5 Tips For New Traders
The Payout team are frequently asked by new traders, what is the best way to start trading? While we believe every trader must develop and learn their own trading style and strategy, it is important to know where to start.
Whether you plan to trade stocks, forex, futures or options – these 5 tips for new traders will help you on the journey!
Choosing the Right Broker
Your broker won’t make you money, but they are a key component in successful trading. A broker is responsible for providing you assets to trade (e.g. forex, gold, cryptocurrencies, oil etc.), holding your capital and processing your deposits and withdrawals.
Your broker is in a position of trust and choosing a broker is not a decision to take lightly.
The Payout team continue to recommend Zentrader.com as a reliable and trustworthy choice. They offer a generous cashback (claim here) that allows you to try out the platform without risk. Zentrader have also become known for offering local deposit and withdrawal methods in a variety of currencies including USD, JPY, AUD & IDR.
We also recommend being careful about accepting broker bonuses. These are sometimes used by dishonest brokers to trap new traders so they lose their funds. Read what we have written on this matter here.
Study, Study, Study
The is no substitute for hard work. Our experience is that all successful traders have developed their own personal strategy. Some may focus on a particular asset e.g. gold or USD/JPY, some may trade the whole day while others find they are most profitable during certain hours of the day.
The Payout team warn against trying to copy another trader’s strategy or using companies and individuals that sell trade signals. While we do not offer any trading advice, a demo account is a good place to understand the basics of making your first trades.
News and Data Moves the Market
What makes forex (or any financial asset) go up or down?
At any point in time, the value of an asset is based on supply and demand. If the price is stable, participants in the market have agreed on the value (economists call this an equilibrium price).
The two major factors that can make prices move are:
- Data releases
- News events
- Classical chart patterns
- Indicators (e.g. MACD, RSI, Bollinger Bands)
- Candlestick charting
Forex and asset prices become volatile if something that “the market” or traders did not predict occurs. For example a major news event (Donald Trump winning the US presidency or BREXIT yes vote) or data release (higher than expected inflation in the US).
There are many good financial news sources, some free ones include Bloomberg and Reuters. If you want to take things to the next level live streaming news services such as TradeTheNews (paid) and Talking Forex (free trial) are used by many professional traders.
We have written about using and trading live data in this article here.
Understand Price Charts
Technical analysis is one of the most common methods used by traders to determine where to place trades. Some ways charts are analysed include:
The very best cloud charting package on the market is by TradingView (see our article here). Whilst their paid Pro version offers amazing value, their free version will be sufficient for many traders.
Demo Trading Accounts
If you do not immediately want to start trading with real capital, a demo (or paper trading) account is a highly recommended way to get a feel for the market. Any decent demo account should include live market data and replicate real market conditions.
We have written extensively on the benefits and review our top demo account here.
If you have yet to choose a broker, our partner Zentrader serves traders from around the world and is offering a $50 cashback bonus for new traders.