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If You Want To Day Trade, You Need The Technology
By Jobo Smith
If you are looking to start trading the markets, whether its stocks, bonds, futures or forex, you need to think about the technology you will need. The first starting point is your computer. Real time streaming quotes take up a decent amount of CPU and memory in real time. An old computer will not cut it. It might be tempting to say "I will just use this for a bit until I get better at it, then I will buy a new computer". This is the wrong way to think. Trading is all about speed and accuracy of information. On an older model computer with limited memory it is likely that any fast pickup in trading would create lag time. Lag time can range from a few seconds up to a few minutes or more while your computer tries desperately to catch up - but the influx of new data is too much for it to handle. Additionally, the graphics card needs to be above average - after all, the quotes on the screen are graphics, and the more powerful the card, the less the CPU has to work. I can summarize lag time with 2 words: Lose Money. The worst thing about lag time is you will not even know its happening unless you have a separate computer system to measure the current prices. Another thing you will need is to have AT LEAST 2 monitors, and ideally you want a separate computer for charting vs order execution (trading platform). You need the ability to watch real time news, quotes and monitor multiple charts in real time to find trading ideas. You also need room for any trading chat rooms you might want to join, to gain additional insight and ideas to trade. Anything less than 2 monitors for this makes it very very hard because you always have to task switch, taking something off your screen to put something else in. The best scenario is one computer for order entry and internet browsing, and a separate computer for charting and chatting. You can also move the chatting to the internet browser computer, but you want to be careful not to load that computer too much. Order entry is your lifeblood - do not risk it crashing or going down because you have too many things on your computer running. You want two monitors (19inch or more) for charting, and 2 for the other computer (1 for order entry always up, 1 for web browsing, news and other stuff. The other hint I will give you is to NOT use web based order entry systems, they are just too slow. You want direct access to the markets, and absolutely do not want your orders going through a third party first (order desk). For swing trading or investing, web based is totally fine. For any type of short term trading, a stand alone executable trading platform is a must. Keep this in mind when looking to open an account. Often people overlook this problem because the effects are not easily quantifiable to them. But just think about this scenario - what if I told you every single trade you did you would pay on average 2-5c higher when you buy, or 2-5c lower when you sell. Its easy to say "aw that is no big deal". If this is true, then why don't you open a trading account and agree to pay 5c a share commission? Most people would say "Are you crazy, I can trade for 8 bucks a trade ..." The reason people think like this is the effect is not easily seen unless you have an order on direct access system A and the same order on web system B, and hit enter at exactly the same time when the market is moving. Over many thousands of trades, there is super high odds that web system B will have a significant slippage effect (worse fills) on pricing vs direct access system A, costing thousands of dollars more in lost profits. Its not that the web system is bad, its the delay to go to market that kills it. 5 or 10 seconds might not seem like a lot of time, but when the market is moving that can actually mean 10 or even 20c worse fill on a stock. Multiply that times 500 or 1000 shares and you are at $200.00 cost for just 1 trade. You can usually get a direct access software for less than that a month, yet people get very cheap when it comes to spending money on trading tools. Traders often do not realize the $100.00 savings a month by not paying for software is actually costing them $2000.00 because they do not receive a bill in the mail for $2000.00, its just missed profit that is not in the account. Often times firms will pick up the cost if you are an active trader, you are only responsible to pay if your trading level drops below a certain minimum activity level for the month. |
http://www.stock-trading-info.com
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You make a good argument for two computers and the right software. My husband dabbles in this, good info!
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