How to Setup a Profitable Trading Business
In my opinion trading is the most exciting and best way to earn a living in the world. With just a small amount of equipment and space you can do it from anywhere on the planet.
When you think about it, it is one of the least expensive businesses to set up – no rent, staff advertising etc… Plus no pain in the ass bosses, backstabbing co-workers or the usual office politics B.S.!
What’s even more amazing is that soon wireless technology will be convenient and affordable enough so that you will be able to sit with your laptop at a Cafe in Paris or on a beach in Tahiti and trade. To me it doesn’t get any better than that!
Anyway, I want to talk about the various things that you do need to set up your trading business.
*Hardware: This would consist of a good computer that has plenty of memory (at least 512MB) and high quality processing power of a Pentium 4 or AMD Athlon chip. Having the latest and greatest mega-computer is nice, but not necessary and will not make you one bit more profitable. You are still the most important part of this equation! The great thing nowadays is that you can buy an absolutely amazing computer for under a grand.
NOTE: If you are using two or monitors you should have at least 1 GIG of ram as these setups have huge memory appetites!
*UPS: This stands for Uninterrupted Power Supply and is a device that will keep your computer running in the advent of a power blackout. This is vital if you trade all day because, the worst thing is to be in a losing trade and the power goes out and you then have to spend 5 panic filled minutes rebooting your system and wondering what is happening.
*Trading Software: This would be your charting software that gives you a wide range of choices for displaying graphs, quotes and data in real-time. Just a few to name are… Omega Trade Station, Meta-Stock, E-Signal or Omni-Trader. These programs are not cheap, but if you plan to make a full time living from this, then they will be essential.
If however, you trade part-time and have a full-time job then you can get by with very simple charting software which is only a few hundred dollars
*Real-time data: The ability to have access to real-time intra-day charts is extremely important. Live quotes are not good enough because they don’t tell you where the stock has been. You need to be able to visually see how the stock is reacting at your entry levels. Also charts will allow you to see where all the support and resistance levels are. This is important to know because these levels can give you profit targets as well as to know where your stock may run out of steam.
Some companies that offer real-time data are E-Signal, Omega Trade Station Pro, Realtick, Quote.Com, Ensign etc… Modems/DSL/Cable: These are obviously the means to which you can receive your data. If available I would definitely get DSL as my first choice and cable second.
In my experience I have had temporary outages of cable service from time to time, versus the phone, which never seems to go out. Another advantage for DSL/Cable is that have a huge speed advantage over a dial-up-modem. Quick and efficient as well as uninterrupted access to your data is extremely important.
If you are really serious about trading then high speed access is essential!
*Routine Maintenance: It is vital for you to perform regular maintenance on your computer doing things like scandisk and defrag. This will keep your computer running optimally and help it reboot really fast if your computer crashes during a trade. You can lose a fortune each extra minute it takes to restart your machine!
One last I should mention is that I see way too many traders trying to skimp on buying the right trading equipment. As they say you get what you pay for. Also consider that 95% of traders lose money and you can bet that the 5% who do win use the quality equipment.
This does not mean you have to run out and spend a fortune, rather just to make sure you do spend money on the right places. Please note that regardless of whether you are a swing trader, day trader or position trader in stocks, bonds, forex, futures or options this information will apply.