Trader Mike’s posts for newbie traders were some of the most helpful resources I found when I began trading. Therefore, I know the priceless value of high quality Trading 101 information.
This post will be the first of a comprehensive series focusing on trading basics for new traders. As all pro traders know, you cannot succeed without a solid foundation. So let’s start building …
Newbie day traders are a lot like people who want to finally write that screenplay they’ve been carrying around in their heads for years. At some point, every investor seems to take a stab at day trading. Like newbie screenwriters, 99% of new day traders have no idea how to get set up.
First, successful day trading is not possible without good technology. Therefore, a high-quality computer and broadband connection are key. When choosing a computer, monitor size is also very important. The larger the monitor, the more things you can monitor (simple, right?).
I hate PCs because Microsoft Windows sucks shit and attracts more viruses than a person who frequents the docks after-hours. So, I have a an iMac with a large monitor. (Yes, I am an Apple snob. But that’s what happens when you find something superior to the competition.) I also have a second monitor: a cheap RCA 26″ LCD flat-screen. Again, the more square inches of monitor you have, the larger your window to the exchanges.
As you can see in the picture, I also have a window seat and a zen desk. You need natural light and a view for sanity, and a minimalist desk to focus and avoid mental clutter. I will be writing more about this subject (sanity and a clean mental landscape) in future posts.
Once you have your hardware, you need software to make the magic happen. Unfortunately, all the minions on Wall St. (including myself when I worked there) are slaves to Windows-supported software. As a result, I use Parallels to run Windows on my iMac. I use Interactive Brokers as my broker because trading is a commodity, so cheap and quick execution is all I want. Then, I use QuoteTracker as my charting program because I love the technical analysis tools, the user-friendly nature, the quick customer service, and the absurdly cheap cost compared to the competition. And, yes, it has one of the most critical tools you will need to succeed: Volume Weighted Adjusted Price (VWAP). (Note: brokers and charting software are a matter of personal preference. Do your own due diligence and make the decision that works best for you.)
Another software program you must have is security. I use Zone Alarm, but there are plenty of good ones. Make sure you get a good product that costs money. If it’s free, so is the hacker’s entry to your computer and ultimately your trading account. Skimp on that extra appetizer at dinner, but not on the shield to your fortune.
To recap: you do not need a Bloomberg Terminal to successfully day trade. However, you will need something better than that machine you’ve owned since before the dot-com bubble, and it cannot be connected to the World Wide Web via dial-up.
That’s enough for now. Researching and purchasing the proper computer, monitors, broadband, and software will keep you busy for a while. Well, at least long enough for me to write the next post in the series where I will discuss how to scan for trading candidates, plan trades, and join the online day trading community.