1)|
|2||Transaction opening||Not earlier than closing the candle, breaking the level|
|3||Closing deal||You can close part of the contract with a breakeven|
|4||Professional level||For all market players|
|5||Performance||With the correct construction of the pattern is very high|
|6||Using indicators||Not necessary|
There is still a double top, triangle, flag, pennant and many other patterns, which you can trade very profitably.
Option 4. Control and trending strategy
There is a small group of strategies, on which deals open against the main trend. We do not recommend this direction of trade to beginners and do not use it ourselves either.
The bottom line is as follows: when reducing the price of any financial instrument, need to open a deal to buy, i.e, counting on growth.
The trouble is, that the market can move in the chosen direction infinitely long, this will lead to huge losses, risk of losing money, trading against the trend, just huge.
Option 5. Game using news
News trading is very profitable and simple at the same time, also requires absolutely no knowledge.
Important news not every day, therefore, for stable and regular earnings on Forex, you need to master other trading methods.
5 easy steps to play the exchange — instruction for dummies
For successful trading on the exchange, you must follow a sequence of five simple steps, indicated by us below.
Step 1. Choose a broker
Brokerage firms, with whom you can collaborate in the trading process, there are a lot of online — new companies appear almost daily. When choosing a broker, you need to pay attention to the training and trading conditions.
Step 2. Register on the broker’s website
Usually registration takes a few minutes: we indicate the name, email and cell phone number. Subsequently, the manager of the selected company contacts us for advice.
Managers do not call clients at all brokerage firms, however mobile – the most convenient way to make contacts.
You cannot trade immediately after registration – first you need to replenish your trading account or get a bonus to open deals.
Step 3. We open a personal account
Account requirements are always different, in some companies, you can start trading even with capital of a few cents. In most cases, you have to replenish the deposit by at least $ 100 to work.
We do not recommend opening real accounts until, trading strategy has not yet been tested. If you are on the demo account – depositing real funds will only lead to their loss.
Broker’s managers often persuade clients to immediately trade for real money, since intermediaries want to earn on spreads or commissions, but you must stand your ground and not risk it.
Step 4. Download and install the trading terminal on your computer
Trading terminal – this is a platform, through which transactions are opened in the financial market. It is downloaded on the website of that broker, with whom we decide to cooperate.
Terminals, installed from sites of other brokerage firms, will not work: just won’t be able to log in.
Step 5. Start trading
When did the basic training go?, mastered the terminal and carefully studied the trading strategy, you can deposit real money into your account and start serious trading.
Alexander Elder (author of popular books about the stock game) recommends every new trading day to start with the phrase «I AM – loser trader».
Cause: if we inspire ourselves, letting emotions control your mind, a «pessimism» creates installation «I have nothing to lose». It relieves the brain of the need to digest emotional outbursts.
How to play and win – useful tips for novice traders
Below we list five useful tips for trading. Take note of them, so that trading constantly brings you profit!
Tip 1. Set a suitable position size
At the opening of each new transaction, we set Stop Loss, upon reaching which the position will automatically close. Maximum loss should not exceed 2% from capital.
If we lose in deal 2% available money – we reserve the right to 49 transactions. With a working strategy, such «safety bag» definitely lead to success.
Also, if a large amount is lost, trader ceases to be emotionally stable. In stress, amateurs often open up losing positions and fly out of the market.
Tip 2. Focus on exiting trades
Strategy, which trader follows in the trading process, should give clear guidance, where to enter the market, and where better to get out of it.
Closing a trading position does not always make a profit, sometimes a loss. However traders, which do not close orders on time, hoping for a market reversal, usually fly out of it.
Do not concentrate on closing a position only then, when breakeven is set – Stop Loss is set at the open price level. But even then there are dangers, eg, gaps, arising after days off.
Tip 3. Keep up to date, what’s going on in the market
Even if the trader does not open trades based on the news, he must look at financial news and keep abreast of upcoming economic events.
The analysis is conducted in various directions, it’s not necessary to even understand everything yourself, to make money successfully.
This will avoid unnecessary Stop Loss due to price movements in an unforeseen direction, and also reduce the number of false signals: in anticipation of important events, the market is usually in a sideways trend, therefore, trend signals are better to ignore.
Tip 4. Always keep track of your results
Sometimes it happens, that a trader loses money in several transactions in a row. Beginners in a similar situation will continue to trade, and increasing volumes and trying «recoup», professionals – stop and ponder.
The criterion for success is not a theoretical basis, and the bottom line – if during the trading process on the account there is a profit – OK, if the loss – you are moving in the wrong direction.
Tip 5. Write your plans on paper
Practically all successful traders recommend trading on paper. Beyond Future Plans, you can train yourself based on historical data.
For training, a certain period in the market is randomly selected, graph readings are redrawn, the trader makes a decision in accordance with his strategy – what to do.
Then the chart rewinds further, stock player is watching, his assumption turned out to be winning or erroneous.