How do we start to learn the stock exchange

Learn to trade - your free start in the world of trading

Start learning right away and be aware: Successful trading as a private person is a long and challenging road. Learning to trade therefore requires realism and an iron will. Because trading on the stock exchange is not described as a game of probabilities for nothing and the return is not given to you.

We at CMC Markets accompany you on your Career to become a trader. Our experts will show you how to go from being a market observer to becoming a market participant and learn to trade online. This is taught to you through proven strategies and trading systems - always with the aim of ensuring that you are optimally equipped for trading stocks, CFDs (Contracts for Difference) and other financial products.

Our large information center is aimed at beginners, but also advanced. Start building your trading basics with CMC Markets now!

1. Learn to trade - the basics

A trader is ...

a flexible businessmanwho trades or speculates in a wide variety of securities and contracts. In this case, trading means buying the relevant paper at the right time and selling it at a later point in time as profitably as possible. And: Traders are not investors. Most of the time, you don't want to invest in the long term, but rather trade financial products based on short to medium-term trends, such as the 123-trend reversal pattern trading strategy. In this way, price fluctuations should be exploited as precisely and directly as possible.

A trader needs ...

Understanding of a range of complex trading strategies and instruments. With their help, various factors such as price movements and market participants must be analyzed and taken into account.

Learn to trade First of all, it also means defining your time horizon on the stock market. Now learn the importance of discipline, expertise, trading psychology and hands-on experience.

2. Tips & tricks for getting started in trading

You don't become a successful trader overnight. To become a beginner as possible broad understanding Intensive training is required to build up using trading instruments, platforms or market characteristics.

Follow the three big questions you will encounter as you learn to trade:

For each of these questions you will find detailed answers that you can use for your trading style and for your financial products.

3. The financial markets

The first thing you need to do when you start trading is to learn where the various trading products and financial instruments are traded. This is the only way you can decide which market is most suitable for your trading intentions. Trading instruments are divided into different markets on paper. However, these are not physical constructs, but are located on the stock exchange - or close to the stock exchange. Licensed banks and brokers have direct access to this. Retail investors can trade in the following markets, but the first two can only be traded through an intermediary:

The cash market / locomotive market / effective market

Classically, stocks, goods or bonds are traded here that are directly available, from which the name is originally derived. On the cash market, the so-called fulfillment time, i.e. the execution of a purchase, takes place a maximum of two trading days after the conclusion of the transaction.

The futures exchange / derivatives exchange

On this financial market, transactions are carried out that will not have to be fulfilled until later in the future (at least three trading days after the transaction has been concluded). One also speaks of futures. Traders speculate here on the price development of various products, since the price for the product is already fixed when buying it, but is only paid when it is due.

The OTC market

Over They C.ounter “trading, also known as direct trading, stands for over-the-counter trading. This means that your transactions are not brokered via an exchange, but that you conduct your trade directly with your business partner. This can be, for example, an online broker who, in addition to the listed products, can also offer you financial products such as CFDs or some derivatives that can only be traded over the counter.

4. The trading instruments and types of derivatives

If you want to learn to trade, you will come across thousands of financial products on these two financial markets in the future, some of which have great differences and variations. Generally you are the followingTrading instruments (also called underlyings or asset classes) that can be combined with the various types of derivatives:

shares

Shares are issued by companies or, more precisely, stock corporations (AGs). As the owner of a share, you are co-owner of the assets of the AG and may receive annual dividend payments. The value of the share itself is based on the share price of the issuing company.

Indices

An index combines a group of similar stocks. A classic example is the DAX, which tracks the shares of the 30 most important German stock corporations. This means that traders always trade with the entire block of shares.

Forex

In forex trading, two currencies are exchanged or traded for one another. Traders thus speculate on the performance of one currency against another. Cryptocurrencies are also traded against the US dollar on crypto exchanges.

raw materials

The raw material trade is the oldest exchange of goods and money. Even today, prices are determined by supply and demand. The trading of precious metals, fossil resources or agricultural raw materials takes place either as spot or forward transactions.

Government bonds

Bonds are debt instruments that the issuer uses to obtain outside capital on the capital market. Government bonds are a special form. As a trader, you lend money to a state for a fixed term and at a predetermined interest rate. You are the creditor and the state, as the debtor, undertakes to guarantee the interest and repayment.

CFDs

Contracts for Differences are financial products that can be used to leverage almost any trading instrument. Traders use CFD to trade on price changes of a certain underlying asset without actually owning it. Only part of the total value of the trade is deposited with the broker as margin, but the total trade value is traded. The broker provides the missing liquidity for you. This creates the leverage.

Futures / Forwards

These trading instruments belong to the unconditional, i.e. mandatory forward transactions (as opposed to options). Traders undertake to buy or sell a previously defined underlying asset at a specified time and at a specific exercise price. To open a contract, a security deposit must be deposited as a fraction of the contract value, which creates a leverage effect. A listed trade is called futures, and an over-the-counter trade is called forwards.

Options

In the case of options, buyers have the right - but not the obligation - to trade underlyings. Traders receive a right to buy or sell in the future. You secure the current price Y at time X - regardless of whether the price has risen or fallen in the meantime. The seller is obliged to provide the corresponding financial product at time X at the agreed price Y. As a trader, however, you are not obliged to take this option. For this reason, one speaks of conditional futures.

Warrants & Certificates

Warrants and certificates are traded as securitized securities. Certificates can also be traded with and without leverage.

5. The trading strategies & trading styles

Below are common strategies and styles that you can use to develop your own concept.

Position trading

The general public generally understands this style to be “classic trading”. Positions are held for several days, weeks or months. The time horizon is long to medium term.

News and event trading

This trading strategy is based on current business news and market analysis. Economic market developments and events flow heavily into the trading concept.

Swing trading

In swing trading, traders try to make the most of the trend phases and price fluctuations by speculating on a change in the prevailing price trend. This trading style takes place in the medium to short term.

Day trading

As the name suggests, day traders open and close their position within one trading day. The investment horizon is clearly short-term. Find out more details in this guide to day trading strategy.

Scalping

Scalpers trade in minimal time windows and with minimal price changes. With very short-term scalping, relatively large positions in underlying assets are traded within a few minutes or even seconds.

The five trading strategies and styles you learned about above clearly represent a multitude of different individual approaches that you will encounter when learning to trade. Further differentiation options that could be used in each of these concepts are, for example:

In addition to the selection of the market, your trading strategy and your desired trading products, you also need two things: a broker and a trading platform to learn how to trade in a practical way.

What is a broker?

A Broker is a Financial Regulator Licensed Stock Broker or Distributor who oninvoicecustomer's financial products on stock exchanges and over-the-counter financial markets acts. This is known as brokerage.

Choosing your broker is critical to your trades. Because your broker determines the processing of your orders and ideally supports you in your development in the area of ​​trading. In the best case scenario, you will learn theory and practice in equal measure.

In addition, the brokers differ in terms of fees and conditions. This includes, for example, the spread, i.e. the difference between the purchase and sale price, a minimum start-up capital or commissions.

What is a trading platform?

A Trading platformis a software or a web-based trading portal, with which you can trade on the stock exchange and over-the-counter orders over the Internet unwinds. This platform is usually supplemented by additional functions and information. These must support your own trading approach as best as possible. More information on the subject can be found below.

In the following section you will learn how you can take the next step to becoming a trader with a demo account.

6. Learn to trade in practice - with a demo account

It is well known that profit, risk and loss go hand in hand in trading. Nevertheless, it happens again and again that traders doomed their overzealousness. In order to save you such an experience, we recommend you to enter the world of trading CFD demo account.

A demo account simulates trading under real market conditions, but dispenses with the use of real money. Your capital investment is therefore purely fictitious and serves exclusively Exercise and simulation instead of real profits. This makes the demo account the ideal way to start trading on the financial markets.

Use the option of a practice account for aanalytical knowledge of the market, design your first trading strategies and check whether the trading style you have used fits into the simulation. In contrast to a real money account, trading errors with the same learning experience do not result in real money losses. However, you should by no means make frivolous decisions in the simulation and approach potential losses with extreme caution.

If you mark any possible risk of loss on your demo account as insignificant, you are missing an essential purpose of the exercise: familiarizing yourself with the Trading psychology. Because a extensive simulation training will not prepare you for reality if you use completely different standards for each.

People react and act differently when losing real money is at stake. To guard against this psychological mirror trick, treat the mental pressure related to your demo account in the same way as the pressure related to your real account.

Only get into the real market when you have an efficient and profitable oneTrading plan developed with your demo account that suits you. Dealing with setbacks and the first losing trades can already be done on the demo account. In this way, you are somewhat prepared for real trading.

7. Learn to trade - 3 key questions

If you have successfully completed the first training in your demo account, the next step is to position yourself in the dynamic markets before the real trades. Because Learning to trade means learning to orientate yourself.

It is therefore about further increasing your learning curve and human as well as technical decisions hold true:

8. Personal goals and mental attitudes as the basis for success

Make yourself consistent, long term goals for your career as a trader. This should reflect both your specific ambition and your original motivation. Be absolutely sure of your ambition and cause so that you can go along with it 100% determination and perseverance trade. Perhaps you are attracted by the opportunity to be your own boss and let nobody else determine your work results than you and your market instinct?

There are numerous Motivationswhich significantly shape trading psychology and thus your money management. It is your own Goals and perspectives on the market to be examined concretely.

Should your trading style focus on CFDs or other financial products in the long term? Is there a fixed growth target for trading? Does your individual trading style make you more of a day trader or a more conventional trader with a longer-term time horizon?

Answering these questions openly and critically is of crucial importance for any trade. Because: Only a trader with goals is a trader with a future.

9. The trading journal - learn to trade thanks to the manual and retrospective

However, since the future is uncertain, only the past helps us learn to trade:

“The experience is like a lantern in your back; it always only illuminates the part of the path that we have already covered. ”- Confucius

Download PDF template

What was already a widespread wisdom in ancient China is still valid today on the stock exchange and is a valuable reference for every budding trader and investor.

Customize one Trading journal which you as documentary diary Records your previous positions, trading instruments and their results without any gaps. In retrospect, the accumulated knowledge of your own experience is available to you as a practical reference work.

This way, you drag afterwards analytical inferences from your actions. What signals and market movements were your decisions about losses based on? Which at Profit?

Make a note of all key data and indicators of your positions and trading instruments for every single trade. How high was your capital employed? What is the timeframe within which you acted? How did the price fluctuations move at the beginning and end of this time frame? What did the chart analysis say at this point in time? Were you able to secure your stop-loss orders sufficiently?

A carefully kept trading journal is the most valuable handbook you can acquire for trading on the stock market. So improve consistently and intuitively Her ownMarket instinct through detailed bookkeeping and learn how to trade through a component all of its own. Open a free one now Demo account and write down your first trades!

10. Find the right broker

Anyone who trades as a private person cannot do this alone. ToProcessing of transactions on the stock exchange a broker approved by the Federal Financial Supervisory Authority (BaFin) is required in any case. Such a stockbroker acts as an intermediary or middleman in the execution of securities orders.

The broker officially places your buy and sell orders on the stock exchange for you and can also give you access to other financial markets apart from stock exchange trading. Because not all financial products are traded on the stock exchange. Depending on the know-how of your broker, they can also open the way to the foreign exchange market for you, offer you trading hours outside of German stock exchange hours or enable you to trade other financial products, e.g. CFDs.

The regulation of CFD trading in the EU also ensures that private investors are not required to make additional contributions.Private customers no longer fear losses that exceed their equity or the trading account value. It is therefore advisable to pay attention to the regulation and the seat of the broker.

But even within the EU, not all brokers are the same. In addition to broad market expertise, the range of services, the service quality, the platform used and the cost structure are important. As with the decision for a bank, you should inform yourself, but also feel that you are in good hands - after all, your money is also at stake!

Notice: A competent, reliable and at Broker adapted to your trading style is one of the most essential pillars to learn how to trade successfully.

11. The technical analysis - trade and learn with software

Your broker executes your trades. Thanks to the content provided, you can sometimes learn trading through its platform. In addition, is the use of technical aidsfor every trader a tool that makes it possible to identify potential trades in the first place. Depending on the Trading platform Different free and paid tools are available, all of which serve a practical purpose: the trend analysis.

Specifically, the benefits of chart technology or chart analysis are broken down - often simply "Technical analysis" called - in three central points:

1. Recognize current trends
2. Early identification of trend disruptions such as breaks or slumps
3. Forecast of future trend developments(such as with the 123 trend reversal pattern strategy or the Elliott wave theory)

With the help of so-called charting software, you can identify trend movements at an early stage in order to adapt your trading to them quickly and ahead of time.

So that you are ideally equipped for analyzing and assessing trends, we explain in our Platform manuals Various indicators and oscillators as well as interpretations within this chart technique.

12. Common mistakes in trading

You are now familiar with the “dos” in trading, but the same applies to trading CFDs, stocks and the like: You learn from mistakes. So that you can avoid popular mistakes, we present you seven don’ts in total:

No risk management

The protection in trading is one of the most essential points of all. Always be aware that

1. You will also generate losses,
2. Trading is hard work
3. and your technical equipment can make a difference between success and failure.

Use the options of risk management, e.g. in the form of stop-loss orders for your trades, and integrate it into your personal, trading-relevant decisions as financial security.

We deal in more detail with the topic on our side Risk and money management.

Trading with emotions & overtrading

Mistake number 2 that novice traders can make is letting emotions guide them. Regardless of whether it is negative or positive. Profits should be recorded just as rationally as losses. Overconfidence and greed are out of place for this reason. Experts also speak of overtrading here. This means either too many trades at once or positions that are too large. Learning to trade means to hide feelings while trading and to always keep a cool head. Learn more about how to deal with Trading psychology.

Five more mistakes in theTrading we explain in our video:

13. Learn to trade with CMC Markets

Now that you've got a first glimpse into the craft of a trader If you have won, you are equipped to begin your securities trading planning steps. We are happy to support you in trading CFDs and accompany you on your way from young trader to professional. For example, try out our on-site offers or video webinars.

We look forward to continuing to support you in your trading career and would be happy to tackle your future plans and challenges with you. Discover the diverse world of CFDs at Learn to trade on CMC Marketsand then open your free CFD demo account!

^ Please note that CMC Markets reserves the right to exclude individual customers from the promotion at any time. Such a decision by CMC Markets is binding. Affected customers will be notified by CMC Markets before the promotion is withdrawn.

1We only offer CFDs on cryptocurrencies to customers of CMC Markets Germany GmbH.