Setting up your trading toolkit: It’s worth taking the time to do, allow a few days or evenings, maybe 20-40 hours, depending on what you already have.
Trading is a very real business
Trading should be treated as a business, like any other; you seek out goods or services at good value and sell them on for a profit, repeating the process to make a return on your initial investment and earn an income from your successes.
It sounds obvious but the allure of online trading can mean people rush into it too quickly and lose money by gambling on the markets, often because they don’t have a clear view on how this particular business works and performance is measured.
Leveraging the power of modern computers
Fortunately the Internet has also given us greater accessibility to information, and encouraged fantastic software services – previously only available within big corporations, for expensive subscriptions fees – but now available for very little cost, or even for free, due to the larger audience they can attract online.
We strongly recommend that your trading toolkit is in place, well organised and understood before you trade with real money. This will help you to be time-efficient in your research, execution and record keeping – and make sure that your valuable time is accounted for, and ultimately, paid for when you start trading ‘live’.
Don’t pay to learn by losing real money.
There’s no hurry to start until you are sure you can trade and invest profitably. The following pages are a condensed result of years of research and testing from evolving our own trading toolkit. Now you can quickly build a similar trading setup to the way we work, trade profitably, and research ongoing strategy improvements to grow your investments methodically.
Your personal hedge fund
Think of trading as managing a mini hedge-fund for you and your family – you need to do it with care and confidence and be accountable to yourself and your decisions if you are to grow your account consistently.
The right tools for the job
- You, Your Time & Your Money
Your time is valuable, your money hard earned, and your education & experience is equally valuable. Make sure that you understand how much your time is worth (the opportunity cost of your time from whatever else you can earn money from), how much time and money will you need to put into trading and active investment management, what target returns are realistic, and can all this effort justify your input.
- Computer Setup
PC/Mac/Linux/Servers – How to make the most of the computer you already have and what to consider if you decide to invest in a new one. We like to have the best tools for the job so that we can concentrate on the tasks in hand. Whatever your preference, there’s a way to trade reliably from anywhere with an internet connection at any time with the right tools.
- Charting Software
If you just use the charting software that your broker provides you may be missing out on much smarter ways of viewing the markets. We do like MetaTrader but it is good to know a bit about the alternatives. Think of your charting software setup as your workbench, your online desktop and office for analysing the markets – keep it clear and organised and your mind will then be able to focus on important decisions, without distraction.
- Trade Log Analysis
We used to create lovely spreadsheets in Excel to record our trades but nowadays there are fantastic services online that connect to your MetaTrader account. These tools give you much more insight into your account performance and help you measure, analyse and improve your edge much more effectively.
- Education & Resources
There’s an almost infinite amount of information online you could read on trading and investing. We highlight some of the best resources to look through and get up to speed quickly on what both the winners and losers are doing.
There are a few classic books that are well worth reading if you want to be thoroughly conversant in trading and investing. It is actually not an endless subject as some authors would have you believe, so pass some time with a few select books and you’ll soon be conversant with all the right terms for discussions with fellow professional traders and investors.
It’s all very well knowing everything about how you ‘can’ trade but there’s many more ways to lose money than there are to make it. We are fans of high-probability strategies that give us an edge great enough to compensate for the odd human error or market shock, with flexibility to adapt our trades as they evolve. It’s an old adage, but a true one, you really do need to cut your losses sooner, let you winning trades run and take regular profits off the table.
- Support & Discussion
Trading can be a rather solitary occupation so we prefer to work as a community of traders online, sharing ideas and improvements to strategies and collectively keeping an eye on the market for great setups and to collectively watch out for market-moving events and trade their effects.
- Broker Accounts
We’ve read many of the online reviews and used various different brokers over the years, our short-list here are brokers that we have used, or do use. We have chosen them because they offer a good platform, service, spreads, liquidity, trade execution and have a vested interest in you being a long-term successful trader with their brokerage because they profit from the ongoing trade spreads as you continue to trade up a larger account.
- Self Development
You’ll find it fascinating how much business and trading will teach you about yourself, your tendencies, pre-conditioned assumptions, strengths and weaknesses. We are not automatons, and our emotions and psychology can alter our perception and judgement in ways that we may not have experienced before. So, we need to understand more about the laws of large numbers, probability, fear of losing, greed from winning, and how to keep our fallible human minds from eroding our statically strategic edge.
You owe it to yourself
Take your time and it will cost you very little to prepare yourself and your setup methodically to make sure you are one of the 25% of traders and investors that continue trading for years with an edge that yields long-term growth of your account.
We believe getting this toolkit in place is very important, and will help you to be a well-organised trader and investor, able to trade stress-free because you’ll have a much clearer insight into the markets and your trading.
You will be at a much greater advantage from being in control of your money and have a better understanding of how trading the markets for profit actually works – and how to have a long-term, and most likely life-long, edge over the average person.
Because once you know all this, you’ll see how much of a disadvantage you were at before.