Did you know many people think traders usually fail because of expenses? They think that trading costs and buying specialized day trading tools are to blame.
The truth is, costs occur in all businesses. And trading from home has a low run rate when compared to most businesses. Moreover, day trading tools are what they say they are…
…they are tools. And tools can only perform as well as the hand that wields them.
What are trading tools? Everything employed in the pursuit of trading profits is a day trading tool.
Some tools are tangible. However, the more important ones are intangible and ever-evolving. Day trading is serious. The skill of day trading requires specific tools to generate the best outcomes.
Some trading tools cost money. Others are free. Still others need more time to forge.
Consider trading as a business. In comparison to other businesses, overhead and variable costs are low. The costs are also predictable with proper planning. Ensure that you have these 13 essential tools to maximize your day trading success.
Day Trading Tools – Tool #1: Trading plan
The most often overlooked aspect of day trading is the trading plan.
It’s an easy oversight to make. The best trading plans involve customization for the individual trader. This means they are not advertised on mass.
Everyone wants to sell you a “one size fits all” strategy. But the generic plan is not the one that will get you where you want to go.
What every trader needs to remember is that trading is a business. Businesses need plans for how they are going to succeed. Make sure you have a trading plan that at very least covers all the remaining points on this list.
Day Trading Tools – Tool #2: High-speed internet
Online connectivity is a vital facet of trading. Without the ability to have the market know about your desire to buy and sell, trading ceases to occur.
It sounds elementary. But a steady and reliable internet connection is a must for the dedicated day trader. Not being able to do your job is costly.
Minimizing the possibility of an outage is a big benefit. Having a backup provider and the right hardware is an inexpensive insurance policy.
“A fast and reliable internet connection is a must for day trading.”
Stay safe. Use a high-speed physical connection and have a mobile connection backup. You will be thankful that you do when you experience an internet outage during trading hours.
Day Trading Tools – Tool #3: Online broker
Unless you have a seat at an exchange or have a unique arrangement with a financial firm, you are going to need a broker.
Identify your desired market and trading products in your trading plan. Then use this knowledge to choose a broker that can provide access to them for you.
The best broker for your trading operation is not always the cheapest one. Low prices often have added hidden costs to your trading.
On the other side, high priced brokers aren’t always worth the extra cost either. Pay attention to what you get from your broker for the money you pay.
Find a broker to suit your trading strategy needs. Make sure you set up a backup broker (or two) as you get more serious about your day trading. Take my advice – I been through four separate broker related crises – you always want to have a backup broker!
Day Trading Tools – Tool #4: Trading platform
Many brokers offer their own proprietary trading platform. A trading platform is software used to enter orders. Many also let you analyze data to make trading decisions.
In contrast, there are some excellent broker-independent or multi-broker trading platforms. These specialized tools allow trading at many brokerages through one software interface.
“A trading platform is to a trader as a cockpit is to a pilot.”
The are several advantages of a multi-broker platform. They include not having to learn a new platform if your broker goes out of business. They are also helpful if you find your needs better served by a different brokerage and decide to switch.
Broker independent multi-broker platforms also have a narrower focus. They are in the business of providing an excellent platform and concentrate on that.
My preferred platform is NinjaTrader for all the reasons stated here.
Day Trading Tools – Tool #5: Data feed
Trading platforms need a data feed. Some trading platforms include the data feed for free, and others do not. Data comes in the form of historical and real-time trading prices and volumes as well as news feeds.
My preferred data feed is Kinetick. It’s designed to work with Ninjatrader and is fast and reliable. I use Kinetic data and don’t plan on switching to another provider any time soon.
Whichever data feed you choose, make sure it provides the right products and markets for you. You can pick and choose what you need, and set things up the way you like them.
Day Trading Tools – Tool #6: Fast computer
One of the more contentious requirements in trading is the need for a fast computer. The availability of platforms that have mobile interface capabilities also fuels this debate.
However, the discussion ends when it comes to day trading. Those who are serious about results need to have a fast computer.
Computers are an expense that only appear once every few years. Spend the money on a performance machine. The simplest guideline to follow is:
If (video) gamers think it’s a good computer, it will likely be great for day trading too. Don’t let a slow computer bog down your trading efforts.”
High-performance laptops are an option for traders who need portability. The cost of this flexibility is a slight increase in price. Whatever computer you choose, make sure that it is never the factor holding back your trading.
Day Trading Tools – Tool #7: Capital
“It takes money to make money.”
There are many businesses where pure ingenuity and strategy are all that you need. Creativity makes the necessity for money a smaller concern. Day trading is not one of them.
You might be a stock day trader meeting the pattern day trader requirements. Or you might be a futures trader meeting margin requirements. No matter what the situation, trading requires capital. Save money and make your trading path easier.
Day Trading Tools – Tool #8: Education
Education and training is the only true secret weapon tool in the markets.
Ignoring this tool is the underlying reason behind many trading failure stories. Doctors need education and training. Lawyers need education and training. Starbucks baristas need education and training.
Despite these truths, many aspiring traders take the plunge unprepared. They jump into the competitive world of trading without formal education and training. There’s a standard objection:
“Training and education’s expensive, and I don’t have the money.”
Here’s the truth…
You can’t afford NOT to pay for training and education for your trading career. The lesson is always cheap.”
Some education and training programs and courses are expensive. There’s no arguing it. The expense is always minuscule compared to the losses they can save you from taking. Large losses almost always materialize through ignorance and inexperience.
If you think you have money to trade, invest it wisely and deposit it into your brain first. Your future self with thank you. So will your trading account.
Day Trading Tools – Tool #9: Practice
Fantastic trading methodologies exist. One trader may consider a strategy to be fantastic. Another trader may find little value in the exact same strategy.
Practice, practice and practice some more to improve your trading fast. You will figure out fast what methods work for you (and which don’t).
The only way to find out whether a strategy is right for you is to try it for yourself. Test the method. More important, test the strategy and method the way you like to trade.
Don’t be in a hurry to do something that isn’t right for you. Start with a simulator to build your trading experience. Follow it up with the appropriate steps to move that strategy into live trading.
Day Trading Tools – Tool #10: Strategy
The variety of trading strategies is as diverse as the traders who deploy them.
Many traders end up struggling because the choice is overwhelming. They often change their strategy after a short time based on what they see on the horizon. They consider anything new as working better in comparison to their current strategy.
This is a bad pattern. Stick to one or two good, solid strategies and give them time to work.
“Strategy is everything in trading.”
Strategies take time to show consistent and favorable results. Start off with fewer trading strategies so that you can excel at them free of distraction. Then add or subtract to your strategy list as your trading mastery and results dictate.
Day Trading Tools – Tool #11: Specific tools
Strategies within the day trading arena vary a lot. Even the tools to deploy the different strategies are quite specific.
- High-quality news feeds benefit a strategy that trades breaking news and earnings releases. But the same news feed might be a waste of money for trader dealing with chart patterns.
- High precision historical databases and backtesting engines can be powerful. They are a fantastic asset to traders who use 100% automated systems. The same tools would be inappropriate for traders with a discretionary method.
- Proprietary indicators are a welcome expense for capable traders. These traders benefit and build a strong business case for the expense. The same indicators have less value to a trader who is unable to incorporate the tool into his trading plan.
Strengthen your trading operations. Ensure that you have the best tools, but only for the strategies that you actually trade. There is no need to own and use every tool out there.
Successful traders specialize. This also means they chose specialized tools for their focus. Make sure you pick the arsenal of tools that fit your own strategies best.
Day Trading Tools – Tool #12: Discipline
You will not find it on a store shelf. It is non-existent online. And it is not something with which any of us are born.
Discipline. It’s one of the most essential tools to successful trading.
“Nothing can stand in the way of true discipline.” quote=”Nothing can stand in the way of true discipline.”
Discipline in trading can come in the form of learning and practicing for the experience. It takes the form of setting aside as little as 30 minutes a day without fail.
The hallmark of discipline is consistency. Doing the right thing over and over again without failing to show up and at least try is key. It’s what needs to happen for trading success.
Day Trading Tools – Tool #13: Commitment
Long term commitment can be elusive. Trading is a challenge, and true trading mastery takes years. A strong commitment is an intangible tool. It keeps traders sticking to their discipline over the long run.
For the committed, there is always a way. You can find the success you desire in the markets.
Remember that overnight successes are rare. Long-lived overnight successes are nonexistent. Commit to trading. Weather the storms that will deliver you to the sunny beach of trading success.
For more day trading techniques, tools & strategies, check out these articles:
- Online Trading Brokers & After Hours Trading
- 3 Best Online Trader Training Methods
- 5 Must-Know Basics For Day Trading Beginners
Use these 13 day trading tools to maximize your results. It’s a great way to get the most out of your time spent trading.
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