Even when compared to other types of trading, the tools you use as a day trader are extremely important if you hope to generate a profit on a regular basis. Thanks to the tight timeframes that day traders typically operate under, every second can literally be the difference between success and failure which means the platforms, software and tools you use are ultimately just as important as the strategies you employ and the stocks you pick to trade. What follows is a list of things that every day trader should have on hand in order to ensure as much success as possible.
The right hardware: While you don’t necessarily need the latest and greatest in computer hardware in order to run most types of trading software, that doesn’t mean you can get by with the bare minimum either. The better your computer, the faster and smoother this software will run and the less lag and fewer crashes you will experience. First and foremost, it is important that you have adequate RAM which will make it easier to multitask without issue as you will frequently have several different programs as well as your web browser open at the same time. Additionally, as your software needs increase, the base level of hardware required will do the same.
While these costs can easily add up dramatically if you have to purchase an entire new rig all at once, there will rarely be a need to do so. Rather, you can purchase parts overtime as needed, or when they are on sale, in a more piecemeal fashion most of the time. With this strategy, you can grow your hardware capabilities slowly as your need for the increased power manifests itself.
As you get more serious about day trading, you are also likely going to want to run at least 2 monitors at a time, if not more, which will allow you to dedicate one to trading and the other to research and tracking results. This will mean you will likely need a better video card with enough HDMI ports to account for the additional monitor inputs. Once this is done, depending on the quality of your system, and its available cooling power, you may need to look into liquid cooling solutions as well to ensure that things don’t overheat in the midst of an important trade.
Regardless, you are going to want to invest in the best internet speed available that your current system can reasonably take advantage of. The current high-end standard is 1 gigabyte MBPS which can be found in most major markets, though something around 100 MBPS is typically fast enough for most systems. In addition to having access to the speed, you are going to need to be sure that your router and modem can keep up as well or they will bottleneck your efficiency to a noticeable degree. When you contact your internet service provider, you will also want to consider reinstalling a landline as a type of emergency backup in case you find yourself unable to make a specific trade in any other fashion. While this might seem like overkill, the $10 per month will seem reasonable the first time you find yourself using it to place a major trade and you can think of it as a hardline to your broker in case the worst occurs.
Brokerage: Many traders stick with the first brokerage they come across without ever thinking twice about it. This can be a serious mistake, however, as an experienced trader has needs that are frequently quite different than those of a beginner. As such, once you get used to the day trading experience it will generally behoove you to reevaluate your choice of broker and determine if you ultimately made the right decision.
First thing in order to determine the best options for what you are looking for, the best place to start is on your favorite day trading website and see what the people who frequent their forums have to say. After you have determined a suitable list, the next thing you will want to do is determine the fees that they charge in exchange for the services that they offer. If you have already determined what trading platform or online tools that you prefer then it is important to make sure that the brokerages you are looking at support them as not all brokerages support all trading platforms. Otherwise you risk having to learn an entire new platform from scratch.
Additionally, it is very important that you choose a brokerage that is based in your home country or at least in a country that provides proper oversight when it comes to day trading. While many foreign brokerages might offer cheaper fees, putting your money into the hands of a company without direct oversight means that if that company suddenly disappears, your trading capital will go with it.
Finally, it is important to make a concentrated effort when it comes to determining the type of customer service the brokerages you are interested in provide. In order to determine this, you will want to do more than listen to reviews which can easily be skewed in one way or another, it is instead best to see for yourself. This means you are going to want to call the brokerage personally and see how long it takes for you to speak with a real person. While you won’t have to actually call your brokerage very often, when you do it is likely to be an emergency which means you are going to want the time it takes to find someone to talk to, to be as short as it possibly can be.
As a new customer, it is likely that you will receive a call back from someone associated with the brokerage who will try and sell you their service. If this call takes more than one business to occur then you will know that you are better off going somewhere else. After all, if the company treats new customers with that level of disdain, consider how much worse things will be once they already have your money and aren’t actively trying to make a good impression. Finally, assuming that their customer service is up to snuff, you will also want to email them with questions a few different times, just to see what their level of response is like. While this process may be a bit time consuming, once you find a brokerage that is on point, it will be more than worth the effort in the long run.
Online trading tools: There are plenty of different tools online that claim to help you maximize your trade efficiency so the ones you choose to use are ultimately up to you. First things first, you are going to want to find a financial calendar that works for you to ensure that you don’t miss any important dates when it comes to financial earnings reports. The program you choose should automatically populate with various important events as well as offer many different customizable dates and provide details on multiple different markets.
If you ever trade in the forex market then you will want to find a good currency convertor that shows any changes to specified currencies in real time. You will also want a currency convertor that shows the range a specific currency pair has operated in over a predetermined period of time.
Additionally, you will want to ensure that you have a calculator that makes it easy to determine pivot points along with Fibonacci numbers. These tools will make it easy for you to keep up to date on relevant trends and help you stay informed on relevant indicators that it is otherwise easy to miss if you aren’t careful. Along similar lines, you are going to want to track down a heat map that is reliable and that shows you the trades that are currently trending along with a volatility monitor to make it easy for you to keep tabs on the mood of the market.
There are so many popular platforms online these days that finding the right one can be something of a chore. The list collected here will simplify this search somewhat as it lists those that are currently at the top of the list. This doesn’t mean that you shouldn’t do your own research if you have a lot of specific requirements, it is only here to point you in the right direction.
OptionsHouse.com: This is a trading platform that just offers the basics which is perfect for those who just want to focus on trading. It offers a variety of easily modifiable tools, zero minimum account balance and a flat commission rate of $4.95 per trade.
InteractiveBrokers.com: For those who like all the frills possible, this site offers a wide range of perks including classes for new traders and a variety of trading aids. They do require a minimum trade balance of $10,000, however, though those under 25 aren’t held up to this level of scrutiny. They take $.005 of each traded share and include trading options for precious metals, forex, futures and more.
Ameritrade.com: This platform is considered one of the best on the market today and charges a flat rate fee of $9.99 for each trade. They feature a low required balance, several trading platforms based on what the client is looking for and access to especially curated research. They also offer an additional trading platform known as Trade Architect which is designed for those looking for something straightforward and simple.
Tradestation.com: This platform’s main claim to fame is its extremely fast order execution rate and charges anywhere from $5 to $10 depending on the volume of the trade. Their required minimum balance is $5,000 and a $99 monthly subscription fee which is waved if you hit a large enough trade volume each month. Their trade platform is also lauded for its robust feature set.