How I Started Trading: Part II/Choosing the Right Tools

How I Started Trading: Part II

Choosing the Right Tools

Another thing I found out is to be successful in trading, you must have the right tools.  Finding the right tools can be confusing at times and some may be very expensive.  However, if you have followed my advice from the previous blog, you have chosen a “guru” to follow and learn from.  I would absolutely take their advice when it comes to the tools you will need when trading.  If they have a DVD there is usually a chapter on this subject or they will have a section on their web site dedicated to the tools they use.  But, for the sake of this blog, I will share what tooIs I use and how I use them.

First, I will talk about brokers.  I think choosing the right broker can make or break you when you first start making actual trades.  The first accounts I opened were a USAA, a TDAmeritrade and an E-Trade account.  I opened the latter of these because they offered free trading platforms and free initial trades.  USAA does not have a platform.  I opened it because I am a USAA member.  E-Trade’s platform is only free for the first few months unless you make so many trades within a quarter.  Then you get it for free. Also, you have 60 days to actually fund the account while still having access to the platform.  I opened up multiple accounts so that I could avoid the PDT rule. TD Ameritrade had a paper trading option but unfortunately I never took advantage of it.  For a newbie it was difficult keeping up with 3 accounts so I found myself trying to come up with something better.  Also, I needed to come up with the $600 to keep my E-Trade account open but by then I had lost most of the $1500I started with.

When I started following Tim Sykes, I was directed to Suretrader since I had such a small account.  I was warned that they were experiencing growing pains and that the customer service was terrible.  I also had fears because they were outside of the US.  But, they didn’t enforce the PDT rule since they were off shore and they catered to (preyed on) traders like me.  I only sent $500, which was about all I had left, at first and eventually got comfortable with them.  I remember they gave me a couple hundred dollars rebate since I signed up through Tim so I ended up with a little over $800 to start with.  They have been my exclusive broker this year.  Their customer service has been a lot better.  I think they need to reduce some of their fees though.  I use TOS platform to watch my charts and watchlists during the day because it offered everything I needed for free and I was very comfortable with how it worked.  I do plan on using my TD Ameritrade account to do some swing trades this coming year.

Next I’ll talk about what I use as my primary screener. Finviz is by far the best screener that I have found. And better yet, it’s free.  With Finviz you not only get the scans but you also get a corresponding chart and info like the short float and volume to go with each ticker. This cuts down tremendously on the amount of time I spend vetting tickers for my watchlist. Before I started using Finviz I would use my scanner to find tickers and then I would have to put each ticker into my charts at TOS to get a look at the chart. With Finviz my scans are now completed in about 1/2 the time because I only vet the ones that pass my Finviz daily chart test.  Once I have my watchlist narrowed down to about 10 to 12 tickers, then I use TOS Trade tab that has 3 multiple timeframe charts so that I can see how the ticker lines up over multiple timeframes and pick the best 3 or 4.  I’ll have more on how I do my scans in a later post.

I also use Equityfeed. This is a paid subscription service but I really can’t make it without it.  This is a very powerful tool and I haven't begun to familiarize myself with all it offers. I needed a tool that would give me real time information 1st thing in the morning and real-time intra-day scanning to help me identify any setups that may come up later in the day.  Since I am a teacher and can’t watch my screen all day this tool is invaluable to me.  I can usually pay for the subscription with just 1 trade this tool helps me find.  I will explain in more detail how I use this tool in my Screener and Scan blog.

Before I started using Equityfeed I used Stock Horizon to help with intraday stock picks but they would send short and long alerts and most of the time it was done by 10 to 10:30.  I would catch one or two here and there but I found myself not trading my set-ups and I had a nice loss the last time I used it.  I’m sticking with Equityfeed because of all the options it will give me down the road as I perfect my strategy and I like finding stocks on my own for potential trades. I am not bashing Stock Horizon as it is a good service for those who do not have time to scan for themselves.

As far as chatrooms go, InvestorsUnderground is by far the best.  I have been in 4 to date and they do not compare to the information and support you get in IU chat.  Above all, they are always striving to get better and provide more.  I am only in chat during my summer break due to my work schedule but I follow what I can on Twitter.  I would recommend that you watch the Textbook Trading DVD before you start engaging in the chat though because you definitely need to know what is going on beforehand.  Nate personally answers all emails and Tweets and gives honest spot on advice.  If you want to learn from the best, Nate and his community are the best. The video lessons, webinars, and DVD’s are unmatched.

As far as videos I would only recommend Textbook Trading and Tandem Trader.  I believe IU will release a swing trading DVD by Michele aka Offshore Hunter, soon and I’m sure that one will be just as good.  I think all of the reviews on Investimonials speak for themselves.

One tool that I plan on re-implementing is Profit.ly.  I will start verifying my trades again and using their tools to track my progress and analyze my trades. As you can see I have the widget up already on my page with my pathetic newbie trades from earlier this year.  All are pre-IU and Textbook Trading.

Lastly, I will share the hardware that I use.  I wanted a mobile station so that I could move throughout the house because sometimes I like looking out over the deck in my backyard, sometimes I like sitting on my deck, sometimes I like looking out of the front window, and sometimes I like sitting on my front porch.  I wanted to be able to trade anywhere.  So I started out finding a desk that was light, sturdy, and had wheels.  I then started looking at different personal trading setups and saw that most had 3 screens so I started with three screens plus my laptop.  I quickly found that being a rookie it was too much to watch 3 screens while you are learning so I condensed it to only 2 screens and my laptop.  I can pack my station up in a matter of minutes and take it anywhere I travel.  Unpacking and setup is just as quick.  I have an ASUS - 15.6" Laptop - Intel Core i7 - 8GB Memory - 1TB Hard Drive that runs 2 ASUS 24” LED HD Monitors through two j5 create - USB 2.0-to-VGA Display Adapters connected to my laptop with a powered Belkin USB hub . I haven’t had any issues with this setup and I have been running it for the last 6 months.  I am looking to upgrade my laptop to a 17” screen only to make things easier to see. 

                                                                         Before

                                                                         After

This just about covers all of the tools I use to trade with.  I tried to keep things as simple as possible.  I am a firm believer in the KISS method.  When I started trading I would search for the cheapest and any free tools that I could get my hands on. I quickly learned that the cheapest or free was not always good and more times than not, you get what you pay for. As you can see I have a mix of both free and paid.  The tools that I use today are well worth the money and when used correctly pay for themselves 10 times over.

Ed