What is trading?

IT equipment

There is no need to spend more than 400 to 500 euros for a computer. During the first two or three years, a simple laptop connected to a second screen (20 inches to be comfortable) will be enough for your needs. Enough to do your market analysis on the one hand and place your buy and sell orders on the other. Budget required: between 400 and 500 euros for the laptop (no need to have the latest, the trading software works with basic machines) and 200 euros for the screen. Don’t listen to specialized sites that tell you that their $ 3,000 multi-screen platform is essential. It’s just marketing!

Initiation

First go through a demo account to acquire the automations. Contrary to what some advertisements suggest, you will not become a trader in a week. Mastering the software dedicated to this activity (the two best known are Metatrader 4 and ProRealTime) already requires a month of learning. So, you have to practice on a demo account for 3 to 6 months to acquire automation: buy or sell? Goal for earnings of 5 or 20%? The answers will depend on your ability to establish the right scenario.

It is therefore necessary to train a lot, do and redo tirelessly … Most experts believe that it takes at least a year of initiation before developing and reaping fruits. To save time, training can be useful, such as DMTrading, ICT Finance or Patrick Riguet which, for less than 500 euros, will give you lifelong access to their website, explanatory videos and their weekly market analysis.

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Capital of departure

With less than 1,000 bet in euros, your chances of getting out are slim. Many start trading with 200 or 300 euros, hoping to double their capital every year. They will soon become disillusioned. Not only are the chances of pocketing 100% winnings per year reduced (even among professionals), but you lose more often than you do at first. Even if you only bet 5 euros per order, the account will be “burned” after six months.

It is the law of the genre: the minimum stake to last more than a year is 1000 euros. However, you will need to manage your risk: imitate experienced traders, who never place more than 1-2% of their capital per order. This will allow you to sustain 50 to 100 losses in a row without emptying your account.

Products for investing

The German Dax and currencies are the preferred support for traders. Stocks, stock indices or indices based on commodities (gold, oil, etc.), the choice of media is wide. However, it is advisable to bet on the more volatile ones, whose prices are yo-yo, up or down (you can play either way). As far as stock indices are concerned, the German DAX is therefore very interesting (it is often preferred to the CAC 40, which is less reactive).

With stocks it is more delicate: to aim for fast gains, you need to identify those whose prices have fluctuated without a clear direction for a few days, then wait for a violent bullish or bearish start. However, the differences are often smaller (rarely more than 2% per day).

For this reason, many traders prefer currencies, where they bet, for example, on the evolution of the euro against the US dollar, the Swiss franc or the Japanese yen: price changes are more explosive, but shorter trends, which they force you to look at your position like milk on the stove.

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Buy and sell signals

It is necessary to know about fifteen graphic figures by heart. Identifying media that has potential is not enough. It is therefore necessary to detect the right buy and sell signals. This is where chart analysis comes in. Although it is not an exact science (false signals are not uncommon), we can see that the curves representing prices have regularly repeating shapes. By observing them closely, we can thus anticipate their future evolution. When a known figure appears, it is a sign that you can place an order with a fairly high probability of winning. There are about fifteen significant figures (see examples below). To recognize them and know how to interpret them, consult a specialized website, such as Abcbourse.com or Centralcharts.com.

Strategy

Ditch the screens and rest during market lulls. Focusing on periods when trends are strong, capital gains guarantees, and refraining when calm returns (30 to 40% of the time), this is the right strategy. The slowdown is therefore not a sign of weakness, but rather a sign of great wisdom, which allows you to avoid trading overdose and the resulting losses. Attention, without having your eyes fixed on the graphics all day, you still have to spend at least an hour or two in front of your screens, in the morning or in the evening. It is a discipline to be imposed in order not to miss out on good opportunities.

Risk level

Never commit more than 2% of your capital per transaction. Managing a risk, in trading, is first of all to preserve your capital. The only way to achieve this is to limit account exposure: then imitate professional traders, who never risk more than 1-2% of their capital per order, which allows them to bear 50 to 100 losses below without emptying their account.

Another trick used by many pros, which should be inspired by, is to play for the long term, that is, with weekly or fortnightly, or even monthly, rather than multiplying the orders to buy and sell during the day. You will be less stressed and have fewer brokerage fees to pay.

To maximize your profits, there is a simple method: placing two “trigger” orders after taking a position. One (the “take profit”) to automatically exit the market as soon as the capital gain target is reached. The other (the “stop loss”) to limit the loss in the event of a bad bet. Example for a stock bought at 20 euros and a profit target of 5%: put the take profit at 21 euros and the stop loss at 19.50 euros. Hopefully, you get your 5%; otherwise, your loss is reduced to 2.5%. Many traders make sure that, as in this example, the gain is double the possible loss. It is therefore sufficient to win more than one bet out of three to be a winner.

Broker

Open your account with a reputable broker who has been licensed to practice.Kracoin, B2trades, Feeltrade, Obroker, Goprobank … According to the Autorité des marchés financiers, which regularly publishes the list on its website (amf-france.org), more than 120 dubious brokers, in other words without legal approval , would be active today today, especially in the currency market. Stop scrapping! We no longer count the number of scammed customers, whose requested bet (from € 1,000 to € 5,000) has never been recovered. Being located in a tax haven, like the Bahamas, it is also useless to file a complaint: it will not succeed. To avoid problems, always opt for a reputable broker, licensed and based in France, such as FXCM, IG Markets, XTB, CMC Markets or JFD Bank.

Scalping, a very high risk technique

Day trading, where you try to make money on the same day by playing on small price fluctuations, is already a dangerous exercise. But there is more daring: “scalping”. His followers try to take advantage of micro price changes, within two to three minutes. These are all axes of graphic analysis. At first glance, the recorded gains are not staggering (often less than 0.10% per transaction), but by playing big and multiplying positions dozens of times a day, some make a fortune. Others are ruined in one day. Avoid before you have 10 years of trading experience.

Three graphic figures that allow you to predict the evolution of a value

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The share price is delimited by two converging lines. It often ends up crossing the bottom line (when the trader has to act) and then continues its fall. Success rate for this scenario: 65%.

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Trend change figure. The 1st and 3rd vertex form the shoulders, the 2nd the head. Crossing the so-called “neck” line (the white line), the price usually falls. Success rate: 85%.

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Pattern that marks a break in an uptrend. The price falls between two bearish lines, then resumes its rise as soon as it crosses the upper line. Success rate: 80%.

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