Experience Trading
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Investing in the global financial markets can be a rewarding venture. However, like all investments, there are risks and challenges. Unfortunately, many inexperienced traders believe trading consistency is a case of efficient market analysis and strategy. While this does form part of the trading process, a well-rounded trader requires a complete skill set.
With 2024 in the rear-view mirror and 2025 underway, the FP Markets Research Team have compiled 10 tips to help new traders start trading this year.
The right expertise is crucial for success in any endeavour, including trading. Learning about the markets they wish to engage with and developing the skills necessary to succeed is essential for new traders. For example, will you focus primarily on Forex (Currencies) and the Stock market, or will you trade and specialise in just Commodities? This needs to be decided and included in your trading plan (see Tip 2).
Consider making it part of your daily routine to read books and articles relating to trading. It is important to immerse yourself in the market's current narrative. Webinars are also hugely beneficial; if you can find the time, live workshops could be something to consider. While many professional retail traders are self-taught, seeking mentorship may also be worth exploring to help accelerate learning.
A trading plan is designed to get you from flat (no trade) to trade completion. A trading strategy and trading plan are often used interchangeably. That said, a trading strategy is your rules to enter and exit trades, and a trading plan includes the entire process. This will consist of risk and money management strategies, your trading approach (this will also contain how you will approach back testing and forward testing), your trading journal, your goals, markets traded, and more.
As a new trader, you should spend time crafting your trading plan. It will also be beneficial to read up on the four primary trading styles as these will help design your strategies: scalping, day trading, swing trading, and position trading.
A point to appreciate is that you should have a complete trading plan before you test a trading idea. Consider checking out this video, which covers the subject in more depth.
It cannot be overstated how imperative risk management is to a trader. Executing live trades without a defined risk management plan will eventually lead to account ruin. Unfortunately, no matter how effective an analyst you become or the win rate of your trading strategies, neglecting to factor in risk will eventually deplete your account equity. It is not a case of ‘if’; it is a case of ‘when’.
Risk management will help a new trader preserve their trading capital, provide emotional stability (see Tip 4), structure, and consistency. Void of efficient risk management, a few consecutive losing trades could be detrimental to your equity and your trader psychology.
The barrier to entry into trading is low, but the failure rate is also high, and this is primarily because, as humans, we succumb to our emotions and depart from a defined plan. All professional traders have losses; it is normal. The difference between them and a new trader is they control risk and seldom deviate from their plan.
Trading psychology is an often overlooked concept in a trader’s arsenal. You must understand how successful traders think to build the confidence required to function at the highest level in trading. This is one of the components separating winning traders from those continuously struggling. It is not that winning traders win more; they understand and accept that trading is not about winning and losing; they embrace this and acknowledge that (controlled) losses are part of the business.
Fear is a struggle for every trader. Although it is impossible to remove fear from your trading, one of the ways to help mitigate its effects is to begin slowly. Start trading with a demo account and progress to a live account, gradually acclimatising to risk and account size.
It is also vital to accept that no matter how skilled a trader you become, you will never know what will happen on a trade-by-trade basis. This is random. Successful traders work with an edge that gives them probability over a sample of trades. For example, your strategy may have a 60% win probability (found in back testing and forward testing). This means that over 100 trades, 60 ‘should’ produce winning trades.
Technical and fundamental analysis complement each other to create an approach to trading the markets.
To begin, keep things simple. Learn the basics of both methods and see how you can merge the two to form decisions. For example, if you are a Stock trader, begin learning basic approaches to support and resistance, price action techniques, and understand how to read a company’s income statement, balance sheet and cash flow statement to help determine a Stock’s intrinsic value. If you trade the Forex market, you will focus more on macroeconomics, understand how central banks work, and try to familiarise yourself with high-impacting economic indicators. Fortunately, the approach to technical analysis is the same regardless of the asset class you trade.
It cannot be emphasised enough how important it is to maintain a trading journal.
For each trade, you should detail the date and time, the market traded (for example, 06/01/2025, 13:00 GMT, EUR/USD), trading volume, the strategy employed, entry and exit prices, the outcome, and your thoughts before, during, and after the trade. This need not be a complicated process, but it is a worthwhile one.
Keeping a trading journal will help you identify your strengths and weaknesses, as well as highlight both good and bad patterns that can improve your performance. For instance, maintaining a trading journal will help you recognise whether you cut winning trades too early or let losses run.
The use of a demo account remains debated among market participants. One of the points of contention regarding a demo account is the lack of exposure to emotion. Without real money, a trader will likely be overconfident and expose the strategy to more risk than planned. For this reason, it is important to follow the plan intended for the live trading account. There is no point trading a US$10,000 account if you plan to begin with US$500. Try to emulate a live trading scenario as best as you can.
Although a demo account can be a useful tool to help familiarise yourself with the trading platform’s features, many traders feel a small live account provide more realistic results regarding forward testing.
Having data (results of a trading strategy’s performance) before entering a live trading environment will help provide confidence. If you overlook a demo account and fail to conduct any form of back testing or forward testing, how would you know what is ‘normal’ for your trading strategies? Can you continue to function objectively and follow your trading plan after three consecutive losses with a live trading account? It is unlikely unless you have seen this before through your testing.
AI needs no introduction and is now more accessible to retail traders through software like Autochartist and Trading Central. AI can help traders process large data sets, formulate risk management plans, and provide investment advice.
Market screeners are widely used among professionals and retail traders to filter and select stocks according to the conditions of your strategies. Along with pattern recognition tools and other complex arrangements, trading robots have also become popular, executing trades based on predetermined rules.
AI is here to stay. Hence, exploring this unique, albeit broad and complex domain that can help your trading is worth the time.
A common trap many new traders fall into is rushing a process that cannot be rushed. From learning the skills required to trade to continuously updating knowledge, consistent traders embrace the long-term nature of the business. They understand the need not to be drawn into the jackpot-seeking mentality and focus on following their trading plan to generate a steady and consistent return.
Trading is a serious business and requires a skill set that can take years to reach an elite level. Would you expect a doctor, a lawyer, or an engineer to qualify and provide advice within three months? No. So, to begin earning a consistent return in the first couple of months is unrealistic. To become an expert in something, you must dedicate time and energy to master your craft; the same applies to trading.
The final tip is to enjoy the journey. Trading is a never-ending learning process about the self and the markets.
Given the time required to learn to trade, you must enjoy what you are doing and generally have a passion for learning and bettering yourself. However, it is vital to maintain a healthy lifestyle and remember your ‘why’. Stay focussed on your long-term financial goals and why you started trading in the first place, and, over time, you should see development and results.
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