In trading and anywhere else, knowledge is key. By learning the trading basics, you can put yourselves in the best position to protect your future positions and earn additional income.
Below are the five best ways to learn trading — suitable for beginners and those who want to improve their trading skills and pick up a few new ones.
One of the highest-selling books on trading is How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology by Andrew Aziz – estimated 500K+ copies sold. Even the world-known series “… For Dummies” can’t compete, with estimated 20K-30K copies.
The quote “It is extremely important to stay away from stocks that are being heavily traded by institutional traders.” was highlighted by 9,590 Kindle readers.
Classic trading books document real-world traders and how they rose to the top. You can learn stories about the complexities of trading and how others overcame them. However, the content shouldn’t be treated as a definite guide on how to learn trading. Reading about the experiences of other traders can point you in the right direction in terms of a general trading approach and mentality. Think of it as something they’ll never teach in finance class.
The best thing about trading books is that most of them are available as ebooks. Ebooks are much cheaper than paperbacks and allow you to electronically highlight passages that you can always come back to in the future.
Learn trading online through educational articles
There are plenty of online resources that publish trading material. Pick a few websites to follow regularly, such as Investopedia, The Balance, blogs on Medium, etc. Make sure these sources are not affiliated with any trading or brokerage platform (unless it’s the one you personally use and enjoy). Whenever possible, seek out impartial articles with accessible, timeless information.
Consider dividing information into categories; for example, markets, technical analysis tools, portfolio management, risk management, laws & regulations, etc. This will help you attack each topic bit by bit, from essentials to advanced levels.
Note: this is not an endorsement of paid trading courses. This point covers articles, guides, and tutorials that are open to everyone.
Follow market coverage
Always get the latest news on the financial markets and events that may move your current or potential trading assets. Because everything changes so quickly, you need reliable sources that will provide you with information, quotes, data analysis reports, general overviews of the market landscape, etc.
Here are a few websites you should consider bookmarking:
- Yahoo! Finance: Offers news, daily trade charts, quotes, press releases, reports and summaries, third-party monitoring, and original content + commentary
- Trading View: A super-charting platform and social network for traders and investors
- The Wall Street Journal: Publishes six days a week, with each update or change made from financial communities across global markets
- Bloomberg: A financial and entertainment news reporting firm with content on electronic trading, family offices, hedge funds, portfolio management, private equity, and research and analysis
- CNBC: One of the quickest ways to get business and financial market coverage
- Seeking Alpha: A crowd-sourced content platform about financial markets (portfolios, news, analysis, alerts, and real-time prices)
Study successful traders
This point is similar to the first one — learning from other people’s experiences. It’s important to highlight that successful traders don’t need to have published books and distinguished titles. You can find them online.
Look up trading influencers on social media — Twitter and YouTube have plenty. Use their content as a way to get a second opinion, which you don’t necessarily agree with. Even if you don’t follow them on an ongoing basis, they can teach you how to do analysis and which timeframes suit what strategies.
Practice in a demo account
Arguably the most effective way to learn is through practice. And if you want to know how to learn trading strategies without risking real funds, the answer is demo trading.
You can combine this method with any other method mentioned above. If you learned a nifty trick from a book or through an influencer, try it out with virtual funds first. If you’ve read about a new indicator, apply it to your charts. If you want to see how your portfolio would react to a market crisis, recreate it on a historical event.
Most trading and brokerage services offer demo accounts with the same functionality as their live trading accounts. Thus, you won’t have to relearn — every move you pick up in the demo account will be the same in live trading.
Bonus: 5 self-learning mistakes to avoid
Now that you know five good practices, take note of the following practices you should avoid:
- Don’t believe everything you see online. It’s self-explanatory and applies to many areas of life.
- Don’t copy other traders’ moves. Copying portfolios of big-ticket institutional investors doesn’t work simply because they have different resources. As for smaller-scale traders who offer their advice for capital, why would they give away advice that allegedly brings millions of dollars?
- Don’t fall for “get rich quick” schemes. If someone describes their method as instantaneous and fool-proof, it’s likely a shady business.
- Don’t implement complex strategies before you’re ready. Mistakes can be costly. Unless you’ve tested a strategy in a demo account and feel comfortable with all the technical tools it involves, don’t bite off more than you can chew.
- Don’t follow outdated advice. If you find a strategy from 10-20 years ago, remember that markets are constantly evolving. Trading is no longer what it used to be.
- And finally, keep learning and implementing new things throughout your trading journey!