Question 1

How do I start trading?

Accepted Answer

The first thing is to consider why you want to trade? Is it just the money or because you want to become a successful trader? It is so easy to open an account with a broker and just start clicking buttons without knowing what you are doing, and it is possible to have some success. Unfortunately, it will be short lived as the law of averages catches up with you and goodbye deposit!

Question 2

What do I need to know before I start trading?

Accepted Answer

To begin trading, not very much. However, to become consistently profitable, a lot! The more knowledge you obtain the better the chance of becoming a trader. This includes the fundamentals that determine price and trend along with technical analysis to assist with the timing of entering and exiting a position.

Question 3

What type of trader will I be?

Accepted Answer

This will depend a lot on your character. Are you passive, aggressive, patient or impatient and your risk appetite? If you are patient, you will gain better entries as you will wait for the market to come to your level rather than being impulsive and rushing into trades. This will reward you with more high probability trades and generally if you are patient you will also be passive. Risk appetite is based on how you approach the risk you will accept in a trade, If you are cautious you will wait for the high probability trades, however, it may also lead you to take profits too early and possibly have your stop loss close to your entry price.

Question 4

How do I build a trading plan?

Accepted Answer

There are two parts to a trading plan, the financial rules and the second which is the criteria required for you to enter or exit a trade. The financial rules should include your career stop, which is the maximum you will invest in yourself to become a trader (the same as any potential business) and once set this should not be broken. Create an Excel sheet and begin that figure, then deduct the deposit you send to the broker to open your account and then deduct any further payments you need to make to top the account up. If it reaches zero, STOP! Go back on a simulator for at least 6 months or until you can produce consistent results.

Question 5

Which trading broker should I use?

Accepted Answer

When it comes to selecting a broker the first thing to consider is what instruments you will be trading, CFDs, or futures & options. This is important as most brokers only offer access one or the other. Pick a regulated broker that offers the markets and services you need

Armchair Academy: Trading Psychology

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