CFDs are complex instruments. 74% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. CFDs are complex instruments. 74% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

How to start and get into trading: A complete guide

Ever wanted to start trading, but simply didn’t know where to begin? We’ve put together a guide on how to get started. Learn how to get into trading with us, an award-winning provider.1

Start trading today. Call +44 (20) 7633 5430, or email sales.en@ig.com to talk about opening a trading account. We’re here 24/5.

Contact us: +44 (20) 7633 5430

Start trading today. Call +44 (20) 7633 5430, or email sales.en@ig.com to talk about opening a trading account. We’re here 24/5.

Contact us: +44 (20) 7633 5430

Understand how trading works

Trading is the buying and selling of an asset of your choice – be it indices, shares, forex or commodities – without owning the underlying instrument. With us, you’d trade using contracts for difference (CFDs), a derivative that enables you to speculate on the price movements of an underlying without owning it.

You can either go long (buy) or short (sell):

  • You’d go long if you think that the underlying’s price will rise
  • You’d go short if you think that the underlying’s price will drop

If your prediction is correct, you’d make a profit; contrarily, if it’s incorrect, you’d incur a loss.

How to start trading

You’d trade using CFDs with us - you’d buy or sell contracts to exchange the price difference of a financial instrument between the open and close position. Whether you make a profit or loss will depend on the outcome of your prediction.

CFDs are leveraged derivatives – they enable you to get full exposure to the value of the underlying asset at a fraction of the cost, by using a deposit called margin. Leverage will result in magnified profit or loss, it’s important to ensure you manage your risk carefully.

Leverage and margin 101

Leverage is a tool used when trading derivatives like CFDs. It enables you to open a position using margin (a deposit) while still getting full exposure to an underlying asset. This means you’re paying an initial deposit, that’s a fraction of the full value of your trade, with your provider loaning you the rest.

For example, at a margin requirement of 20%, you’d need to deposit $200 to open a shares position worth $1000. In the case of indices, a 5% margin would require a $50 to open a position at $1000. And for forex, a 3% margin requirement would need you to deposit $30 to open a position worth $1000.

Trading on margin comes with risk, because the position is still based on full exposure. This means you can gain or lose money quickly, which is why you should set stop orders on all positions to ensure you don’t lose more money than you’re comfortable with.

If you don’t set stops, you could be placed on margin call and your positions might be closed out automatically. However, note that our margin policy doesn’t guarantee against your capital running into a negative balance, depending on region and account type (retail or professional).

The margin call will be triggered when your equity drops below 50% of your initial deposit requirement. We’ll do our best to contact you, although not an obligation, when your equity drops beneath 99%, 75% and 55% of margin, respectively. However, it’s your responsibility to ensure your account has sufficient funds.

To avoid having your positions closed, transfer enough funds into your account to increase your equity above the margin requirement, or close some positions to reduce it.

You can trade rising and falling prices

When trading, you can speculate on rising or falling asset prices. You’ll buy (go long) if you think the asset’s price will rise, or sell (go short) if you think it’ll fall. So, if you go long and the price rises, you’ll make a profit – but if it falls, you’ll make a loss. The opposite is true when you open a short position.

What is the bid-ask spread?

A spread is the difference between the bid (sell) and ask (buy) price that’s quoted for an asset. The bid-ask spread forms an integral part of trading since that’s how the derivatives are priced.

By applying a spread, the asset’s buying price will be a bit higher than the underlying market price and the selling price a bit lower.

Why a top trading platform is important

Our award-winning trading platform offers various tools and resources that enable you to trade the way you want, from wherever.1

It provides access to price charts, which you can use to track the performance of numerous asset classes across more than 13,000 CFD financial markets worldwide. Our platform also offers technical indicators and a Reuters news feed – plus, you can use IG Academy, expert webinars and seminars, and more to learn about trading or to build on your skills.

Trading example

Below is an example to help you understand how trading works:

  • CFD trading on commodities example

If your trading prediction is correct

Let’s say, after doing some research on commodities, you believe the spot gold price will increase from its current level of $1,809.75.

You decide to take a long position, buying five Spot Gold Mini (10oz) CFDs, each with a contract size of $10 per point of movement, making it a total of $50 per point (5 CFDs x $10). The current buy price is $1,810, which is a little higher than the underlying market price because of the spread.

The margin factor of spot gold CFDs is 5%, which means to open a position worth $90,500 you’d require a margin deposit of $4,525 ($50 x $1810 x 5%).

If there’s a rise in the spot gold price that increases its value to $1,820.25 and you decide to close your position at $1,820, you’d make gains of $500 (10 points x $50) as the market would’ve moved in your favour by 10 points (excluding any additional costs).

If your prediction is incorrect

On the other hand, if the spot gold price dropped to 1802.25, you’d incur a loss. You’d lose $400 (8 points x $50) – excluding any other charges – if you were to close the position at the new sell price of $1,802.

Research the available markets

With us, you’ll get access to over 13,000 international markets via CFD trading. You can also benefit from out-of-hours trading that can give you access to more markets and opportunities. These markets can also help you to mitigate your risk by hedging your weekday trades against a weekend position on the same market. Some of our exclusive weekend markets include weekend GBP/USD, FTSE 100, Wall Street and Germany 40.

Below are the most popular markets you can trade with us:

  • Shares: choose from thousands of shares – go long or short on stocks like Apple, Tencent and eBay
  • Indices: trade over 80 global indices, including the EU Stocks 50 and the S&P 500
  • Forex: get exposure to more than 80 forex pairs, including majors like EUR/USD and USD/GBP, as well as minor and exotic pairs like SGD/JPY and GBP/TRY
  • ETFs: choose from a wide range of ETF markets, covering indices, sectors, commodities and more
  • Bonds: trade a variety of government bonds and bond ETFs
  • Commodities: buy and sell over 35 different types of commodities, such as gold, oil or orange juice
  • Interest rates: take a position on the future short-term (quarterly) direction of a range of global interest rates
  • IPOs: buy IPO stocks before and after they list on various exchanges across the globe

Know the risks of trading and how to manage them

It’s vital to understand the risks of trading, and to take the necessary steps to manage them effectively. We provide several tools to help you manage your risk, including stop losses and limit orders.

What are the risks of trading?

There are a number of risks associated with trading. Since CFDs are leveraged products, they give you increased exposure to the underlying asset at a fraction of cost.

However, any losses you make will be based on the full position size and could exceed your initial deposit – so, it’s important that you manage your risk properly.

Risk management tools

There are a number of risk management tools you can use when trading, such as stops (also called stop-losses) and limits.

  • Stop-loss orders will automatically close your position if the market moves against you. However, there’s no guarantee they’ll protect you against slippage
  • Guaranteed stops offer complete protection, closing your position at the exact price you’ve specified. Note that, when this stop is triggered, you’ll be charged a premium
  • Price alerts help you to keep track of market activities. This’ll be done by sending push notifications or emails notifying you on when a specified market level is reached

Learn more about trading styles and strategies

Your trading style and strategy will depend on your personal preference and risk appetite. Although they’re sometimes used interchangeably, trading styles and strategies aren’t the same.

Basically, the style is the main plan on the trading frequency, while the strategy is the method you’ll use as a guideline on when to open and close positions. We’ve outlined some of the most popular styles and strategies below.

  • What is a trading style
  • What is a trading strategy

A trading style is the preference you have when it comes to the frequency of your trading activities, ie whether you’re looking trading over the long or short term. You can adapt a style based on the behaviour of the market you’d like to trade.

Trading style Timeframe Holding period Trading volume Further resources
Position trading Long term Weeks, months or years Low Learn more
Swing trading Medium term Days to weeks Medium Learn more
Day trading Short term Intraday High Learn more
Scalping Very short term Seconds to minutes Very high Learn more

A trading strategy is a plan you’ll use to analyse and keep track of market performances, which you can do in a number of ways, including through utilizing tools such as fundamental and technical analysis.

While fundamental analysis will help you with predicting shifts in prices, most strategies concentrate on tracking particular technical indicators.

Fundamental analysis will measure a company’s intrinsic or actual monetary value by taking into consideration certain economic and financial factors, like its balance sheet, management forecast and macroeconomic markers.

Technical indicators are maths computations plotted on price charts as lines. They’re useful in assisting traders to detect market signals and trends.

Trading strategy Core characteristics Further resources
Trend trading
  • Used for medium and long-term positions
  • Tries to find market rises and falls (trends) and adopts long or short positions
  • Ideal for position and swing trading styles
Learn more
Range trading
  • Used for short and very short-term positions
  • Traders seek to trade on price oscillations that taking place within known ‘support’ and ‘resistance’ level ranges
  • Ideal for day trading trading and scalping
Learn more
Breakout trading
  • Used for short and medium term positions
  • Prices deviating or ‘breaking out’ from a normal range of fluctuations are used as signals to open positions
  • Ideal for day and swing trading
Learn more
Reversal trading
  • Can last for varying lengths of time
  • Based on identifying reversal points in present upward or downward trends
  • A reversal marks a key turning point in market sentiment
  • Ideal for position and swing trading
Learn more

Create a trading plan

A trading plan is a comprehensive decision-making tool you can use to help you work towards your goals. It can cover a range of factors, including what assets to trade, when to do so, how much to spend on a single position and how to manage your risk. This plan should be tailored to your specific circumstances and must be adapted to factor in your risk tolerance and buying power.

Start trading on a practice account

You can open a free demo account with us to put your newly acquired trading knowledge to the test. This is a risk-free environment that enables you to cut your teeth trading using $20,000 worth of virtual funds. Once you’ve gained enough confidence and you’re familiar with trading on the platform, you can then decide whether you’d like to upgrade to a live account.

Get into trading by opening your live account

Once you’ve practised trading with a demo account and you feel you’ve refined your trading plan and skills, you can open a live account with us. You’re under no obligation to deposit funds immediately.

Here’s how to open your live trading account:

  1. Fill in a form: you’ll be asked about your trading knowledge to ensure you get the best experience
  2. Get verification: we can usually verify your identity promptly
  3. Fund your account and start trading: deposit funds into your account when you’re ready to start your trading journey. There's no minimum required deposit. You can also withdraw your money whenever you like for free

FAQs

What is trading?

Trading is the buying and selling an asset of your choice – be it indices, shares, forex or commodities – without owning the underlying instrument.You’d trade using CFDs with us.

How do I start trading?

To start trading, you can open a demo or live account with us, which will give you access to the various markets in the risk-free or live environment, respectfully. Before you take your first position with real money, it’s important to learn as much as possible about trading.

You can access our free online courses on IG Academy to learn more about what trading is and how it works. To improve your confidence as a trader, you can practise using the $20,000 virtual funds in the risk-free demo account environment. When you’re ready, you can upgrade to the live account with us.

What risks should I know about before getting into trading?

There are number of risks associated with trading – and one of them is trading with leverage. With us, you’d trade using CFDs, which are leveraged products – they give you increased exposure to the underlying asset at the fraction of cost. However, any losses you make will be based on the full position size and could exceed your initial deposit – so, it’s vital to take steps to manage your risk properly.

How can I learn more about trading?

You can learn more about trading by taking online courses on IG Academy – for free. Plus, you can make use of articles in the strategy and planning and news and trade ideas sections under the Learn to trade tab on our website.

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