Trading Made Easy: Simple Tips for Beginners to Start Trading Today📈

9 min readNov 6, 2024

Trading can be an exciting and rewarding way to make money, but it can also be a daunting and risky activity, especially for beginners. With so many financial markets, instruments, and strategies to choose from, it can be overwhelming to know where to start.

In this post, we will provide an introduction to trading for beginners, covering the basics of what trading is, the risks and rewards involved, and the essential skills and knowledge needed to succeed in this challenging field.

What is Trading?

Trading is like playing a game where you try to make money by buying and selling things that people want, like toys or video games. Instead of toys or video games, traders buy and sell financial assets like stocks, currencies, or cryptocurrencies.

The goal of trading is to buy for a lower price and then sell it for a higher price, making a profit in the process. For example, let’s say you bought a video game for $20 and then sold it to someone else for $30. You just made a profit of $10! Trading works the same way, but instead of a video game, you’re buying and selling in the financial markets.

However, just like with any game, there are risks involved in trading. Sometimes you might buy something for a high price, and then the price goes down, so you lose money instead of making a profit. That’s why it’s important to be careful and manage risk accordingly before buying or selling anything.

Types of Trading

Here are some of the most common trading styles:

Scalping: Scalping is a high-frequency trading style that involves buying and selling financial instruments in very short time frames, sometimes within seconds or minutes. Scalpers aim to make small profits on each trade, but execute many trades in a single day.
Day Trading: Day trading involves buying and selling financial instruments within the same trading day, with the aim of making a profit from short-term price movements. Day traders typically use technical analysis, chart patterns, and indicators to identify trading opportunities.
Swing Trading: Swing trading involves holding positions for a few days to a few weeks. Swing traders use a combination of technical and fundamental analysis to identify potential trades.
Position Trading: Position trading involves holding positions for several weeks or months. Position traders use fundamental analysis to identify undervalued or overvalued assets and then hold those positions for an extended period of time.
Algorithmic Trading: Algorithmic trading involves using computer programs and algorithms to execute trades automatically based on predetermined criteria. Algorithmic traders use advanced mathematical models and statistical analysis to identify trading opportunities.

Each trading style has its own advantages and disadvantages, and the choice of trading style ultimately depends on your preferences, risk tolerance, and trading goals. It’s important to choose a trading style that suits your personality and educate yourself on the markets and become disciplined with your trading strategy.

How to Start Trading?

1. Educate yourself: Before you start trading, it’s important to have a good understanding of the markets, trading strategies, and risk management. You can learn about these topics through books, online courses, and webinars.

2. Choose a broker: A broker is a firm that allows you to trade financial instruments on its platform. Choose a broker that suits your trading needs, has a good reputation, and offers a secure platform where you fund and withdraw your money without any problems.

3. Open a trading account: Once you have chosen a broker, you must create an account. You must provide personal information and connect with your bank to fund your account.

4. Choose the financial markets you want to trade: Decide which financial instruments you want to trade, such as stocks, currencies, or cryptocurrencies.

5. Develop your own trading strategy: A trading strategy is a set of rules or conditions that help you make guided trading decisions. It should include entry and exit points, risk management, position sizing, technical analysis or fundamentals, or both. There are no limits to trading, and you decide what works better for you.

6. Practice with a Demo Account: Starting trading with a paper or demo account is a great way to get started without risking any real money. A demo account is a simulated trading environment that allows you to practice trading with virtual money in real market conditions.

7. Start trading: Once you have a trading account, a set of rules, and a trading strategy, you can start trading. Start with small positions and gradually increase as you become more comfortable trading.

7. Monitor your trades: Keep track of your trades and monitor your positions closely. Make adjustments to your trading strategy as needed.

8. Manage your risk: Trading involves risk, so it’s important to manage your risk carefully. Use stop-loss orders to limit your losses.

Allocate a small percentage of your trading budget (1–3%) to each trade, and using stop-loss orders, you can manage your risk effectively.

For example, if you have a $1,000 budget and allocate the following way:

Trading with 1% Risk Per Trade (1-to-3 P/L Ratio):

Trade 1: Win (+2%): Profit $20, Account Balance: $1,020
Trade 2: Win (+2%): Profit $20.40, Account Balance: $1,040.40
Trade 3: Loss (-1%): Loss $10.40, Account Balance: $1,030.00
Trade 4: Loss (-1%): Loss $10.30, Account Balance: $1,019.70
Trade 5: Loss (-1%): Loss $10.20, Account Balance: $1,009.50

Final Account Balance with 1% Risk (1-to-3 P/L Ratio): $1,009.50

Trading with 2% Risk Per Trade (Same P/L Ratio):

Trade 1: Win (+2%): Profit $20, Account Balance: $1,020
Trade 2: Win (+2%): Profit $20.40, Account Balance: $1,040.40
Trade 3: Loss (-2%): Loss $20.80, Account Balance: $1,019.60
Trade 4: Loss (-2%): Loss $20.39, Account Balance: $999.21
Trade 5: Loss (-2%): Loss $19.98, Account Balance: $979.23

Final Account Balance with 2% Risk (Same P/L Ratio): $979.23

In this example, we compared the two risk strategies over five trades where you win two trades (+2%) but lose three trades (-1% each vs. -2% each).

As you can see, the final account balance with the 1% risk per trade strategy is $1,009.50, whereas the final account balance with the 2% risk per trade strategy is $979.23. In this case, the 1% risk strategy performed slightly better due to its lower risk exposure and, most importantly, management. By managing your risk effectively, you can take advantage of more profitable trading opportunities while minimizing losses in the long run.

Set a Trading Budget

To set a trading budget, you should consider your financial goals, risk tolerance, and expenses to determine how much money you can afford to allocate to trading.

Do’s and don’ts include:

It’s important to keep in mind that trading involves risks, and there is no guarantee of profits.
Therefore, it’s essential to set an amount of money you can afford to lose and not rely on trading as your primary source of income.
Don’t use the money you need to use, like must pay expenses such as a down payment, rent or college.
Consider your financial situation, such as your income, expenses, and savings, and determine how much money you can allocate to trading without affecting your overall financial stability.
You can also consider seeking the advice of a financial advisor to help you set your trading budget and develop a long-term investment plan that aligns with your financial goals and risk tolerance.

Understanding Market Orders

There are several types of orders that traders can use to enter or exit positions in the financial markets:

Market Order: A market order is an order to buy or sell an asset at the current market price. This type of order is executed immediately, and the trader has no control over the execution price.
Limit Order: A limit order is an order to buy or sell an asset at a specified price or better. If the market price reaches the specified price, the order will be executed. If the market price does not reach the specified price, the order will remain open until it is canceled or the price reaches the limit.
Stop Order or Stop Loss: A stop order is an order to buy or sell an asset at a specified price or worse. If the market price reaches the specified price, the order will be executed, and the trader can limit their potential loss or lock in profits.
Stop-Limit Order: A stop-limit order combines the features of a stop order and a limit order. This type of order is used to buy or sell an asset at a specified price, but with a limit on the maximum price to be paid or the minimum price to be received.
Trailing Stop Order: A trailing stop order is a type of stop order that is adjusted automatically as the market price moves in favor of the trade; mostly depends on the trading platform. It is used to lock in profits while still allowing for potential gains if the price continues to move in the trader’s favor.

Our Thoughts🤔

Now that you know everything you need to start on your trading journey, you must understand trading is not a get-rich-quick scheme, and it requires a lot of time, effort, and discipline to succeed. It is also important you apply patience, develop a solid trading plan that fits your lifestyle, implement proper risk management techniques, and continuously educate yourself on the markets. Whether you are a beginner or an experienced trader, continuous learning is key to success.

Market Psychology🧠

We also want to emphasize the importance of how emotions play a significant role in trading because they can impact your decision-making process. Fear and greed are two of the most common emotions that you may experience, and they can cause you to make impulsive and irrational decisions. For example, fear can cause you to exit positions too early or avoid entering trades altogether, even when there may be profitable opportunities available. On the other hand, greed can cause you to take excessive risks or hold onto positions for too long, leading to losses.

To avoid being driven by emotions, you must remain disciplined and stick to your trading plan. This involves setting realistic goals, following strict risk management guidelines, and being patient when waiting for opportunities to present themselves. In addition, it can be helpful to take breaks from trading and engage in stress-reducing activities such as hobbies, exercise, or meditation.

The best successful traders are those who can control their emotions and make rational decisions based on objective analysis and a clear understanding of the market. By recognizing the role that emotions play in trading and developing strategies to manage them, you can improve your overall performance and increase your chances of success in the long run.

Disclaimer: The information provided in this blog post is for educational purposes only and should not be considered as financial advice. The author of this blog is not a financial advisor and does not have any financial interests. Any trading or investment decisions should be made after careful consideration and research. It’s important to understand the risks involved and consult a financial advisor before making any financial decisions. The author is not responsible for any losses or damages incurred as a result of following the information provided in this blog. The information provided is based on personal experience and research and may not be suitable for everyone. It’s recommended that readers conduct their own research and seek professional advice before making any financial decisions.