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Master the basics and make your first trade

Ready to dive into the world of trading? Our step-by-step guide will walk you through everything you need to know, from predicting market trends to making your first trade with confidence.

Person at laptop Source: Adobe images
Person at laptop Source: Adobe images

This article was produced by IG's editorial team using AI-enhanced research 

  

Your five-step trading primer

Picture this: you slip $1000 into an envelope on your bedside table. 12 months later, you peel it out and there's still $1000 on paper, but in reality it now buys you less than when you tucked it away... thanks inflation.

Now imagine instead you’d put that cash to work by buying a slice of Apple, a barrel of oil or a handful of Bitcoin . Your money would’ve had room to grow (or shrink), all hinging on one thing: your ability to predict the next move.

That is the thrill and the power of financial trading.

Step 1: Grasp the core principle🔍

At its essence, financial trading is simply forecasting whether an asset’s price will rise or fall.

  • Get it right and you profit
  • Get it wrong and you take a loss

That’s why solid research, clear strategies and disciplined preparation are your most powerful allies.

Dive into trading basics

Step 2: Know what you can trade 📊 

Financial instruments come in four main “flavours” and each offers a different way to play price moves without owning the underlying asset:

Most traders aren't after the actual asset, they're all about buying low and selling high.

Step 3: Find the market that suits you 🌐

Markets are where buyers and sellers meet under rules that shape costs, speed and product choice. For new traders, two arenas stand out. For new traders, two key arenas stand out:

  1. Physical Exchanges (ASX)
    Auction-style venues for shares, ETFs and derivatives—offering clear price discovery, robust clearing and strict regulation.
  2. Electronic Networks (Nasdaq & FX platforms)
    Fully digital order books and OTC hubs—delivering millisecond execution and vast liquidity across stocks, indices and currencies.

By aligning your schedule, preferred instruments and risk profile with the right market venue, you can achieve smoother execution, better pricing and the regulatory safeguards necessary for confident trading.

Choose your trading style

Step 4: Balance risk & reward ⚖️

Idle cash slowly loses purchasing power to inflation, while trading can boost gains, it does so at the cost of potential losses. Smart traders strike the right balance by:

  • Defining your risk appetite with clear stop-loss levels and maximum drawdown limits
  • Sizing positions so a single trade can’t derail your overall portfolio
  • Targeting upside using risk-reward ratios (e.g. aiming to make $3 for every $1 risked)
  • Diversifying across instruments and markets to smooth out volatility

By planning how much you’re willing to lose versus what you aim to gain before each trade, you put yourself in control of both risk and reward.

Step 5: Choose your style 🎯

Financial trading comes in two broad flavours. Pick the one that matches your goals, schedule and risk tolerance:

  1. Investing: A long-term approach where you buy and hold assets for months or years (think retirement plans or ETFs). This approach may offer lower stress and fewer trades, along with potential tax benefits.

    However, it also means your capital is tied up for longer periods, gains may be slower and you're exposed to market downturns.
     
  2. Active trading: A short-term approach focusing on price movements, operating on a timeline of minutes to weeks. This strategy targets quick profits and seizes opportunities in volatile markets.

    While it can yield rapid returns, it also involves higher transaction costs, emotional strain and a greater risk of swift losses.

So what's next?

   

Important to know

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update. 

 

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