How to go Start Trading and Why You Should Start with Demo Accounts
Trading can be exciting experience, whether you want try to out generate new profits, explore new strategies to expand your income or just to see how would you manage financial markets. However, before you decide to dive into this new world, there are some important steps that you have to take and information that you have to get. One of the best ways to learn how to trade is by using demo accounts. In this guide, we will show you how to start your trading journey the right way, and why demo accounts that are available at eToro are the best way to enter the World of Trading.
5/8/20244 min read
Step 1: How Trading Works
It is recommended that before entering into their first trade, anyone should ensure to have understood the basic principles of trading. Get to know various types of assets including stocks, forex, cryptocurrencies and acquire the basic understanding of various terms such as bids, asks, pips, spreads and leverage. This information forms the basis which enables you make the correct decisions in the Market.
Step 2: Pick Your Trading Style
There are differences between Day trading, Swing trading and Scalping. Every style has its own characteristics depending on how much time you spend in a trade and/or your risk appetite. We recommended that you take some time to find out about the various strategies that are available and then choose the one that would be most suitable for your lifestyle and financial objectives.
Step 3: Setting Up a Trading Demo Account
In order to begin trading, first step includes the selection of a brokerage platform. When choosing, it’s important to look for certain features such as low fees, a user-friendly interface and well-organized customer support. eToro is a great option for the starters as the company provides demo accounts where new traders can trade with virtual money in order to gain valuable practical experience on how to place trades before they transfer to a funded account.
Step 4: Practice Makes Perfect: Introducing Demo Trading
Now it’s up to you to decide to open a demo trading account. This enables you to gain real life trading experience while using simulation, investing virtual funds in real trading conditions, all without any risk for your real funds! This account enables you to trade virtual funds while placing you in mock trading conditions yet without the use of real money.
Step 5: Create Your Trading Plan
The following are the things that you should include in your trading plan: state your trading objectives, your risk management approach and the conditions that will lead you to open and close a position. It is important to decide how much in a single trade you are willing to lose, which is advisable to be 1–2 percent of the whole account balance.
Step 6: Market Analysis
Before making any currency trades, it is imperative to familiarize with the market conditions. It is therefore important to learn about fundamental and technical analysis. Fundamental analysis looks at factors such as economic data, company earnings and news while technical analysis deals with the study of price action and charts. The integration of the two analyses can go a long way in improving your decision making in trading.
Step 7: Keep Track of Your Progress
When you start placing trades in the demo account, make sure you keep track of your trades. We suggest you use a notebook and write down the reasons for each trade you’ve made, current state of market and the end results. This way, when you decide to review the notes from time to time, you will be able to analyze your trading behavior and the areas where you can improve.
Step 8: View Mistakes as an Opportunities to Learn
There is no trader in this world who occasionally doesn’t make mistake, moreover, if you don’t have a lot of trading experience. This is true for demo trading as well — use it to learn from your mistakes. Identify what happened when a specific trade did not achieve the expected results and alter your approach based on that. It is very important for any trader to be able to adapt and this is something that you will learn when you are becoming a successful Trader.
Step 9: Moving Live to a Funded Trading Account
After you gaining enough confidence, the trading skills and after building a proper trading plan using your demo account, you may decide to go “live” and move to a funded account. At eToro, you can join variety of funded accounts, which means you will be able to trade using real “live” money with the assistance and Client’s resources provided.
Step 10: Stay Informed and Keep Learning
It is important to be aware that financial markets are always changing and are never static. It is therefore important to keep on learning. Use every opportunity to learn as much as possible, especially if you plan trading over the long term. Ensure that you regularly check the market trends, read trading books, enroll in webinars, and be a member of trading communities. The more you know, the more you will be ready to make right decisions in the market.
