Learn Some Trading Skills To Improve Your Odds

Everyone wants a shortcut to learn day trading or any other kind of short term trading - someone to teach them the “secret sauce” that will take 10-20 years of experience and allow them to come up to speed in a few months. If you needed back surgury, would you go to the guy who got is associate degree online, or the guy who went to Harvard Medical School? Is that even a fair question?? Well, lucky for you trading is harder than brain surgery… well it can seem like it at least. In reality there are some easy things everyone can do to dramatically increase the chances of winning and decrease the learning curve - but do not expect a single, easy secret that will solve all the issues and make it easy. That is learned.The one huge key to the path of winning is simply to do things that will not cause you to lose money.

First off, you really need to treat  day trading as a profession. This means you need to treat it as an actual job, and your only way to make money and a paycheck is to be profitable. You will need a dedicated computer for trading only, with 2 monitors - a single monitor cannot show enough data. Older computers are fine for some things, but do not try to use an older computer that is underpowered for trading. I can assure you that computer will fall behind of the task. There is nothing worse than data that falls behind (lagging) as you cannot tell where price is actually at. Trading is super data intensive, make sure you have a computer with at least the following specs:

1. A quad core chip is ideal for this, but at a minimum you want a dual core chip. Each core on the chip can run a separate application, and this really lessens the chance the computer will stall out. Make sure the processor you choose has a decent amount of L2 cache also - this increases speed as well. If you dont know what this is, ask a local computer nerd, they will help you.

2. A minimum of 2gb of memory, the more the better, and the faster the better. If you want more than 4gb you will have to use a 64 bit operating system. Before you take this step, make sure whatever software you are using is fully compatible. You should be able to get by with 2-4gb fine. The faster the memory the better, but no need to really pay up for special memory.

3. An add on graphics card from Nvidia OR AMD. Make sure the card can handle at least 2 monitors. You do not need to spend big bucks on a gaming card, something in the range of 100-150 bucks should do the trick. Do not rely on the built in graphics on the motherboard, they are notoriously underpowered for any graphics intensive software. Trading is extremely graphics intensive - think about real time charting, indicators, order entry, bid ask in real time etc - it adds up.

You will only need this on your main computer that will be traded on and used for charting. You want 1 dedicated screen for order entry and 1 screen for charting. If you have older computers, those are fine to use for surfing the net, checking news, IM chat and other stuff. I would always keep your trading computer as uncluttered with add on applications as possible. You do not want it to crash or lock up during trading hours.

You need a dedicated work area that will serve as your trading area and workplace. It needs to be setup no different than a desk in a normal working environment - phone, lights, supplies, computer, printer etc. Remember to succeed, you really have to treat learning trading as a real business, not some kind of hobby. A hobby is fun, but unless you take it seriously you cannot realistically expect to become an expert. When you are concentrating on trading, do not let outside influences distract you. This means you need to really pay attention, do not chat with friends or watch tv shows and kind of “glance” at the market. If this behavior would not cut it in an office atmosphere it will not cut it for learning to trade either.

Once your office is setup, you really need to get serious about learning how the market works. The internet and free blogs are a great source of information, but you should not expect to learn everything online. Go to Amazon.com or Traders Galleria and search for the term “stock charts”. You will need a beginners book on charting, and additionally a more advanced book for when you are ready. To learn to trade you have to understand the mechanics of how price moves, which means you have to learn to be an expert at charting. This can and will take some amount of time, and is not easy. But as you get more proficient, it becomes much easier to add new ideas and concepts because you have the background framework to understand them.

One can expect that chart reading would take about a year to get really good, but in just a few months you can become proficient. Do not go down the path thinking “I can throw some money at this and someone will show me the secrets”. If you don’t have the background to understand, no amount of shortcuts will help you at all because you have no clue about how or why something might work or not work. One word of caution - do not attend any seminars until you have at least mastered basic charting - your money and time will be wasted. IF you think you know enough to tackle the advanced book, then it is probably time to attend a seminar to learn more. Again here there is no substitute for experience. You will need to watch the markets every day, even if its just for an hour or 2 (until you decide its a career move you can make).

Static charts are fine to go over when the market is closed, but you really need to watch it live as well. If your time is impacted because you have another full time job and cannot watch the market here is a secret: Get some screen capture video software (records your screen to video) and an external usb hard drive, probably 500gb will do. Open your charting program, log it on and set up a few real time charts on the screen before you go to work. Set up the recording software to save to the external usb hard drive. You can set up a keyboard macro to do this if you are not able to be home when the market opens each day. Set i to record at least an hour of video of the market open and any charts you have open. At night you can then replay this recording in real time (or even speed up time) and watch for chart patterns to learn from. If this idea does not sound appealing, there are brokerage firms or data vendors that offer market replay services.

One last thing I have not touched on yet - charting software. There are tons of them out there. I have my own preferences I like, but that hardly matters. You need to discover what you are comfortable with. Some programs are very complicated, some are simple to use, and yet others will let you code custom indicators and trading systems. From the start, I would suggest that most people go with simple. What is the point of tons of things that you have no idea how they work or what they do, or even if you would use them?? All that can do is to lead to confusion and add a bunch of things that are too complicated. Just make sure its a fully robust charting package - meaning all charts are live, you can put tick charts AND minute based charts up (not delayed data, live data) AND its not web based. Web based means the program is running in a browser, rather than running as a separate executable. For the most part, you always want a standalone, executable program - they are far faster and speed is money. If your trading platform is integrated with the charts that is totally fine, just make sure its not web based order entry either. It is too slow in general to be of any use. Web based applications and software are totally fine for buy and hold and longer term investing type trading. Trading is about time, even 5 seconds sometimes can cost you 50c per share if the market is moving fast. That is a real cost and can cause you to turn what would be a winning trade into a losing trade.

While this was not a tutorial on how to trade, I tried to touch on a few subjects often overlooked when people are trying to learn to trade. They overlook these because they either cost money (charting software, real time data, computers) or they think they take too much time so lets find a way to skip this or that part.

As in every business I know, there are some fixed, monthly costs that are a part of doing business. As a trader, data and charting costs are one of many. Often you can get them minimized or waived if you are active, but for probably the first year expect to pay for them as you are learning.