How to get into trading for beginners
Reading time: 10 minutes
Do the financial markets intrigue you? Well, you aren’t alone. Brokers worldwide are reporting record participation of individual traders, with some reporting all-time highs in early 2026, up 25% from the previous peak seen in 2021. So much so that retail traders now account for about 20% to 25% of all daily trading volume in US equities, a figure that can spike significantly during periods of high volatility.
Among the major reasons for this rise in retail trading is the easy accessibility of the markets, thanks to powerful trading apps. Plus, there is so much information available online, from social media chatter to online expert analysis, and even real-time news.
But all this doesn’t mean you jump right into the deep end without preparation. Risk is an inherent part of the markets and learning how to start trading and managing risks is crucial to protecting your capital. Here’s a look at everything beginner traders should consider to develop a comprehensive market approach.
Learn how to analyse markets
‘An investment in knowledge pays the best interest.’
~ Benjamin Franklin
The biggest mistake beginner traders make is treating the market like a casino. If you enter a trade because of a gut feeling or a tip from a social media comment, you might get exposed to unnecessary trading risk. Before you put your funds at risk, you need to understand the language of the markets. Familiarise yourself with key terms, like spread, swap rate, leverage, and more.
Next, master how to analyse the markets. There are two types of analysis, both of which are equally important for making informed decisions.
- Fundamental analysis
- Technical analysis
This is the study of factors that move prices, such as economic data releases, company earnings reports and geopolitical news. If you're trading stocks, it means looking at company earnings, debt and management, while if you’re trading forex, fundamental analysis means looking at economic releases, such as interest rates announcements and inflation data.
Here, you study price charts to identify patterns, trends and volume. Technical analysis also uses tools, called technical indicators, to predict where the price might go next, based on past price moves.
You also need to understand how market cycles work. You will find that markets are either trending (moving consistently upward or downward) or ranging (moving sideways within a defined range). Additionally, some traders also use sentiment analysis to better understand investor psychology and gauge whether market participants are feeling bullish (optimistic) or bearish (pessimistic). You can check for sentiment analysis tools on your trading platform.
Select your broker and platform
With so many people interested in this market, the OTC forex markets reached daily turnover of US$9.6 trillion in April 2025 from US$7.5 trillion in 2022. But not all brokers are built the same. You need the support of an established and regulated broker who offers you rich educational resources and prompt support. Also, check if the brokers you have shortlisted are licensed.
Check out the trading platforms they offer. Some beginners who are in the process of learning how to start trading may prefer TradingView for its charts or MetaTrader for its robust execution, while others might prefer the advanced tools on MT5 or cTrader.
Choose your preferred assets
Don’t try to trade everything at once. Focus on one or two asset classes that fit your schedule and interests. Even within the asset class, learn all you can about the range of instruments and pick one that fits your trading style, experience level and goals. For instance, if you worry about choosing from thousands of stocks or want to trade stocks on a budget, check out indices, such as the S&P 500, FTSE 100 or Nikkei 225. With an index, you get to invest in multiple top stocks with a single trade. Similarly, learn about major, minor and exotic forex pairs before deciding on which pair you want to trade.
Contracts for difference (CFDs) are becoming increasingly popular trading instruments allowing traders to speculate on price movements without owning the underlying asset. CFD trading involves entering into a contract to exchange the difference in an asset’s price between the time the position is opened and when it is closed. This means traders can speculate on both rising and falling markets. CFDs are also traded using leverage, allowing traders to gain greater market exposure with a smaller initial deposit. However, while leverage can amplify potential profits, it can also magnify losses, so risk management is essential when trading CFDs.
Practise with a demo account
Before you risk your hard-earned money, spend time on a demo account, which replicates live market pricing and allows you to practice without using real money. Familiarise yourself with the ‘Buy’ and ‘Sell’ buttons, understand how to use risk management measures, such as stop-loss and take-profit orders, and learn how to use price charts and technical indicators. This is also where you can build and refine your trading strategy before applying it to the live markets.
Choose your trading style
A trading style defines how you approach the markets based on factors such as trade duration, risk tolerance, time commitment, and trading goals. Choosing a trading style that matches your personality and schedule can help you remain patient and disciplined.
Popular trading styles include:
Position trading: This is a long-term trading style, where you hold a position for weeks or months. Here, stocks, commodities or currencies are traded with a focus on capturing the bulk of a major trend, while ignoring short-term market noise and volatility.
Swing trading: This is also an intermediate-term or medium-term trading style, where you hold trades from a few days to a couple of weeks. Traders rely on technical analysis to ride the market momentum and price swings by aligning with the dominant market direction.
Day trading: Here, you enter and exit trades on the same day to try and profit from short-term price fluctuations. The aim is to capitalise on small, intraday market movements, closing all positions before the market closes to avoid overnight risk.
Scalping: This is a high-frequency trading style, where you open and close trades within seconds or minutes, in an attempt to capture small price movements. This can be difficult for beginner traders because it needs quick decision-making and execution.
Master risk management
Risk management can be the difference between a long career and a short, expensive lesson. Some of the popular rules experienced traders follow to limit risks include:
The 1% rule
This is a popular rule, especially when you’re still learning how to start trading. It means you should never risk more than 1% of your total account balance on a single trade. So, if your account has US$10,000, you wouldn’t open a position that could lead to losses of more than US$100 if the trade goes wrong.
Risk-reward ratio
Experienced traders typically assess whether the potential reward of a trade is greater than the risk. A commonly used risk-reward ratio is 1:2, meaning that for every US$100 risked, the target profit is US$200. With this type of ratio, a trader does not need to win more than 50% of the time to remain profitable. In fact, profitability can be achieved even with a win rate below 50%, depending on trading costs and execution quality.
Calculating position size
To keep risk consistent, traders should calculate position size before entering each trade. This helps ensure that each position aligns with their chosen risk level.
A commonly used formula is:
Position size = (Account size × Risk %) ÷ (Entry price − Stop loss price)
By applying this approach, traders can define and manage the risk taken on each trade and maintain consistency in their trading decisions.
Start small and build habits
When you finally move from a demo to a live account, start small. The psychological pressure of trading real money is very different from a demo account experience. Also, building these three habits can go a long way in helping you trade smart:
Keep a trading journal
Write down why you took every trade, the emotions you felt and the result. This can help you identify what works and what doesn’t, while also showing you patterns in your behaviour.
Stick to your trading plan
Emotions like fear and greed can tempt you to make impulsive decisions. Stick to your trading plan. If your strategy says don’t buy, then don’t buy, even if you have a ‘feeling’ the price will go up.
The review process
Use the time when the markets are closed to look back at your trades. Check what worked and what didn’t. Constant learning and refinement are the key to longevity.
Common beginner mistakes to avoid
Here are some common pitfalls the new traders might fall prey to:
- Overtrading: Taking on too many, emotion-driven trades through the day without a strategy. If there’s no setup, there’s no trade.
- Revenge trading: Trying to ‘win back’ money immediately after a loss. This can lead to further losses due to emotional decision-making.
- Ignoring the stop-loss: Holding on to a losing trade doesn’t usually end well. Always set your stop-loss to limit losses if the market begins to move unfavourably.
- Excessive leverage: Leverage helps increase your market exposure with only a small investment, but this can magnify both your potential gains and potential losses. So, use leverage wisely.
Start your trading journey with FP Markets
Trading isn’t a ‘get rich quick’ scheme; it’s a craft that rewards patience, education and discipline. The best thing a beginner trader can do is focus on learning how to start trading. By choosing the right assets, developing a solid trading strategy and never compromising on risk management, you can increase chances of satisfying trading experiences.
But first, you must choose a broker who offers the trading tools you need for satisfying trading experiences. FP Markets is an established global brokerage that offers a wide range of asset classes, including CFDs on global indices, stocks, forex, commodities and cryptocurrencies. You can also choose from multi-award-winning platforms, like MT4, MT5, cTrader and TradingView. Start your trading journey with a broker that values your education as much as your financial goals. Open an account with FP Markets today.
