A beginners' guide to trading
Trading as a beginner can be exciting – and overwhelming. That’s why we’ve outlined everything you need to know for your trading journey, including how to trade stocks, and forex trading for beginners.
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Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.
Visit help and support for more information.
Call 0800 409 6789 or email helpdesk.uk@ig.com if you have any questions about trading or investing. We're available 24/7 between 8am Saturday and 10pm Friday.
Contact us 0800 409 6789
Call ##newaccountsfreephone## or email newaccounts.uk@ig.com to talk about opening an account.
Contact us 08001953100
Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.
Visit help and support for more information.
Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.
Visit help and support for more information.
Call 0800 409 6789 or email helpdesk.uk@ig.com if you have any questions about trading or investing. We're available 24/7 between 8am Saturday and 10pm Friday.
Contact us 0800 409 6789
In plain English: what is trading?
Trading is speculating on an underlying asset’s market price movement without owning it. So, basically, trading means that you’re only predicting whether a financial asset’s price will rise or fall.
You can trade hundreds of financial markets, including stocks, cryptocurrencies, forex, commodities, indices, bonds and more. We offer more than 17,000 markets for you to speculate on – think Meta shares, the US dollar against the euro, crude oil and the Germany 40.
When you trade, you’ll use a platform like ours to access these markets and take a position on whether you think a market’s price will rise or fall. If your prediction is correct, you’ll make a profit. If incorrect, you’ll incur a loss.
The financial instruments you’ll use to trade on an asset’s price movements are known as derivatives. With us, you’ll get exposure using exchange traded derivatives (Turbo24) and over-the-counter (OTC) derivatives (spread betting, options and CFDs).
This simply means that the instrument’s price is ‘derived’ from the price of the underlying, like a company share or an ounce of gold. As the price of the underlying asset changes, so does the value of the derivative.
To understand this, let’s look at an example of speculating on shares. If the price of a share goes up from €100 to €105, the value of the derivative will increase by the same amount. If you bought the derivative at €100, you could now sell it at €105. Although you never own the share itself, your profit or loss will mirror its price movements.
So, why use a derivative?
With derivatives trading, you can go long or short – meaning you can make a profit if that market’s price rises or falls, as long as you predict it correctly. Conversely, if the market moved against your speculation, you’d incur a loss. This is because trading isn’t owning the actual financial asset. With owning something outright, such as gold for example, you’ll only make a profit if the gold price climbs.
Leverage can be another reason to trade with derivatives.
Trading with leverage means that, instead of paying the total value of your trade upfront, you’ll put down a fraction of its value as a deposit. This means leverage can stretch your capital much further as you can open large positions for a smaller initial amount.
With leverage, your total profits or losses are calculated based on the full position’s value, not how much you paid to open that position. You can make more than the initial margin amount you paid to trade and set a knock-out level to cap your loss.
Note that with spread betting and CFDs, you stand to lose far more than your initial deposit. That’s why it’s important to take steps to manage your risk effectively.
Interested? Practise trading with a free demo account
All of this new terminology can be a lot to digest. So, we’ve created a table below with five key trading terms every beginner should know.
Five key trading terms
Term |
Definition |
ETP trading |
Exchange-traded products (ETPs) enable you to track your position day-to-day and intraday. You can take a position using leveraged ETPs such as Turbo24. |
Spread betting |
A type of derivative trading we pioneered. Spread betting allows you to trade on the price movements of an underlying asset. You’d do this by betting an amount of capital per point of movement in that asset’s price. This amount per point is what you stand to gain in profits or lose in loss. |
CFD trading |
CFDs (contracts for difference) are a type of derivative that enables you to trade on the price movements of an underlying asset. You’d do this by agreeing to exchange the difference in that asset’s price from the time you open your position to when you close it. The difference at these two points is what you stand to gain or lose. |
Options trading |
Get exposure via options trading where you’ll buy contracts that let you trade on the future value of a market, giving you the right – but not the obligation – to trade the market at a set price on or before a set date. With us, you’ll use two types of options: barriers and vanilla options. |
Going long, |
Going long (also known as ‘buying’) is a prediction that a market’s price will rise; whereas, going short (also known as ‘selling’) is a prediction that it’ll fall. However, short selling is risky because losses can be unlimited if risk isn’t managed properly, since there’s no limit to how much a market’s price can rise. |
Trading on margin |
Trading on margin, ie opening a position for less than the total value of your trade, is also known as a ‘leveraged’ trade. Note that not all ETPs require a deposit to trade on leverage, ie with constant leverage, you can take a position without paying margin. For example, if you bought 10 CFDs on shares worth €100 each, the position’s total value is €1000. With a margin deposit of 20%, you could open a trade of this value with €200. |
Risk |
Margin is risky in the sense that you risk losing more than your initial deposit, and your losses can far exceed your margin amount. When trading ETPs, you don’t use margin to open a position. However, with CFDs and options trading, you should take steps to manage the risk. It’s essential to understand the risks inherent in trading – especially so with trading on margin. Fortunately, we offer mechanisms to help you manage your risk. |
Volatility |
Volatility refers to times when markets are moving rapidly, typically as a result of announcements, events or market sentiment. While it inherently comes with higher risks, you can also find opportunities if you have a solid trading plan that includes comprehensive risk management measures. |
Financial markets new traders
We offer over 17,000 popular financial markets. With us, you’ll trade these markets using ETPs (Turbo24) or derivatives like spread betting, CFDs or barrier and vanilla options.
What is stock trading and investing?
Stock trading is speculating on whether the share price of a public company will rise or fall. This means you’d go long if you thought the price would rise or you’d go short if you thought that it’d fall.
With us, you’d trade with limited risk and pay zero commission.1 You’d make a profit if your prediction is correct. On the other hand, you’d incur a loss if you predicted the market movement incorrectly.
What is forex trading?
Forex trading is the exchange of one currency for another. The forex market is the biggest and most liquid in the world – it’s decentralised and you can access to the markets 24/5.
Forex is traded in pairs, which consist of two currencies that are traded against each other. There are hundreds of different combinations to choose from, but some of the most popular include the Euro against the US dollar (known as the EUR/USD), the US dollar against the Japanese yen (USD/JPY) and the British pound against the US dollar (GBP/USD).
When trading forex, you’ll be speculating on whether one currency’s price will rise or fall against another currency – for example, if the US dollar (USD) will weaken or strengthen against the Euro (EUR).
What is index trading?
Index trading is speculating on the price movements of a collection of underlying assets that are grouped together into one entity. When you trade on the index, you’re trading on all its constituents at the same time.
Types of indices you can trade include:
- Equity indices
- Bond indices
- Commodity indices
- Real estate investment trust (REIT) indices
An index’s components will always have something in common which groups them together, eg the 500 biggest US-listed companies by market cap are grouped into the S&P 500 index.
We offer exposure to top European and international indices, such as the France 40, Germany 40, Italy 40 and Wall Street with zero commission1 and 24/5 market access.
What is commodities trading?
Commodities trading is speculating on the market price of natural resources such as gold, sugar cane and Brent crude oil. There are ‘hard’ and ‘soft’ commodities. Hard commodities are mined substances like precious metals, diamonds, oils, gases, and the like. Soft commodities are plant and animal resources like grains, sugar cane, coffee beans and cattle and other livestock.
Some commodities, like gold for instance, have a reputation for being a safe haven in times of uncertainty and are often used as hedges against things such as inflation and macroeconomic volatility. You can take a position and limit the level of your risk you’re exposed to with us.
Trading for beginners: where to learn more
Getting started with trading can be an intimidating experience, with so much to learn. But, as we all know, practice makes perfect. That’s why we recommend putting your learnings into practical use with our free demo account.
Here, you’ll be able to trade with €10,000 in virtual funds in a risk-free environment to hone your techniques and build your confidence before doing it for real.
Your first trade: how to do it
After learning about trading beforehand, the only thing left to do is to make your first trade on our live platform. However, if you still want to know more about entering the world of trading, read our ‘How to get into trading’ page.
Here’s how to make your first trade:
- Decide how you want to trade (ETPs, spread betting, CFDs or barrier and vanilla options)
- Open and fund your live account
- Search for your opportunity
- Decide whether to go long or short
- Select your deal size and take steps to manage your risk
- Open and monitor your position by selecting ‘place deal’
Why trade with us?
There are many trading platforms out there, so why should you choose us?
We‘ve been a market leader since 1974. We’re also focused on the success of our clients, providing a host of educational resources and more.
Here are just a few more reasons to trade with us:
Low spreads
We offer competitive rates on popular stocks, cryptos, commodities, forex and indices
Trading strategies
Finetune your trades and identify what’s working and what isn’t with our trade analytics tool
Round the clock support 24/7
Contact us by phone, email or Twitter – 24 hours a day from 8am Saturday to 10pm Friday
Risks and benefits beginner traders should know
You’ll need to evaluate the risks versus the rewards for any trade before you open a position. Here, we’ve included some of the main risks and benefits to be found when trading with us:
| Risks | Benefits |
| Leverage – Turbo24, CFD and options trades are leveraged, meaning profits and losses can substantially outweigh your initial margin (not applicable to constant leverage and covered warrants), and you can incur losses rapidly | Leverage – because leveraged trades only require you to put up a fraction of the total position’s value, you can stretch your capital and magnify profits, if you make them |
| Short selling – can give higher risk of losses if a market moves unpredictably. If its price increases, losses could be unlimited, as there’s no limit to how high a market’s price can climb | Short selling – going short doubles your trading opportunities, because you can profit (or make a loss) from down trending markets as well as appreciating ones |
| Volatility – markets can be volatile, moving very quickly and unexpectedly in reaction to announcements, events, or trader behaviour | Volatility – a trader with a solid strategy and risk management measures in place can find opportunities to trade on volatility |
| Margin call – you need a certain amount of money in your account, called margin, to keep your positions open (except Turbo24). If your account balance doesn’t cover our margin requirements, we may close your positions for you | Margin call – you can use risk management tools such as stop orders and alerts to keep up with margin requirements and limit your potential losses |
FAQs
How do I get into trading?
The very best way to get into trading is to find a platform you trust, learn as much as you can about trading beforehand and then practise to get your technique right. Thereafter, all that remains to be done is to open a live account and get started.
How much do online brokers cost?
Online brokers generally charge a fee for the service they provide to their clients, based on the number of trades they make. With us, you can trade over 17,000 markets and pay zero commission.1
What are the risks of trading?
The main risks around trading involve the fact that your potential for profit and loss isn’t capped at the capital you’ve spent
CFD and options trades are leveraged, meaning you’ll put down a small deposit (called margin) to open a larger position. The profits and losses will be calculated on that full position size and can therefore substantially outweigh your margin amount.
You can go either long or short when trading asset’s market prices. Short selling is especially risky, as market prices can keep rising, theoretically speaking. When short-selling, your risk increases as the asset’s price increases. Luckily, there are ways you can manage your risk in trading – including setting stops and limit orders.
Can I practise trading?
With us, you can practise trading with your very own free demo account. Here, you can trade with £10,000 in virtual funds in a risk-free environment before doing it for real.
Where can I learn more about the markets to trade?
Our markets to trade page offers details on the 17,000+ international markets you can get exposure to.
Try these next
Discover our 17,000 markets to trade
Find out why our platforms come out on top
Learn exactly how to get started trading with us
1 All trades with a notional value of above €300 are commission-free.
2 Best multi-platform provider and best finance app as awarded at the ADVFN International Financial Awards 2022.
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