New to this other than demo accounts and reading. I have good results from demo accounts but paranoid it will change when I go real money. I'm curious to a couple things, 1. In worst case scenario how far minus if any can you go on stocks and forex if you dont use leverage or margin? 2. If avoiding using leverage and margins what is the worst that can happen? 3. If I'm going in looking to go only on my own money and with no experience of trading really, where would you recomened I trade?
I'd suggest you try a simulator vs a demo account. https://www.sterlingtradingtech.com/products-and-services/platforms/sterling-trading-simulator/ Trade in the simulator like its real money for a few months. Not free but the cost is better than losses.
I strongly suggest you just peruse the psychology section for now, over the summer. Yes, there is a lot of stuff in there that can help you before you start, and it will take a lot of time to go through it. (Assuming you live in the northern hemisphere.)
1. You won't be liquidated by the broker if you're not using margin. So you cannot lose any more than you put in. 2. You lose your entire bankroll. With margin trading you can theoretically lose more than your entire bankroll. If you don't use leverage you can only lose what you put in. 3. This is a very hard question. First, establish some small amount of capital you are willing to lose. I'm a contrarian in the aspect that I don't think demo/simulators are worth anything. There is a significant self-realization that happens when you watch your own money disappear. It's the same thing in poker - they tell you play $1/$2 no limit cash games with money you can afford to lose. Before learning to trade, you have to learn to lose. So get some cash together you can lose and not worry to much. This is your tuition you're going to pay Mr. Market to teach you. Next, since you're not willing to use leverage you're basically limiting yourself to long only equity trades. If you want some exposure, you could try speculating in the 3x leverage ETFs (they are leveraged, not you - though you are exposed to the same movement). Other than that, you could try medium to long term investment a'la Bejamin Graham. The most important thing I can tell you is don't get bogged down in analysis. If you're spending more than a few hours thinking about a single trade, that's too much. Through this process you should discover something about yourself. Your "trading personality". Some people like to live in the moment scalping ticks all the time. Me? I prefer to be patient and wait for trades. I'm a swing trader, and I have realized I prefer a mix of TA and fundamental analysis. This is different for everyone, and if reading all of the Market Wizards books taught me anything, it's that there are as many trading styles as there are traders. Try not to box yourself into one method. Discover what works for you by trying everything. Eventually you'll end up where you need to be.
That's it. Right there, in a nutshell. I knew I liked you for a reason, ye who named yourself after a standard unit of measurement.
Don't confuse "demo" with "paper" or "simulated" trading. A full PAPER trading account with real time data will teach you a lot, but it won't teach you about a couple of things, like how much lag time there can be when you are trying to sell out of a position while the stock is in free fall and you take an extra beating, or the effect on price of a very small float or low volume stock that your order can have. There are some things that trading in a simulator just can't prepare you for. Oh and the psychological aspects. You are a different trader when you play with real money as opposed to pretend money. A "demo" account might do nothing more than showcase a trading platform. WORST case? It could get really bad, really fast. It's all up to you, and your discipline, knowledge, and skill level. And market conditions, and luck. You COULD blow through your entire account in a few days. You probably won't, but smart money would be on you being a net loser for at least a few weeks, and this is AFTER a few weeks or months of paper trading. You might be winners right out the gate and stay there, but the chances of that are small. If you do your homework before going live, you can keep your beginner losses very small, though. It is more than just picking the right stock, and the right entry/exit. Your money and risk management are crucial. Setting a stop loss intelligently, as well as an appropriate profit taking limit, are a key part of that. Determining your allowable risk and sticking to it are essential. The worst that could happen is you lose everything. See above answers to minimize your chances of that. I recommend a few weeks minimum of paper trading before you go live. Most guys will tell you to paper trade for several months before you go live. I am a new trader trying to keep my losses small as I learn. I paper traded initially and found it was great for learning the platform and learning how a trade actually works. It was good for learning the basics of chart reading, pattern recognition, and basic strategies. It did not make me a trader. It did not fully prepare me for going live and a year of paper trading would not fully prepare me to go live, but it did help. Just doing something wrong or something you didn't mean to do can cost you hundreds of dollars, and a trading platform is a very complex piece of software. You need to become very familiar with it and familiar with how various types of orders work, so as to minimize "Oh, SHIT!" moments. Once an order is sent and executed in live trade, it is a bit late to realize you didn't mean to do THAT. Paper trading is your preferred venue for making oopsies. Paper trading is of course not the same in one other crucial way. Not playing with real money just doesn't have the sense of reality that trading live does. Winning isn't as rewarding. Losing isn't as punishing. It doesn't MATTER so much. When you lose a half a week's wages in less than an hour, it is real, and painful. It teaches you a lesson about something. You can't simply give a few clicks of the mouse and reset your account to $100k. You have to put real money in there, money that you could have used for other things, necessary things, or even cool or fun things. Money you could have invested. Money you had to work for, probably. Still, paper trading is essential. You need that time where a mistake doesn't cost you. It will save you thousands of dollars to make at least some mistakes in a simulated trading account. That's where you start. Get yourself a few good books on trading. Keep in mind that most authors of such books want to sell you stuff. Memberships in online forums, trading lessons, webinars, and more books, mostly. So, read with your BS filters on. A good book or three is a smart investment. It might even convince you to not even try trading. It might also occur to you that this guy took a bunch of time to write this book when he could have been making money trading if he was a good trader. Well, that doesn't mean that the subject matter is flawed. Get the good stuff out of your books and apply it. Don't just pick a stock or whatever, and buy because it seems to be going up or you feel like it will go up. In fact, don't just pick a brokerage or a trading platform at random or on strength of its advertising. Do your homework. There are an awful lot of different ways to trade. You can swing trade, or day trade. You can trade based on fundamental data, or technical data, or more likely a bit of both. You can trade momentum, or reversals, or gap strategies, or scalping, and more, and have one or several strategies, with more, or less, proven efficacy or logic behind them. You can trade options, futures, forex, bonds, funds, or stocks. Swing trading or day trading stocks is IMHO the easiest to learn and make a good return on. As a newbie my humble opinion is of course topic for debate, but I am only doing day trading of stocks, so far, and a basic understanding of how to trade in this market can be acquired on a few months of diligent study and practice. You could even learn one specific strategy in a few weeks, I suppose, though you could possibly go a long time before you see the right setup for your one single trade strategy. I suggest starting out with two or three but not more strategies. Being a one trick pony is very limiting. Trying to do too many different styles of trades right out the gate will mess you up. The first thing you will do is set aside some money to trade with. If you can manage significantly more than $25k then you have a lot more flexibility. Under $25k, with a US brokerage, and you are limited by law to less than four intraday trades (buy and sell or sell and buy within a single day) in any 5 trading day period. Most brokerages and pretty much all brokerages that cater to traders as opposed to investors, offer a free paper trading account to anyone with a money account at that brokerage. There is no specific minimum real money amount required to have a paper trading account. That would be up to the brokerage. I believe my brokerage technically has no minimum account balance to be able to paper trade. Most either won't or it will only be a couple thousand. The paper account might be free or it might cost something extra. You may have to pay for the trading platform or for data, there might be other fees, maybe a minimum monthly commission. I am using Interactive Brokers, known as IB on this forum, but as a Linux user I only had this or one other choice. There are several brokerages popular with members of this forum. IB has treated me well, with low commissions and fees, and fast execution of trades. But it might or might not be the ideal brokerage for you, so shop around, AFTER you read a book or two.
1. Wipe out, -100%. 2. Wipe out, -100%. 3. Do sim first to find your strategy, be it equity, forex, commodity... then do 80/20, 80% in treasury/CD, 20% to trade. And use Kelly Criterion for gauging your trade size. Good luck.
You should do as much research on the different trading methodologies before you start trading. If you want to be successful at trading, you cannot give up easily, even after a few losing trades. If you have a true edge in the market, you will find success eventually. In my opinion, paper trading is a good way to get a feel if the strategy you cleverly thought up of will work or not. However, the orders get filled very differently in paper trading compared to real account (generally better fills in paper account).