Trading for the first time? Olymp Trade tells you how to get started
Trading in financial markets tests a person’s strength. Thousands of traders strive to make successful trades, increase their trading volume, and buy expensive cars and high-quality business suits.
This is sometimes preceded by a difficult but exciting process. There are five basic rules that a novice trader needs to follow in order to learn how to work with goals, avoid stepping on the rake, protect his or her capital and move forward in the chosen direction.
Rule One: Take no risks at the starting point
A demo account is an account with a virtual currency that simulates trading with real money.
We recommend that you learn how to open and close positions, place pending (limit) orders, set stop loss and take profit. When using a demo account, one can also understand what a profit or loss comprises, as well as how various multiplier (leverage) factors work.
Experiment with trade amounts to determine the deposit amount for real trading. For example, if you expect to deposit $1000 to your account in the future, it is better to work with this amount on the demo account as well.
This approach will help you set a daily profit target and limit the risk. If you manage to earn $100 a day while having $1000 on your demo account, it makes sense to set a similar target when working with real money.
Rule Two: Choose a simple and intuitive trading terminal
A trading terminal is a software or interface which allows traders work in financial markets.
We do not recommend a novice trader to begin with famous exchange programs such as Thinkorswim or NinjaTrader. These solutions are difficult to understand and can only scare off a beginner.
The first terminal should help you intuitively understand what each button is used for, how to open the first position, what the difference between a training account and a real one is, and so on.
In this case, the Olymp Trade trading platform is perfect for novice traders. Why?
• Here you will find 10,000 units on a demo account, which you can reset for free (if you suddenly lose all the demo money).
• You can learn the basics of trading directly on the company’s website.
• The Olymp Trade broker is a reliable and certified company.
Rule Three: Don’t trade at random
A trading strategy is a set of rules and techniques for analyzing the asset price of an asset and making trades.
Trading is not gambling! You should stick to the trading strategy, since that is the only way you can provide a positive result in the long run.
Every day you will feel that “the trend is about to end” or “the price will start growing in no time,” or “the Euro has been growing for five hours without a rollback. It must start falling now.” a dozen times. But every thought that runs counter to your strategy is the work product of your intuition and imagination.
You should have a plan of action from the very first days in trading. You can find simple trading strategies on the Internet and adjust them in due course. As we have already mentioned, one should do it when working on a demo account.
Many traders use countertrend strategies based on the overbought and oversold areas. You can find an example of one of them below.
A trader selects two indicators: RSI (a single-line indicator) and Stochastic. The indicator lines are above the upper limit of the channel (overbought), which means that downward price movement may begin soon. The position of the lines under the lower limit (oversold) implies that the asset price might increase.
On the Olymp Trade platform, you can find the indicators in a menu that you can access by clicking on the compass icon.
Rule Four: Read the news
Traders read the news. Investors read the news. Even the most advanced analysts read the news. Consequently, all market participants live in a single information environment, which one should join not to stay one step behind.
The useful news can be divided into two categories: “the economic calendar events” and everything else. The first one is very important, as they have a strong impact on the asset. This news includes the countries’ reports on GDP, unemployment, inflation, consumer sentiment, and so on.
If the report highlights the economic conditions in Germany, it may affect the Euro exchange rate. Statistics on changes in crude oil reserves helps oil strengthen or decline.
A major advantage of the economic calendar is that we know when the event takes place in advance. This information can be used at your discretion (careful traders prefer not to trade at the time when important data are released).
Other news you can read on Google or on Yahoo.Finance. They help one better understand what is happening in the world. For example, a political crisis in Venezuela was one of the reasons for the increase in oil prices in March 2019.
Rule Five: Withdraw the money
One should celebrate their first bout of success. Set a weekly target profit. Follow the rules above and withdraw the money once the target is reached.
First, your mind needs to get used to the fact that you earn by trading.
Second, you need to thank yourself for the work you have done. Buy something memorable. This thing should remind you of your new profession.
Third, teach yourself to reinvest a part of the profit. To do this, you can open a bank deposit or make a long-term investment in the currency pairs you have analyzed or use other instruments.
We hope that these rules and examples clearly demonstrate the importance of this component in trading. Of course, these are not a complete set of laws, but they are enough for a successful start. Reach your goals and be successful!
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