The 3 keys to successful learning to trade from scratch for beginners are to prepare your mindset as a trader (trader not a gambler), money management (capital calculations) and learn methods (methods for analysis).
- Trading and investing have several different characteristics, such as different types of income, subject, period and time period.
- Action plans that we can do to get deeper into trading are reading reference sources, understanding basic trading concepts, practicing on demo accounts, and joining communities and mentors.
Difference Trading and Investment
This time the author will discuss the simplest trading technique, namely trend following .
Before discussing in more detail, the author would like to explain the difference between investors (people who invest) and traders (traders).
Here are the differences between trading and investing, in general:
Based on the time period, traders can be divided into:
- Scalping trade r : a trader holding positions in seconds to minutes (no overnight positions ).
- Day trader : a trader who holds daily positions (no holding positions or overnight positions ).
- Swing trader : a trader who holds daily to weekly positions.
- Position trader : a trader who holds positions monthly for up to a year.
Each trading style has the same mindset and analysis method, the difference is money management .
The money management includes:
- Calculation of capital and number of lots or positions taken.
- Calculation of profit targets.
- Calculate the maximum loss in one trade .
Learn to Trade from Zero with Price Action Strategy
The first knowledge that you must learn as a trader is money management .
No matter how good the trading method is, a trader can lose (and even lose all his capital) if his money management falls apart.
A novice trader must learn:
- Trend h price
- Trendli ne support and trendline resistance
- Trend analysis indicators
Let ‘s discuss one by one the three things above:
#1 Price Trends
One way to know whether a price will increase or decrease is to look at the trend. In general, there are three types of trends, namely an uptrend ( uptrend ), a downtrend ( downtrend ) and a flat trend ( sideways ).
Take a look at the image below:
The characteristics of an uptrend price is to form a higher price ( higher high and higher low ). Look at the image below:
The characteristics of the price being downtrend is to form a lower price ( lower high and lower low ). Look at the image below:
The characteristics of a sideways price is that the price moves steadily within a certain range . Look at the image below:
The trend following strategy is basically trading according to price movements.
Trends are like escalators in a mall or shopping center. When the escalator goes up, we go up too. When the escalator goes down, we go down too.
#2 Trendline Support and Resistance
How do we know the price range ? One way is to use trendline support and trendline resistance .
Here’s an example:
Trendline Resistance you create by connecting the two highs (A and B).
Trendline Support you create by connecting two lows (C and D).
The case example in the chart above is a sideways trend .
- If the price is near the trendline resistance line (Line A and B), then the price tends to go down.
- If the price is not near the trendline support line (Line C and D), then the price tends to rise.
- If the price breaks the trendline resistance (letter E), then the price will tend to increase.
You can watch a more detailed explanation of the trendline in the following video:
#3 Trend Analysis Indicator
Indicators are tools with a statistical approach that you can use to analyze a price.
Some indicators that you can use to analyze trends :
- Adaptive moving average
- Average directional movement index
- Average directional movement index wilder
- Bollinger bands
- Double exponential moving average
- Moving average
- Parabolic SAR
- Standard deviation
- Triple exponential moving average
- Variable index dynamic average
You don’t need to study all indicators, just use a simple indicator like Moving Average .
Hopefully the explanations above, regarding price trends , trendline support and trendline resistance as well as trend analysis indicators can be useful for you.
How to learn to trade from scratch
My experience when learning to trade from scratch is by passive learning and then active learning.
First, I learned trading through videos on Youtube and read some books. There are several trading books that I have read and I recommend to you.
You can buy the four books in e-commerce (Tokopedia, Shopee, BukaLapak) or buy the ebook version at Google Books, Amazon Kindle or Apple Books.
You can also download the FREE Trading Guide ebook for Beginners that I wrote.
Once you’ve learned the basic theories, my advice is to put them into practice on a demo account .
You can trade in financial products such as stocks, gold contracts, foreign currency contracts and others.
In my opinion, trading financial products is a skill that you need to hone. Just like people learn to drive a car, the more you practice, the better you become.
I personally learned from zero to become a confident trader , it took me 5 months, accompanied by the Traders Lab community and experienced mentors.
If you want to join the trading community, then join the Traders Lab program . For more information, please check the following banner :
Traded Financial Products
Financial market trading activities which consist of various markets:
Capital Market (Capital Market)
The capital market is a place to get capital from the stock exchange. The products traded are debt securities (bonds) or shares.
In Indonesia, you can make transactions in the capital market by opening an account with a securities company.
Foreign Exchange Market (Foreign Exchange Market)
A place for buying and selling foreign currencies. The foreign exchange market can take place on a spot basis (direct money exchange) or derivative contracts ( forward or futures ).
Commodity market ( commodity market ) money changers , banks and futures brokerage firms. You can check the list of futures brokerage companies on the official CoFTRA website .
Conclusion: Want to learn to trade from scratch?
The points that prospective traders need to learn are:
- The right mindset as a trader (different from investors).
- Learn how to calculate capital and money management .
- Learn technical analysis methods, just use trend following , trendlines and indicators.