Online Trading Made Simple – Part 1

 

From Complete Beginner to Understanding Your First Trading Screen

Educational note: This article is for general educational purposes only. Online trading involves substantial risk, and losses are possible. No strategy guarantees profit.

Introduction

When you first turn on a trading platform, online trading can look pretty intimidating. There are charts, numbers, the Buy and Sell buttons, prices, indicators, and other things that you don't know what they mean. This article starts from the basics and walks you through the process in easy-to-understand terms.

The object is not to assure oneself of simple earnings. With difficulty and risk of loss, is in trading. Newcomer should, first of all, learn and also learn risk, and then take a demo account.

What Is Online Trading?

Trading online means buying and selling financial instruments on a trading platform through a computer or a handheld device connected to the Internet. The trader views a market, constructs an opinion of potential price directions, decides on entry, and then manages the trade.

Let's say for example you buy an asset at 100, and then a few moments later you sell it at 105 – you've made 5 units of difference to the price (before fees and other costs). But if you sold it at 95 then you've lost 5 units. It's a very simple example of why trading can't be guaranteed income.

What Can You Trade?

Depending on the broker and local regulations, online traders can also trade on stocks, forex, commodities, indices and cryptocurrencies.

Stocks represent a companies' shares. Forex refers to a currency pair such as EUR/USD. Commodities include markets for instance gold and oil. Indices are a bundle of companies or a sector of a market. Cryptocurrencies are digital currencies that are susceptible to very sudden price changes.

There are rules, costs, hours of trading and risks associated with each market. How much does the product that I am trading cost? Get to know the product before trading it.

What Is a Broker?

A broker is a company that provides access to finance markets and trading service. The trading platform is the computer application you use to view prices, charts and place orders.

Check the broker's is a licensed entity before you open an account, their regulation, fees, withdrawal process, products and customer support. Avoid anyone who offers you guaranteed returns.

Understanding the PC Trading Screen

Average trading screen will show the underlying or symbol, the last traded or the current trading price, the chart, the SELL and BUY buttons, the order form, and the account or positions page.

The label on the symbol shows which market you're viewing. The graph shows how the price of that market is moving. The order window could be asking for the size of the trade you wish to place and for your risk preferences. You usually see your open trades in the positions area, plus your profit or loss.

Avoid pressing or pushing buttons just because they are there. Find out what the controls do first.

Candlesticks and Price

A candlestick chart summarizes the four prices for a period in one single candle - the Open, High, Low and Close. The candle body shows the high to low price span, while the wick shows the open to close price range.

For example a candle could have a 100 open, 108 high, 97 low, 105 close. One candle gives you an indication of what happened in the market during that time.

Understanding Time frames

What is time frame- It shows how much time one candle represents. You will get a one minute chart's candle which shows you to get one minute, hour candle which is applicable for one hour and a day candle which is for one day.

Shorter time frames reveal many small movements. Longer time frames show you a larger picture. The same market can look quite different on different time frames – practice comparing them using a demo account.

Buy and Sell

Usually a Buy position signifies that the trader expects the price to rise. A Sell or short position usually suggests that the trader expects the price to fall when short selling is allowed.

If you buy at 100 and close at 105, you receive a pleasant price difference before costs. If you buy at 100 and close at 95, you suffer a loss. And is Buy or Sell shows the course of the order. It does not imply any profit.

Orders: Market, Limit and Stop

A market order typically seeks to be filled quickly at the best price currently available. A limit order sets a price, or one more favourable, at which the trader wants the trade to be executed. A stop order is triggered once a particular price condition is met.

The precise way orders behave differs from one market and broker to another. Check your platform's documentation before trading with real funds.

Stop-Loss and Take-Profit

A stop-loss is a risk-control order that will close out a position once a specified "bad" price level is hit. A take-profit order is a profit-control order that will close out a position at a specified "good" level.

These may help to put a plan in place but cannot guarantee a correct implementation if markets are volatile, there are gaps or the environment is abnormal.

Why Use a Demo Account?

A demo account uses play money and is a great way for new traders to learn how to trade without risking their own capital immediately. Practice opening charts, changing time frames, sending orders, setting up risk management, closing trades and viewing profit and loss.

While a demo account will never feel like trading with real money, it can be a fantastic way to learn.

Your First Practice Trade

Select one market in a demo account. Bring up the chart and scrutinize it before making any move. Think about the direction it appears to be going, which levels look critical, and what may disprove your line of thought.

Know your risk and stop before you get in. Enter with a demo, watch the position details and exit as the plan states. Keep note of the reason you entered and the benefit you received.

Common Beginner Mistakes

Common mistakes include believing every "guaranteed" profit promise, risking too much leverage, risking your essential funds, buying into social media's pop and pray signals, trading without a strategy, moving your stop-loss away from your entry point to avoid taking a loss, revenge trading, and trading with too many open positions.

Another mistake is to add a large number of indicators simply because you do not understand how they work. One simple method is often better than a chart with a large number of tools.

Conclusion

For the first month learn how the trading environment works. Become familiar with the broker, the platform, the market, the charts, the types of orders and the risk management tools. Practice these basic steps until they become second nature.

Don't go straight to trading with real capital as your next step. The next step is to learn how to read charts and how to identify the structure of the markets.

Frequently Asked Questions

1. Is online trading easy?
The mechanics are learnable, but consistent trading success is difficult.
2. Can I learn without experience?
Yes. Begin with education and demo practice.
3. Can trading guarantee income?
No.
4. How much should I risk?
 There is no universal amount. Never risk money needed for essential expenses.
5. What should I learn next?
Learn candlesticks, trends, support, resistance and basic indicators.