14
Aug, 2020
trading-tools-trading-essentials

Trading Essentials: The Most Common Software, Platforms and Tools Explained

trading-tools-trading-essentials

There’s an endless list of trading tools and resources at your fingertips, from stock screeners, to charting software, news streams, chat rooms and trading platforms. As a beginner trader, it can be overwhelming to determine what you absolutely need and what is nice-to-have for getting started. Subscription-based software will give you the most features; but depending on your trading style, you may be just fine with free options.

Before spending all of your trading capital on complex contraptions, begin with the basics. If you’re simply investing, all you need is a search engine and a broker — one tool for researching trades, and another to execute them. However, the more detailed your strategy, the more benefit you will find with paid resources.

Once you’ve gotten comfortable with the fundamentals of how to find, analyze, buy and sell stocks, you will have more clarity on what tools you need to supercharge your trading.

Here are the most common trading tools explained.


A brokerage is your door to the stock market, connecting you to various exchanges and executing transactions on your behalf.

Brokerage

What to look for

The best place to start when looking for a brokerage is your trading or investment strategy. After you’ve defined your trading goals, approach and technique, it’s time to identify a brokerage that aligns with your needs.

Access to charting tools: If you don’t have capital up-front to invest in trading software and platforms, you might consider a broker that offers free charting and analytics tools, like TD Ameritrade’s Thinkorswim. Thinkorswim also offers a free trading simulator so you can practice your trading strategy without risking real money.

A support team: Some brokerages offer investment consultants who analyze your trades and provide recommendations on how to organize your portfolio. If you’re a passive investor looking

to build a balanced portfolio long-term, you may find it helpful to have a brokerage partner who can provide ongoing support and ideas.

Mobile optimization: For the active trader, brokerages now offer mobile and desktop applications to keep you connected on-the-go. If you plan to trade via mobile, be sure to select a platform with minimum lag and maximum responsiveness.

Pay-to-play fees: Thanks to Robinhood, most brokers have removed commission fees for trading stocks. However, if you choose to trade futures or forex, commissions and exchange fees still remain. Depending on the volume of your trades, you can negotiate lower commission fees with your broker. Even with no commissions, you may be required to maintain a minimum account size; deposit an initial amount; or pay margin rates, data and exchange fees.

If you plan to day trade with a small account, consider an offshore broker due to the pattern day trader (PDT) rule that requires you to maintain a minimum $25,000 account size.

Before choosing a broker, do your research. Ask other traders what they use. Find the top five most popular brokerages and compare them. You can also open accounts with multiple brokers and test them out until you find the right fit.

Trading platform

Trading platforms, like brokerages, often allow you to trade the market directly. However, they also offer added bonuses by combining a number of tools, including scanners, watchlists, data and news streams in one platform.

What to look for

User friendliness: Learning how to trade is hard enough without the additional learning curve of a trading platform. Choose a platform that is intuitive, easy to use and offers hands-on customer service. You can always explore more features as you get comfortable with the essentials.

Low-latency and responsiveness: Many trading platforms execute trades through your broker. Manage your risk and minimize slippage by choosing a reliable platform with quick response times.

Notifications and alerts: If you’re managing many trades at once, desktop, email and mobile alerts can help you stay organized. Choose a platform that allows you to customize your charts so you receive alerts when indicators are triggered.

Simplicity: Platforms like Robinhood and Webull are simple to use and allow you to connect information from other sources.

Versatility: Choosing a platform that combines the most commonly used tools in one space can be efficient, convenient and cost effective. Thinkorswim, Interactive Brokers (a broker with their own charting platform), Tastyworks, TradingView, Sierra Chart (futures), and NinjaTrader are just a few all-in-one platforms to consider.

Charting software

Use charting software to analyze stock trends and make informed decisions about when to buy or sell stocks.

What to look for

Compatibility: While web-based platforms are easily accessible and can be used without downloading clunky software to your computer, desktop platforms have more complex software requirements that may be incompatible with some PC or mobile operating systems. Do your research to ensure compatibility between your preferred charting software and trading devices.

Speed and responsiveness: Your trading style will determine the requirements of your charting software. Time is of the essence for momentum traders who hold stocks for minutes or hours.

You’ll want a charting platform like TC2000 that enables real-time technical analysis on multiple time frames, with the flexibility of viewing several layouts at once.

News and analytics: A simple charting platform with access to earnings reports and news alerts may be more fitting for position traders who hold stocks for months to years and rely on fundamental analysis to make decisions.

Fundamental and technical analysis: Charting software that offers a combination of both fundamental and technical analysis is essential for swing traders holding stocks for days or months. TradingView is one option that provides technical indicators, along with a stock screener and watchlists. With the right broker, TradingView can also serve as a trading platform.

Stock screener

With thousands of stocks on the market, how do you choose the best trades? Stock screeners (or scanners) allow you to filter stocks for potential winners by setting specific parameters.

What to look for

Simplicity and ease of use: Most stock screeners follow the same simple setup; but not all are created equal. For a free, intuitive stock screener, you might consider Finviz or Yahoo! Finance. Some brokers and trading platforms also offer stock screeners as part of their service.

Complex screening criteria: Depending on your level of technical analysis, you may need access to more expansive screening criteria and indicators that go beyond price action, volume and volatility.

Watch lists: Some stock screeners , like Benzinga Pro, allow you to build personalized stock lists based on your criteria. This can be a helpful way to narrow your focus down to only a few key trades and save your favorite go-to stock picks over time.

Data feed

Data feeds provide real-time quotes and historical market data by the day, minute and tick. Make sure to check with your broker for complete details as access and possible fees vary for each broker.

What to look for

Newswire: Press releases, earnings and announcements can sway the momentum of a stock. Follow news streams to keep a pulse on real-world events that trigger trends in the market.

API integration: Stock news APIs can be integrated into your platform of choice, helping you stay up-to-speed with market news anytime, anywhere.

Additional Fees: Certain instruments, such as Futures, can have additional fees associated with data for charting. Data required to populate your favorite charting software for Futures is not the same as stocks. While some brokerages offer access to this data for free, you may be required to pay for this data via a provider, such as CQG or Rithmic.

Community forums

Chat rooms are a great way to stay in-the-know of trending trades. The more interest a stock generates, the more momentum it will have. Be careful to trust your own gut. Don’t jump into a trade on recommendation. Do your own analysis and research to make informed decisions that match your trading style.

What to look for

Free communities: Social media is a great place to start. Follow your favorite traders on Twitter and Facebook. StockTwits is a free chatroom that offers simple charts, trending stock alerts and real-time news feeds.

Continued education: Trading communities like Real Life Trading and Trappers Anonymous (Wallstreet Trapper) require a fee to join in exchange for online courses, stock reviews and strategy sessions.

Now that you’re familiar with the various tools and resources at your disposal, now it’s time to choose your adventure. Start by determining what you will trade, i.e. stocks, futures or forex. Then, choose the platform you like the most and are most comfortable with. If you’re unsure, request a demo and take it for a test drive. Be sure to pick a broker that supports your platform of choice, and vice versa. Pay attention to commissions and other fees for processing trades, depositing and withdrawing funds. Seek out top-notch customer support and check with other traders for credibility.

Remember; less is more. Don’t try to use all the tools and resources available. Take what you need and leave the rest. Keep it simple.

 

Get out there and crush it!

For real-time insight follow me on Twitter! @Mv3Trader

Comment below with your opinions and questions.

6
Aug, 2020
behind-great-trader-is-great-strategy

Behind Every Great Trader is a Great Trading Strategy

Trading can be fun and profitable. When done well, it may even change your life. But, before you become totally obsessed with rewriting your own Cinderella story, keep in mind, once the novelty has worn off you will encounter highs and lows. When you’re frustrated or bored, you may be tempted to take short cuts and skip important steps. How you navigate these moments will make the difference in your trading trajectory.

Think of trading as a business. The market doesn’t owe you anything; and you are responsible for your own success. You can grow your account by incredible margins by honoring your trading technique and continuously improving your skill set. Here’s where a solid strategy can focus your trading, accelerate the learning curve, and keep you making money reliably.

What is a trading strategy?

A trading strategy is your personal guide for how you’re making decisions on when to buy and sell in the market. It provides clarity on why you’re trading, your goals and rules of engagement.

Do you prefer to trade in the morning, mid-day or late afternoon? The time of day you trade will impact the types of trades you take and indicators you’ll use.

Will you swing trade or day trade? Holding stocks overnight greatly increases your overall risk. You need a plan for getting in and getting out.

Are you a pre-market or after-hours trader? Will you go long, short or both? Brokers have various rules and regulations that dictate when, how and how often you trade.

Will you trade cryptocurrencies, forex, futures or penny stocks? Each stock exchange varies in lliquidity, volatility, cost and risk.

The most important component of a trading strategy is your risk management plan. By clearly defining how you will manage your trades, you can easily spot points of weakness in your routine and make adjustments along the way to improve your risk-reward ratio.

Why a trading strategy?

Trades in high-volatility stocks require quick thinking on-the-go. You can lose money within minutes by getting stuck in a loop of analysis paralysis. A trading strategy can supercharge your execution by doing the hard work up-front. Maximize your risk and minimize losses by creating a consistent approach that reduces the amount of time it takes to get in and out of trades.

At some point along your journey, you may hit a plateau in your growth. By benchmarking your goals and keeping track of your progress, you’ll have a historical record of what is working well and where you can improve.

Having a clear formula for your trading also boosts your confidence so you can rely on your own gut instincts without following the crowd or falling victim to bad trading habits.

What goes into a trading strategy?

Consider these components when building your trading strategy:

Set your intentions: Take a moment to reflect on why you’re trading. Think about what attracts you to the stock market and what personal qualities make you a good candidate for success as a trader. Evaluate your lifestyle and how trading blends into your daily routine. Imagine the lifestyle you aspire to achieve and how trading can help you get there.

Objectives: Think about what you want to get out of trading, whether it’s personal development, financial stability, professional growth or sheer enjoyment.

Goals: Benchmark your progress by defining measurable milestones — what you will do and by when. Set short-term (a few months to a year), mid-term (2-5 years) and long-term (5+ years) goals. Your goals should be specific, time-bound, actionable and rewarding.

Begin with your current account size. How much will you grow your account and by what date? It may be helpful to set quarterly targets that coincide with market earnings seasons, in addition to a year-end goal.

Don’t forget to set goals for your learning. Define exactly what you want to learn and how you will get there. How many charts will you study each day? How many books will you read and by when?

Approach: Now that you have clearly defined goals, outline the actions you’ll take to achieve them. For each goal, explain how you will get there. For example, if your goal is to read 12 books by the end-of-year, start by identifying the best trading books to read. Then, purchase one book. You may decide to purchase 12 books right away! There is no right or wrong answer. The point is to be intentional about your goals and specific about how you will achieve them.

Learning: Make a plan for how you will continue to invest in your learning, whether it’s joining a bootcamp, finding a mentor or listening to your favorite podcasts.

Aspects directly related to your PnL

Trading style: Here, you’ll define your unique trading style. There are f our main styles to choose from:

  1. Scalping: quick trading happens within seconds and requires fast decision making.
  2. Day trading: momentum trading takes advantage of uptrends and down trends to make quick profits. You may hold a stock for a few minutes to a few hours.
  3. Swing trading: mid-term trading with positions over days or months. This type of trading requires patience since you’ll be holding over night.
  4. Position trading: long-term investments that move over the course of several years. Think: “Warren Buffet method.” This option foregoes short-term profit for long-term wealth.

You may choose one or more of these trading styles depending on your personality, risk tolerance and financial goals.

Risk management: The most important part of your strategy. Start by determining how much of your account you will risk per trade. It may be helpful to pick a range of stock prices you will target and a set number of shares you’ll execute with each trade. Identify how many trades you’ll take per day, per week, per month and per year. Then, detail how you will manage getting in and out of trades; your target risk-to-reward ratio; how much you’re willing to lose; and how you will use stop losses to stay accountable.

Trading rules: Create a set of rules or a checklist to guide your trades. Consistency in your trading routine can help you spot weaknesses early on; course correct; and create new, winning habits. Your rules may include: 1) use stop losses on every trade; 2) always buy (x) amount of shares; 3) never purchase shares below (x) price point; and 4) never trade on an empty stomach.

Your rules will be unique to your goals and trading style.

Trading routine: Now that your rules are defined, it’s time to create a routine around how you’ll execute your trades. Organize the day to accommodate your trading cycle. When will you do research and scan for stocks? At what times will you begin and end your trading? How often will you journal and review your trades?

Be disciplined!

Trading community: List the names of people you know who can serve as mentors and study partners. Identify close friends and allies who are supportive and can provide encouragement when you encounter challenges. How will you ask for help? Who will you reach out to for help? Sometimes, you just need one or two people you can safely vent to about your performance.

Evaluation: Detail how you’ll evaluate your trades. Set dates for how often you’ll revisit your goals; and make a plan for how you’ll adjust when you get off track.

Where to go from here?

Choose your medium. Journaling platforms like Tradervue allow you to track, analyze and share your progress with others. Google Docs or Sheets is a free and simple way to outline your trading plan.

The bottom-line

Your trading strategy offers clear guidelines for how you engage with the market. It will be unique to you and evolve over time as you learn and grow. Building a strategy takes time, but it’s an important first step toward winning results.

Get out there and crush it!

For real-time insight follow me on Twitter! @Mv3Trader

Comment below with your opinions and questions.

29
Jul, 2020

7 Ways to Accelerate Your Stock Market Trading Success

Anyone can join a broker, click a few buttons and start trading stocks. They might even make a few bucks here and there, but inevitably this approach to trading is not sustainable. If it were, we’d all be throwing rockstar parties on our private Hawaiian islands and hanging Leonardo Da Vinci diagrams in our bathrooms by now.

95% of all traders will never see their mega millionaire dreams come true. What sets the remaining 5% apart is their disciplined approach to trading as a life-long learning process.

Whether you’re a beginner just getting started with trading, or have hit a rut and are getting back to the basics, here are some helpful tips to set you up for success:

1. Do your homework

Like any skill, becoming an expert trader takes time and repetition. You may be tempted to get into explosive stocks on earnings news without doing your homework first, ignoring position size and failing to set stop losses; but this risky type of trading can lead to disaster. Becoming a winning trader is about increasing your probability of success by improving your win ratio and minimizing your losses.

Build your watchlists, set your targets and calculate your risk on every trade. Journal about your trades, paying special attention to how well you’re managing risk. Take note of any gaps in your learning and document bad trading habits that are costing you money.

The great news is there are tons of free tools and resources to help you. Most brokers offer free charting tools. Platforms like TradingView allow you to analyze and replay stocks in real-time.

2. Study, study, study

Start small and scale up by choosing 3-4 types of stocks and patterns you like to trade. Get to know the ins and outs of those trades by studying chart patterns every single day. Familiarize yourself with how market indexes, sectors and stocks influence each other; and then watch the market move.

Studying chart pattern flashcards can be a great way to build the muscle memory necessary to spot patterns on the fly and greatly reduce the amount of time it takes to get in and out of trades. Read books to supercharge your learning. Long-time swing trader Paul Singh has an extensive list of 21 books that taught him how to trade.

Podcasts like Chat with Traders is a great way to hear from experts and become familiar with proven trading strategies.

3. Pick a learning strategy and stick to it

The world of trading is vast, from cryptocurrencies to forex, scalping, earnings, biotechs, micro futures, technical analysis, longing and shorting; the list goes on and on. With so many different types of stocks and trading methodologies available, finding your own rhythm can feel overwhelming. This is where a strategy comes into play.

Your approach to trading will be personal, depending on your lifestyle and goals. Whether you’re seeking instant gratification and income with day trading, or building long-term wealth with an IRA, a trading strategy can help you navigate the noise. Your trading plan should include your goals and objectives; approach to risk management; personal trading rules; and a routine for getting in and out of trades. The key is to create consistency in your learning by following a specific methodology and sticking to it.

4. Form a study group

Trading can be much more fun and rewarding with others. Form a study group of 3-4 serious traders to exchange learnings and share best practices. Find a partner to help keep you accountable to your trading strategy.

Follow your favorite traders on Twitter, or join a trading community, like StockTwits, to stay in-the-know of trending stocks. Be cautious about getting trapped into stocks that are hyped up in trading chat rooms. Rely on your own research and gut instinct to make trading decisions.

5. Work hard, play harder

There are no shortcuts to becoming a successful trader. You may become an overnight sensation by luck of the draw; but you can just as easily blow up an account by not learning and practicing the fundamentals. You have to put in the hard work; and sometimes that means staying up late at night to build your watchlists; waking up early in the morning to watch premarket action; or spending your weekend charting patterns. The more prepared you are, the faster you’ll be able to make decisions, and the more confident you’ll be with managing your trades.

6. Practice makes perfect

Now that you’ve studied your charts, done your homework and built your trading

strategy, you’re ready to start trading. Keep practicing winning habits to increase your probability of success.

Sign up for a trading simulator. This will allow you to make mistakes and adjust your

strategy without the emotions that come along with having real money on the line. Remember, there is no rush to lose money. It’s better to be out of a stock and wishing you were in, than in a stock wishing you were out.

7. Drop outs don’t get the degree

No successful trader has won 100% of their trades. You will win some, and you will lose some. Stick with it! Take note of your wins and why they were successful. Journal your losses and how you can mitigate them. Manage your risk so you can stay in the game. Persevere through the downside until you see the upside. Never, ever give up.

The bottom line

If you want to make money as a trader, it’s going to take hard work and perseverance. As the stock market evolves with time, there are always new trends emerging. COVID-19 has brought with it a wave of volatility in the stock market that’s now being dubbed “The Kangaroo Market,” where stocks hop up and down between uptrends and downtrends over a period of time. You want to understand the fundamentals of how the market works so you can quickly adjust your trading strategy to take advantage of these new opportunities to make money.

With the right approach to learning, continuous study and consistent risk management, trading can be fun and profitable.

Get out there and crush it!

For real-time insight follow me on Twitter! @Mv3Trader

Comment below with your opinions and questions.