How to start trading: step by step beginner’s guide

Beginner-proof step by step guide on how to start trading online from scratch, without making mistakes

You have read somewhere that today it is possible to make money from home with stock market investments. That a small capital invested in large global companies like Amazon, Tesla, or Apple can make you a lot of money. It’s possible? Yes, if you know how to trade.

The bitter truth that online advertisements and social media posts don’t tell you is that you have to be very good to earn. Markets offer tempting opportunities, but they also hide pitfalls such as losing money or scams.

There is a solution: learn to trade online seriously. If you recognize yourself as a beginner in the field and feel you do not have the knowledge to invest money in the stock market, you can always start gradually and then gradually gain experience. No one is born with the ability to trade from scratch: even Warren Buffett has come a long way before becoming the investor he is today.

To help you here is a guide on how to start trading online. You will find everything you need to know about investing from home, even what sites and ads often fail to tell you. Read calmly and start your trader experience in small steps and complete safety.

How online trading works

Online trading consists of trading stocks, commodities (gold, oil), ETFs, and other instruments on the financial market. Trading takes place on digital platforms provided by banks or investment companies called brokers, which mediate between the retail client and the market.

How online trading works in brief:

  • the user registers on an online trading platform;
  • proceeds with the deposit of money on the trading account linked to the platform;
  • start trading from home, on a PC or smartphone, of securities and other assets available on the platform;
  • withdraws the position (up or down) and realizes a capital gain or loss, depending on the success of the investment.

Trading online therefore means choosing independently where to invest your money. This is why you cannot start rashly: the quotes on the financial market and forex move sensationally, and not always in the direction you want.

How to start trading from scratch

We briefly introduced what online trading is, but how do you get started if you’ve never heard of investments? Understanding this is simple, but learning (and earning) isn’t as easy as it sounds.

Where to start trading online then? Here you will find 7 steps to follow to learn how to invest from home seriously, without making gross mistakes that would lead you to lose your savings:

  1. Learn the rules of the stock market;
  2. Don’t believe in false myths;
  3. Take a trading course;
  4. Choose a regulated online broker;
  5. Start trading in demo mode;
  6. Choose between trading CFDs or underlying;
  7. Invest in what you know.

1. Learn the rules of the stock market

Don’t invest your savings in the financial market until you know at least it’s basic functioning. Online trading offers very high potential gains, but also carries the risk of losing important figures.

If you want to beat the market you have to know its rules, reduce the risk of suffering losses with knowledge. Understand what it means to invest in the stock market, how the buying and selling of stock works, what are the market forces that affect the listing of an instrument.

Even if the idea of ​​making money right away is tempting, start trading from theory. Defer the action until you know what you are doing well enough to handle it.

2. Don’t believe the myths about trading

The more you learn about finance and markets, the more you will find that some home investment ads omit something important. How many times have you heard of safe and guaranteed earnings, monthly Amazon income, or small investments in Bitcoin that will make you rich tomorrow?

Do you want to start trading from scratch? Clear away those false myths that can lead you on the wrong path:

  • Safe investments do not exist, there are only the riskiest and the least;
  • on the financial market, nothing and nobody offers you fixed and monthly returns, not even Amazon. If you want something similar there are bonds, but the stock market doesn’t guarantee anything;
  • investing in the markets is simple, but not easy: trading from home is truly within everyone’s reach, but doing it well and earning money is not easy;
  • stocks and cryptocurrencies are among the most volatile assets on the market. This means that in the positive phases of the economy their prices can gallop, but during crises, they can sink with equal ease.

Sweeping away the illusions and falsehoods about online trading also helps distinguish a serious investment solution from a fraud. Have you already received phone calls from people who want you to trade online? They often promise to turn small amounts into fortunes, effortlessly, and within a set time. Stay away from it: it’s the kind of lure of a trading scam.

3. Study or take a trading course

The best investment you can make to start trading online from scratch is in your education. Starting to get an idea of ​​the markets and finance is fine, but to get real results you will have to do much more.

Seriously consider taking a beginner trading course. It is important to receive a complete financial education, basics of technical and fundamental analysis, especially if you really want to learn how to start trading online and ride the volatility of the markets.

4. Choose a regulated broker

An online trading platform is what you need to start investing in the stock market from home. There are dozens of them and registering is very simple, but choosing the right broker is far from simple.

Each investment company offers different functionalities, tools, and conditions: some are distinguished by low costs, others by the number of assets available, still others by the functions available.

Before looking at these aspects, you need to verify that the broker you want to start trading with is regulated. What does it mean? Since these platforms deal with savers’ money, the authorities of the financial markets assign authorization to brokers who respect certain parameters.

5. Start trading in demo mode

Open an online trading account and find yourself on an investment platform full of charts, indicators, terms that you have never heard of as a beginner and inexperienced.

Where are the stocks that interest you so much? What does stop loss and take profit to mean? How do you customize the chart with the performance of the stock? Even if you are familiar with technology, you will need some time to learn how to use the software.

To make it easier for you, almost all brokers have equipped investment platforms with an online demo trading account, a virtual account identical to the real one in everything, except in risk.

The demo account, in fact, offers you a large sum of virtual money to start trading safely, without losing your money for inexperience.

You can do tests on the platform, try to make trades, simulate a series of strategies. Starting with a demo account is the best way to start trading online, learning step by step, and without risk.

6. Choose between trading CFDs or underlyings

Another detail that does not catch the eye of a beginner: the nature of tradable assets.

Most online trading platforms offer the client the trading of instruments called CFDs (contracts for difference), derivative products with underlying stocks, ETFs, or the forex currencies to which they refer. Other brokers, on the other hand, allow you to trade directly on the underlying, i.e. to physically own the financial instrument.

What are the main differences? With CFDs you can open and close positions faster and use leverage, a mechanism that allows you to multiply your starting capital (therefore the gain and unfortunately also the loss).

What you can also do with CFDs is to short a stock, that is, bet that the value of that stock (ETF, cryptocurrency, etc.) will drop. It is a strategy to make money when the stock goes down.

The use of CFDs allows the broker to reduce management costs and offer trading conditions that are more favorable to the customer than investing in shares. However, the trader is required to pay spreads and other rates for trading CFDs and holding positions for several days.

7. Invest in what you know

Another maxim from Warren Buffett: invest only in what you know. When you leave the demo account to seriously start trading online, you will be the one to choose which assets to trade.

The possibilities are endless: American, Italian, European, Asian stocks, ETFs of all kinds, investments in commodities, forex currency pairs, Bitcoin and emerging cryptocurrencies, indices, and bonds. Where to start?

Start with the tools you know. Find out about the companies you intend to invest in, the underlying assets of a fund, or the performance of a market before committing your money.

Don’t make bold moves or hearsay. Focus on a few tools, read the analyzes and opinions of the experts, make your idea in the light of the economic, political, and social framework. This is all the more true when you invest in the long run: you need to know the company you hand over your money to, its added value, the health of balance sheets.

To get results in online trading you need to get informed, know the variables that can move the market, have an intuition for what will happen in the short term. Do you have what it takes to start investing? Open an account and start practicing.

[Bonus] Trade by copying the most experienced

Are you interested in starting to invest in the stock market but don’t trust to trade alone? Many are afraid of being too hasty to leave the demo environment. Part of it is right (never be in a hurry), but if you never start investing you risk missing out on interesting opportunities.

A solution to this dilemma seems to have been found by the broker eToro with its copy trading functionality. The platform shows you the best investors of the moment, allows you to choose the trader most in line with your risk-return objectives and copy it.

Choose the budget to be assigned to each popular investor and eToro will automatically replicate each position (open or closed) by the copied trader. In this way, you will not only be able to better understand how to trade like an expert investor but also begin to invest a small part of your savings in the stock market in semi-automatic mode.