FAQs

Yes, profits from trade qualify as income anywhere in the world, so you pay tax on them. The amount and type of tax depend on your specific circumstances, such as whether your profits come from capital gains or income. In the UK, Capital Gains Tax (CGT) is payable on the profit (or gains) you make when you sell any investments that have increased in value over time. It’s advisable to consult with a tax professional to ensure compliance with UK tax laws.

A £100 deposit is a fair capital to start trading in a real trading account, but there’s no specific predetermined minimum. The minimum you need to begin trading varies depending on the broker and the type of security or investment you choose to trade. The amount may also depend on your risk appetite. But to see meaningful returns, more substantial capital, such as £5,000 to £10,000, might be needed to diversify your trades effectively.

If you are a beginner, we advise using a demo account until you trust your skills enough to make real money. Although you will not make any profit in actual money, you’ll learn the skills needed to manage the risk of trading with real funds.

There are no guarantees you’ll make money in trading. It is a high-risk field with significant risks and requires high skill, discipline, and experience. Nevertheless, some traders earn enough to replace their regular income. On average, medium-skilled traders may earn over 10% of their monthly deposit. But many traders also don’t attain this level of success. Our ten-cent opinion is to start trading part-time while keeping your job. If you can pull this through, you can replace your regular job. But don’t leave your job to start trading.

The key differences are time and risk.

Investing looks at the market from a long-term perspective. You typically buy and hold an asset with the hope that, over time, it will gradually grow and return profit. Investing involves low risk since you focus on analysis, such as fundamental and long-term market trends.
On the other hand, trading is based on the short-term aspects of the market. Your strategies here are geared toward daily, monthly, or quarterly profits. It’s a high-risk business that relies heavily on market timing and technical analysis.

To start trading, you must know what traders do. As a trader, often called a day trader, you actively engage with the market to profit off quick price changes in a given financial security by employing intraday strategies. Note the keywords in bold in the last sentence. While trading is lucrative, you must thoroughly understand the market and financial securities. In addition, you must have a high level of personal discipline and razor-sharp focus.

To start trading, follow these steps:

Step 1: Learn about the markets, financial securities, and trading strategies.

Step 2: Pick a reliable broker and open a trading account.

Step 3: Conduct a self-assessment to develop a trading plan that guides your goals, risk tolerance, and strategies.

Step 4: Test your skills using a demo account to practice without risking real money until you trust yourself.

Step 5: Begin trading with small amounts and gradually increase as you gain experience.

Unlike when people learnt trading by having a mentor while studying this art through books, today, you can now educate yourself. A wealth of information is available online to enhance your knowledge in trading, regardless of your experience level. For starters, leverage our education resources to build a solid foundation. Afterwards, continuously improve your skills as you gain experience. But that’s not the only option. You can approach it from multiple angles, including:

• Online courses and webinars for structured learning. Many platforms like Udemy, Udacity, and Khan Academy offer such courses.
• Books on in-depth and timeless strategies include “A Random Walk Down Wall Street” by Burton G. Malkiel, “The Intelligent Investor” by Benjamin Graham, “Market Wizards” by Jack D. Schwager, and “Trading for a Living” by Dr. Alexander Elder.
• Instructional videos and webinars available on platforms like YouTube, Udemy, Coursera, and LinkedIn.
• Financial news websites and blogs for current trends and analysis, e.g., Websites like Bloomberg, Reuters, and CNBC, provide real-time news, analysis, and insights.
• Forums and community groups for interactive learning and support.
• Educational content provided by brokers for practical and platform-specific knowledge.

While some individuals may learn quickly due to their skills or background, trading is challenging and involves risks. It is a big undertaking with no shortcuts to success. You require significant time, dedication, and continuous learning.

Understand the market dynamics, master technical and fundamental analysis, and develop emotional discipline. Becoming proficient often takes years of persistent effort.

Some online traders lose money because they lack skills and patience. It’s essential to educate yourself on risk management and have realistic expectations. As an aspiring trader, be prepared for a long-term commitment and a mindset focused on continuous improvement.

Online trading is generally secure but depends partly on your choices.

First, as we consistently state, trading involves risks. However, you can limit your exposure by enhancing your knowledge and skills. If you choose not to educate yourself, you could lose your hard-earned money.

Second, consider the reputation of the broker you choose to use. A good broker employs solid security measures such as encryption and two-factor authentication and follows best practices for online security. A recognized authority should also regulate it.

There’s a lot you need to learn before starting trading. But first, understand the market you want to trade on, as this affects your choice of broker and strategies. Then, learn the basics of trading through guides and resources available online and in books. You must understand how to apply safety measures like risk management and the tools that decrease it. Also, ensure you grasp key trading terms, concepts, and the costs associated with trading. But that’s not all. Trading is difficult and risky, so keep learning and adapting. Be well-prepared before signing up with a broker and start trading.

Yes, some traders have achieved significant wealth through trading, and you can. There’s no limit as to how much you can make trading. You need a mix of skills, experience, and a touch of luck.

Fortune favors the bold. To be bold means you are prepared, and that requires a strategy and discipline. It’s neither easy nor common, but many traders have accumulated significant wealth from trading. These successful traders share three things: the three F’s – fun, funds, and fulfillment. You must enjoy trading and get fulfilled from it. Otherwise, you won’t be able to concentrate on trading, which requires concentration and discipline.
Your aim should be to find fulfillment and see it as an enjoyable hobby that could earn you extra money. If you’re fortunate and committed, you may eventually earn enough to consider trading your full-time job.

No, you can’t. You need an initial investment to start trading for profits. However, some brokers offer demo accounts where you can practice with virtual money. But it’s only for practice, and you can’t withdraw profits. Also, you may be lucky to win trading capital from specific programs and competitions that offer trading capital as prizes.

The common risks include:

• Market Risk: Losses from unfavorable price movements, wide fluctuations, slow stop-loss execution, or price gaps.
• Counterparty Risk: The risk of brokers or financial institutions failing to pay up due to insolvency or internal withdrawal issues.
• Liquidity Risk: The difficulty of trading a security without causing a significant change in its price.
• Leverage Risk:  Losses can be much more significant when trading with borrowed money, increasing the risk of losing your position quickly if the market goes against you.
• Operational Risk: Failures in order execution, technology malfunctions, or regulatory non-compliance leading to operational disruptions.
• Event Risk: Market crashes or volatility caused by unexpected like natural disasters or terrorist attacks.
• Country Risk: Political or economic instability leading to asset sell-offs and market shifts due to changes in fiscal policy, interest rates, or regulations.
• Psychological Risk: Losses from emotional or cognitive biases, highlighting the need to stick to a trading plan.
• Regulatory Risk: Changes in laws or regulations affecting trading.

Get charts that match the trading time frame, and have a curious and objective mindset and a notepad. Afterwards start creating your own successful trading strategy by doing the following:

• Conduct thorough research and analysis
• Test strategy ideas using historical data and demo accounts
• Define clear entry and exit points
• Implement risk management techniques
• Continuously review the approach that works for you, refine it, and make it your strategy

Day trading and swing trading involve buying and selling securities in a short time, but the main difference is the speed with which they are done. The two are different from position trading, which focuses on the asset’s long-term potential.

For day trading, you sell the security on the same day, requiring intense focus and quick decision-making.
On the other hand, swing traders hold positions for a few days to a few months, aiming to profit from short- to medium-term price movements.

Traders often make these common mistakes:

• Not having a trading plan.
• Trading too much and taking too many risks
• Not managing risks.
• Making carefree decisions based on emotions, like panic selling or overconfidence in profit streaks.
• Ignoring what’s happening in the market

Staying updated with market news and trends is crucial as they can significantly impact asset prices. Regularly following financial news, economic indicators, and market analyses helps you make informed trading decisions and adjust your strategies accordingly.

Emotional discipline is vital for maintaining a calm and rational mindset, which is needed for trading success. It helps you stick to your strategies, avoid impulsive decisions, and keep stress at bay. You’ll avoid common pitfalls like panic selling or overconfidence in your winning streaks.

Yes, and it is best done as a part-time activity. Trading has inherent risk, and it would be much safer to have another source of income. Many traders start part-time while maintaining their regular jobs. So, choose a trading style that fits your schedule and allows you to manage your trades effectively without constant monitoring.

Your security is primarily your responsibility, so to safeguard against scams and fraud:

• Use reputable brokers and platforms under the regulation of reputable authorities.
• Stay cautious of offers that appear overly lucrative.
• Conduct thorough research before investing in any opportunity.
• Refrain from sharing personal or financial details with unverified sources.
• Utilize secure and reputable platforms for trading and financial transactions.