Trading basics for beginners

There are a few trading basics you need to know before getting started in the markets. This trading introduction will take you through the most important concepts – from how to start a trade, the different types of trading strategies, different markets, to exlplaining what bonds are – so you can start your trading journey confidently and responsibly.

The basics of trading: what is trading?

Trading is the act of buying and selling financial instruments with the aim of making a profit, and involves speculating on the price movements of stocks, currencies, commodities, indices, and other assets. Trading typically involves leverage, meaning you can control large positions with a relatively small amount of capital. However, leverage can amplify your losses as well as your profits, meaning careful risk management is advisable. Traders use a variety of strategies and tools to predict whether an asset's price will rise or fall. These can include fundamental factors such as macroeconomic drivers, or technical influences such as key support and resistance levels.

How to start a trade with Capital.com

You can trade forex with us by following these steps:

  • 1. Choose an asset to trade, based on your trading goals
  • 2.  Choose whether to trade with a CFD or spread bet
  • 3. Decide on your trade size
  • 4. Consider applying a stop-loss to manage risk
  • 5. Open your position long or short
  • 6. Manage your position, monitoring fundamental and/or technical drivers
  • 7. Close your position

What can you trade with Capital.com?

Shares (stocks)

You can speculate on over 2,500+ shares.

Trade shares

Indices

Go long or short on all the major stock indices, including the Germany 40, UK 100, US 500 and US Wall Street 30.

Trade indices

Currencies (forex)

Trade CFDs on popular currency pairs such as EUR/USD.

Trade currencies

Commodities

Trade a range of hard and soft commodities including gold, silver, oil, and natural gas.

Trade commodities

Margin and leverage explained

Leveraged trading, also known as trading on margin, refers to your ability to control a large position with a relatively small amount of capital. When you spread bet or trade with CFDs, you’ll only need to put down a fraction of the total trade size to open a position, known as the margin, while being exposed to the price movements of the whole position.

Unleveraged trading

If you’re new to trading, you might want to trade without leverage. This means you can’t lose more than your initial deposit, minimising your risk compared to spread betting or CFD trading.

Our 1X account enables you to trade unleveraged CFDs on equities and indices with easy access to learning materials in a low-cost, lower-risk environment.

You can start trading on 1X by registering an account with us. Once approved, go to My Accounts, then Add Live Account, and choose 1X. You’ll need to complete an eligibility test to determine your appropriateness for this product.

  

Risk-management strategies

All trading is risky, and leveraged trading is no different. While trading with leverage means your profits can exceed your deposit, your losses can too.

All our retail client accounts have negative balance protection, so any losses are limited to the value of the funds in your account. But that alone does not minimise the risk of trading.

Saying this, there are various ways to mitigate the risk that you can implement as part of your overall risk-management strategy, most notably, by using stop-loss and take-profit orders.

How to get started with trading

So, how can you get started with trading? Here are some important fundamentals you should know before you take your first steps into the markets, covering trading styles, the importance of establishing a trading plan, and more.

  

Want to learn more about these trading basics in more detail? Try our:

Trading courses

We have a range of free, easy-to-follow courses on our education hub. Learn all about trading from industry experts, from how to start a trade to managing risk and more.

Learn more

Risk management course

Learn how to manage risk on our dedicated risk and reward trading course.

Learn more

Demo account

If you want to practise trading, but you aren’t ready to deposit funds just yet, you can trade with virtual funds via a Capital.com demo account.

Learn more

FAQs

What is the 3% rule in trading?

In trading, the ‘3% rule’ advises traders not to risk more than 3% of their total trading capital on any single trade, and is used to limit potential losses to that amount. The 3% rule can be used alongside other methods like stop-loss usage, diversification, and hedging in a wider risk-management plan.

What is trading and how to do trading?

Trading is the practice of buying and selling financial instruments through derivative products such as spread bets and CFDs. It involves taking long or short positions on markets such as shares, currencies, commodities and indices, with the goal of making a profit. In order to maximise their chance of success, traders research these markets by analysing market data, trends, and economic factors to make informed, risk-aware decisions. When trading, it’s important to be aware of the risk involved and prepare accordingly, whatever derivative you choose.

How can I start trading?

To start trading, you'll need an approved brokerage account and a clear, risk-aware trading strategy. Once you’ve opened an account with us and deposited funds, you’ll be able to take positions long or short on CFDs or spread bets across 3,000+ markets, and inform your decisions with key fundamental and technical price drivers. It's vital to educate yourself about the financial markets, risk management, and trading techniques before you start trading.

Can you make money day trading?

Although it’s possible to make money day trading, it's important to understand that day trading is a high-risk endeavour. To profit from day trading, traders must develop their market knowledge and a comprehensive trading strategy, as well as understand risk management. Profiting from day trading is not guaranteed, and losses can occur. It's crucial to approach day trading with caution, start small, and gain experience over time. It's also advisable to never risk more than you can afford to lose and consider learning about trading and seeking guidance from financial professionals before you start trading.

What should a beginner trader trade?

There’s no one-size-fits-all rule when it comes to suitable markets for beginner traders, but you may want to start with assets you’re familiar with and understand. These might include stocks of well-known companies, popular currency pairs, or widely followed commodities like gold or oil, which tend to be accompanied by more regular and accessible information for newcomers. Starting with a small selection of assets allows new traders to focus on risk management, learning, and building confidence before expanding into more complex trading instruments.

Ready to join a leading broker?

Join our community of traders worldwide
1. Create your account2. Make your first deposit3. Start trading