2020 was a year of rapid volatility on all the trading markets, and the sharp ups and downs attracted many new traders, among which many succeeded in taking advantage of the conditions. But as countries and businesses are recovering and adapting to the new reality, such drastic price swings aren’t as common. So are there still opportunities to be found in trading, and if so, what are the steps one may consider taking to start trading online in 2021?
The answer is yes: online trading is becoming more popular and even if the intense volatility stayed in 2020, the possibility of considerable outcomes didn’t. So, how to start trading in 2021? If you are a novice trader, somebody who just recently discovered the world of online trading and you don’t know what the key points to consider are, you need to know one important fact: rash decisions won’t bring any good.
Many traders lose their hard earned money within the first couple of weeks of trading — they dive straight into trading, without learning anything about the way trading works. Such an approach is not going to bring any positive outcomes, so instead of hurrying, take your time to nail down the very basics of trading. Read our guide below including five basic steps you may take into consideration should you decide to start your trading journey in 2021.
1. Choose your trading instrument
Contrary to what others may say, choosing the right trading instrument for you is one of the most important things to do when you are just beginning. What do you prefer: Stocks, Forex, Cryptos? Maybe you are specifically interested in trading commodities? Or maybe you don’t mind trying it all.
Regardless of what you end up picking, this step will encourage you to study, even if briefly, about every trading instrument out there. This way you will know what’s available to you and what the pros and cons are.
2. Pick your broker and open an account
This one may seem obvious, but choosing your broker is just as important. The available trading assets, fees, spreads, deposit and withdrawal conditions will all depend on your broker. There are many comparison articles about different online brokers out there: compare the existing brokers and choose the one that suits you best.
Register an account and learn all about the features and analysis instruments that are available. Make sure you understand the interface and that it’s easy for you to use. This will ensure a smoother trading process.
3. Get a grasp of the market
To understand the full picture of what you are dealing with, start following market news. Such resources as Yahoo Finance, Google Finance and Investing should already be in your bookmarks, make sure that you check them daily to stay on top of the news.
To better understand the very basics, you may check the must-read books for traders that are gathered in this article. Books are a good way to get familiar with the world of investing and trading, without rushing to make big deposits straight away.
4. Learn about technical and fundamental analysis
What do you see when you look at a price chart? If you see a price that goes up and down, you see only a small fraction of what’s actually there. Volatility, consolidation, choppiness — all these terms have a meaning and it’s important to learn what actually makes the chart move. Analyzing the chart is a huge part of a trader’s approach and outcome. Without analysis, one can only guess, and guessing is not a valid trading approach.
Mastering fundamental analysis may give you a skill of planning your next trade after reading a piece of economic news, while acing technical analysis might give you the ability to find patterns in the price chart and take advantage of them before anyone else. Learn all about chart patterns, timeframes, chart types, indicators and the economic calendar.
It may seem like a lot of information to take in at once, but you don’t have to. Spread the topics and take them in one after another. Too much information might only confuse you — it is important to take it slow and pay attention to what you are learning about.
5. Practice
Many brokers, including IQ Option, provide a Practice account which you can use for practicing as long as you like. No need to use real money, especially not until you have a working trading approach all planned. Make lots of trades and try different assets, time periods, test different indicators and find what is best for you. Don’t forget to analyze both your successes and failures to understand what should be corrected.
Another important point to remember is risk management — include money management techniques to your trades and later on make sure to carry them through to the Real account as well.
Conclusion
It is never too late to become a trader, but it is important to enter this field with a deep understanding of how trading works. This is why spending time on theory about the markets is never a waste of time. Extensive practicing may allow you to build better trading approaches, but always keep risk management in mind and actively include it in your trading. Test your strategies and don’t get discouraged by failures — they are a part of the learning process.
