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How to Test Your Trading Skills without Spending a Dime

“I read this article a while back, that said Microsoft employs more millionaire secretaries than any other company in the world. They took stock options over Christmas bonuses – it was a good move. I remember there was a photo of a groundskeeper standing next to his Ferrari, blew my mind. You see things like…

Practice makes Perfect …

“I read this article a while back, that said Microsoft employs more millionaire secretaries than any other company in the world. They took stock options over Christmas bonuses – it was a good move. I remember there was a photo of a groundskeeper standing next to his Ferrari, blew my mind. You see things like that and it plants seeds, makes you think anything is possible, even easy.

Then you turn on the TV, and there’s just more of it. The $87-million lottery winner, that internet stock that shot through the roof, you could have made millions if you had just gotten in early, and that’s exactly what I wanted to do – get in.”

-Giovanni Ribisi – Boiler Room (2000)

Do you fancy yourself as a superstar trader?

That speech from the movie Boiler Room should leave you itching to make your fortune in the market. If you think you have what it takes to compete on the global stage for your piece of the liquidity pie, then why not give it a try?

Here’s everything you need to know about testing your trading skills – without spending a dime.

Investing in the global financial markets can cost you your shirt if you aren’t careful. You need a mentor, a strategy, and a sizable starting account if you want to take a chance at the big time. However, few people are willing to take the risk of putting their money where their mouth is when it comes to trading.

The thought of blowing up an account and losing all of your money may terrify most first-time traders.

However, what if there was a way to hone your trading and investing skills, without taking the financial risk?

How to find a Mentor – For Free

There are hundreds of online investment schools that teach people how to trade the markets. Each of them offering a strategy that they adapt to specific markets.

Some teachers provide strategies on forex, while others focus on equities or bonds. You need to decide which niche suits your investment style and financial interests.

When checking these mentors, it may shock you to discover that they charge thousands of dollars to teach you’re their investment strategy.

If you don’t have that kind of money available for your education, then there are plenty of free options available to give you an idea of how to trade a strategy.

YouTube is an outstanding resource for anyone that’s learning how to invest and trade. The site comes packed with thousands of videos from various traders that share their strategy.

While none of them will give you a full breakdown of their strategy, there is plenty of useful information available if you look around the channels.

Forex Trading

Forex Trading

Read: What is Forex Trading? Complete Beginner’s Guide

Sign Up with A Broker

After you obtain the knowledge you need to invest and trade the markets, you’ll need to start putting it into action.

There are hundreds of online brokers that allow investors to sign up for a trading account on their platform. If you want to test your investing skills, then you’ll need to open an account with one of them to gain access to the market.

After opening your account, you have the option to download a trading platform. The trading platform is a piece of software that allows you to access any market you like. Forex, options, equities, commodities – they are all there at your fingertips.

Brokers offer online platforms accessible from your smartphone. This technology allows you to trade and test your investment skills. Practice on the platform while you’re on your lunch break or during your commute home from your day job.

It may take time to understand the nuances the platform, how to place a trade in real-time, and when to take profits. As with anything you try to master in life, you’ll need to find a mentor to help you fast-track your progress in learning how to invest in the global financial markets.

How Do Brokers Pick Stocks

How Do Brokers Pick Stocks

Read: How Do Brokers Know Which Stocks to Invest In?

Brokers and Platforms

There are various software platforms available online from brokers. Some brokers offer in-house, custom-built software to their clients, while others may rely on generic platforms, such as MetaTrader4.

When selecting your broker, you may have to choose an offshore-facing company. Many U.S-based brokers won’t open accounts for American clients that don’t have a minimum starting deposit of $25,000. This requirement doesn’t help you if you don’t have any money to put into the markets right now. The reason why U.S companies require such a large deposit is due to something called the “Professional Day Trader Rule” or PDT rule for short.

After the 2008 financial crisis that nearly crippled international markets, the U.S government introduced this legislation. This intent was to protect U.S consumers and prevent them from speculating on the markets with money they could not afford to lose.

Unfortunately, the PDT rule means that you’ll have to go to an offshore broker to open a trading account so you can gain access to their platform. Offshore brokers do not have to comply with the PDT rule, even if American citizens sign up for an account.

Free Trading Platforms Compared

Free Trading Platforms Compared

Read: Free Trading Platforms Compared: MetaTrader 4 vs MetaTrader 5 vs cTrader

Playing with Fake Money

After signing up with an offshore broker, you don’t have to send them any real money to access their platform. Most offshore brokers are okay with you opening a “demo account,” in the hope that you decide to choose them when it comes time to invest with real money.

To whet your appetite, the broker allows you to open a trading account using fake or “paper money.” Therefore, you get the opportunity to take trades using leverage, and fake money, to test your skills before you place a real deposit in a trading account.

Paper trading is an excellent way to test your mettle against the market and find out if your strategy works. As a bonus, you don’t take any real financial risk. So, if you blow up your account, then you don’t have to worry about losing a dime to the market.

The broker places no pressure on you to make a real deposit. You can keep playing around with your demo account until you feel confident to transition to a “live account.” Some brokers may try to entice you to start trading with real money by offering you a “bonus” for depositing hard currency into their account. However, in most cases, the broker limits these bonuses to a few hundred dollars at most.

Trading Software Compared

Trading Software Compared

Read: Trading Software Compared: TradingView vs. Sierra Chart

Testing Your Skills – Blow Up Your Account

When playing around with your demo account, it’s a good idea to push the limits of your strategy, and see what it takes to blow-up your account. By blowing up an account, we mean taking as much risk as possible to see how long it takes you to lose all your money. If you learn how not to trade with your paper account, then there’s less risk that you’ll fail when starting live.

Experiment with leverage, and try investing in various markets to get a feel for how the asset classes move every day. For instance, in the forex market, investors trade more than $5.5-trillion worth of currency every day – that’s a staggering amount of money. If you want to get a piece of the pie, then you’ll need to learn what not to do, before you go out and take a position.

Understand Risk Management

So, you’ve been playing around with your strategy, and you may have blown up an account or two, or made a killing. Either way, it’s time to learn some risk management. Risk management is the backbone of investing and trading. Without the correct risk management in your trading, you are doomed to fail – it’s only a matter of time.

Risk management describes how much money you trade with, relative to your account size. You had plenty of fun trying out the trading platform and messing around with fake money, but now it’s time to get serious. Using massive leverage, or trading to the short side exposes you to the risk of losing more money that is in your account.

As a result, if the market turns on you in a trade, and you don’t have the correct risk management strategy in place, you could end up losing more than your original investment. The broker will come after you to collect on the additional funds you lost using leverage.

It’s for this reason that risk management is so important. Risk management teaches you how much money you can afford to risk on a single trade. If you take a position with all of your investment funds in one trade, what if it goes wrong? No trader is right all the time, and even the best traders and investors only have a 70-percent accuracy at winning.

Therefore, you need to understand how many losing trades you can make before your account blows up, and you have no more funds left to trade. By limiting your risk in each trade, you live to trade another day if the market goes sour on you.

How to Start Investing

How to Start Investing

Read: How to Start Investing (Even With Small Amounts): Complete Guide

When is it Time to Invest Real Money in the market?

You’ll know you are ready to trade when you are consistently profitable. What does it mean to be consistently profitable? If your accuracy is over the 60-percent range, meaning that you win more than you lose, then it’s only a matter of time before you consistently make profits.

However, many traders and investors struggle with transitioning from a paper trading account to a live account. You may find that when you finally do go live, you start experiencing emotions, especially when you lose. As a result of your emotional response, you may begin to alter your strategy.

Your strategy is the most crucial part of your trading. If you start to deviate from it and break your rules, then you will struggle to be consistent. Traders and investors need a consistent approach to the market and a solid trading plan. If you don’t have either of these in place, then you are not investing, you are gambling.

As we know from countless movies and TV shows, the house always wins when it comes to gambling. If you take a look at the top poker players in the world, they have a consistent approach to their gambling. They have a set of rules that they don’t break, and if they find themselves breaking the rules, then they walk away from the table.

It’s the same with investing and trading. You need a consistent trading plan and a set of rules that you follow every day, regardless of your emotional response to the markets. When you break your rules, it’s almost sure that the market will take your money. Every trader and investor struggles with coping with a loss, and no-one likes to see their money slip out of their account.

However, it’s how you deal with the losses, as well as the wind that makes you a good investor and trader. If you struggle with managing your emotions, join a trading chatroom. The chatroom is a great place to meet other traders and discuss these sorts of topics with them. The members of the chat all look out for one another. They are there for you when you are struggling to deal with your emotions and remain profitable.

Some Brokers to Take a Look At

Beware of the “B-Book”

Eventually, you’ll reach a place where you want to give live trading a chance. Using your own money in the markets is a haphazard practice, especially if you are a first-time investor. It’s for this reason that you should avoid opening a live account with an offshore broker unless you know what you are doing.

Brokers monitor all of their traders, even when they are playing around in the demo. When you decide to go live, they have a complete view of your trading history. The admins on the broker’s platforms have the training to discern a newbie that knows what they are doing, from someone that is a first-timer, and likely to blow up their live account.

Therefore, the broker classifies these traders into two different “books.” The “A-book” is for new traders that they think will do well and make money from their trading. The “B-Book” is for new clients that they believe will blow up their account.

Instead of providing the B-Book clients with access to the real market, these brokers front them the market, and trade against them, in the hope that they will lose. As more than 80-percent of newbies lose their account within 6-weeks of starting, the broker pockets this cash.

Wrapping Up – Key Takeaways

Before you get started investing, it’s vital that you find a mentor. Register with an offshore online broker, and start playing around with their software.

Learn how to execute a strategy and how to become consistent with your execution. When you’re ready to go live, be careful which offshore broker you use.

Get recommendations from other investors before you commit your funds to a live account.


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Broker news

Donald Trump blasts ‘fools’ who oppose good Russian ties

US President-elect Donald Trump has posted a progression of tweets censuring the individuals who contradict great relations with Russia as “‘dumb’ individuals, or nitwits”.

Mr Trump promised to work with Russia “to comprehend a portion of the numerous… squeezing issues and issues of the WORLD!”

His remarks came after an insight report said Russia’s leader had attempted to help a Trump race triumph.

Mr Trump said Democrats were to be faulted for “gross carelessness” in permitting their servers to be hacked.

In a progression of tweets on Saturday, Mr Trump said that having a decent association with Russia was “no terrible thing” and that “lone “idiotic” individuals, or simpletons, would believe that it is awful!”

He included that Russia would regard the US increasingly when he was president

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Broker news

Bulls and Bears Took on More Currency Exposure in Week Through January

he most striking improvement among theoretical situating toward the finish of a year ago and the primary session of 2017 is not that modification were little. There was just a single gross theoretical position modification of more than 10k contracts. With sterling apparently not able to maintain even humble upticks, the bears added 13.1k contracts to the gross short position, lifting it to 120.2k contracts.

Or maybe, it is eminent that examiners for the most part added to positions, long and short, as opposed to close positions at the very end of the year. Examiners added to net long outside cash prospects positions, aside from in the Japanese yen and Swiss franc where 2.6k and 2.5k contracts were exchanged separately. Examiners likewise added to gross short positions. Here there was just a single exemption, the Japanese yen. Despite the fact that the dollar shut comprehensively higher in front of the end of the week, every one of the monetary forms we track here, spare the Mexican peso, picked up against the dollar in the three sessions since the finish of the CFTC reporting period.

Every once in a while it is helpful to review why many market members take a gander at the theoretical situating in the cash fates advertise. It is not that the outside trade is essentially a prospects showcase. It is principally an over-the-counter market in which every day turnover midpoints in abundance of $5 trillion a day.

Trade exchanged monetary forms and alternatives represented around 3% of the normal day by day turnover as indicated by the BIS study. Be that as it may, past reviews have discovered some contemporaneous connection between’s market heading and net position changes. We think it additionally offers knowledge into a specific market section of pattern supporters and energy brokers. It is not by any means the only device, yet one of a few data sources.

One ramifications of this is albeit theoretical positions in the money fates market are moderately extensive, it is still little contrasted and the money showcase. Along these lines, it is difficult to see the genuine essentialness of a record vast position, as though there is some market top. At some point, examiners are not driving the costs, possibly there is another fragment, national banks, enterprises, as well as genuine cash that is more essential at any given minute.

We invest some energy taking a gander at gross positions instead of just net theoretical positions, which is the more customary approach. We think a more granular look is frequently fundamental. There is a distinction between short-covering, for instance, and new purchasing, however it appears to be identical in the net. Additionally, the gross position is the place the introduction is not the net position. A net position of zero does not mean the market is nonpartisan. Net positions could be huge, which implies a short press or a negative stun could in any case troublesome. The positions that must be balanced are captured in the gross measure not the net figure.

We find numerous customers are likewise keen on theoretical situating in the US Treasuries and oil. The net and gross short theoretical Treasury position has swelled to new records. The bears added 23.8k contracts to the as of now record net short position, lifting it to 616.2k contracts. The bulls attempted to pick a base and added about 20k contracts to the gross long position, which now remains at 471.2k contracts. These modification prompted to a 3.8k contract increment in the net short position to 344.9k contracts.

The bulls delayed in the oil prospects toward the finish of 2016. They exchanged short of what one thousand contracts, leaving 608.1k gross in length contracts. The bears added 4.1k contracts to the gross short position, giving them 168k. These conformities trimmed the net long position by very nearly 5k contracts to 440.1k.

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Broker news

3 ways to profit in the ‘year of the dollar’

In December, the Federal Reserve raised loan fees for the second time since the Great Recession and included the desire of a 2017 financing cost climb to its gauge. Furthermore, only a couple days prior, the abundantly anticipated minutes from the most recent Fed meeting demonstrated the most hawkish tone from the national bank in two years.

In the meantime, Europe has been dove into political turmoil after a year ago’s Brexit vote and the later abdication of Italy’s leader. Somewhere else, the Bank of Japan proceeds down the way of negative rates and forceful security purchasing.

Put it all together, and it isn’t astounding that the U.S. Dollar Index is up against 14-year highs.

Speculators may have missed so much discussion on account of babble about the Dow Jones Industrial Average at the end of the day almost hitting 20,000. Be that as it may, paying little respect to your assignment to stocks or your venture skyline, this sort of huge picture incline in the dollar implies right now is an ideal opportunity to position your portfolio to benefit and, maybe most critical, to keep away from a portion of the pitfalls that can originate from a solid local cash.

Here are a couple ideas dollar exchanges ought to consider:

Residential plays over multinationals

There’s a considerable measure of seek after shopper stocks in 2017 on account of an enhancing work market and any desires for a jolt under a GOP-controlled Congress and President Donald Trump. In any case, remember that not all retailers are made equivalent especially those with abroad operations that are adversely affected by the wide dissimilarity in monetary standards at this moment.

For example, retailer Wal-Mart Stores Inc.(WMT) said troublesome money trade rates shaved very nearly 2.5% off profit for each partake in the second quarter of 2016. On the other hand consider that in the monetary final quarter of 2016, athletic attire goliath Nike Inc.(NKE) saw its income development cut down the middle because of forex weights, from 12% year-over-year in consistent cash measures to only 6% including real money changes.

To take advantage of the “reflation” exchange that numerous financial specialists are counts on in 2017, you need to represent the headwinds that a solid dollar are making for multinationals at this moment. The most ideal approach to do that is to consider customer plays that do by far most of their business here in the U.S. – for example, Foot Locker Inc.(FL), which has been an uncommon splendid spot in retail throughout the most recent couple of years.

Supported money ETFs

Obviously, in the event that you need a steady portfolio, you can’t just purchase just local centered values. Geographic expansion is similarly as imperative as enhancement crosswise over parts and resource classes. Such a large number of financial specialists keep on holding worldwide plays in light of a legitimate concern for a balanced portfolio, regardless of the possibility that it implies battling a daunting struggle as a result of a solid dollar.

The uplifting news, notwithstanding, is that you don’t need to leave yourself to torment through a solid dollar and a powerless euro when you put resources into Europe. Nor do you need to stress over the yen-dollar conversion standard when you put resources into Japan. That is on account of there’s an entire group of cash supported ETFs to permit financial specialists to put their cash in outside business sectors yet keep away from forex issues.

Consider that Japan’s Nikkei 225 file is up around 25% from its July 2016 lows. The WisdomTree Japan Hedged Equity Fund(DXJ) is up 35% in a similar period on account of assurance from forex issues and a somewhat better-performing rundown of stocks – while the non-supported iShares MSCI Japan ETF(EWJ) is up only 10% in a similar period because of battling a difficult task against a solid dollar.

In the event that you need to differentiate your portfolio comprehensively, you ought to consider supported assets that incorporate the Japan-centered DXJ, the WisdomTree Europe Hedged Equity Fund(HEDJ) to play Europe or the iShares money Hedged MSCI EAFE ETF (HEFA) for developing markets.

Dollar list ETF

In the event that you are searching for an immediate play on a rising dollar as opposed to putting resources into stocks, figuring out how to exchange remote trade can appear like an overwhelming undertaking. Gratefully, there’s the PowerShares DB US Dollar Index Bullish Fund(UUP).

This ETF is attached to the U.S. Dollar Index, which is a measure of the greenback against a wicker container of other worldwide monetary standards including the yen and the euro. It’s a straight money play, however that doesn’t make it straightforward or hazard free. In the event that the dollar debilitates, you’ll lose cash similarly as though you’re putting resources into a stock that has fallen on difficult circumstances. Furthermore, obviously, PowerShares takes a little cut of your speculations en route that indicates 0.8% yearly, or $80 a year on each $10,000 contributed.

Still, in the event that you need to conjecture on the dollar or support against a solid U.S. cash keeping down other worldwide ventures on your rundown, it’s maybe the least demanding approach to do as such for generally financial specialists.

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