Hardware for First Time Traders

This post is primarily aimed at traders who are just beginning their trading careers. First time traders will need access to a “demo account” in order to try their hands in the market before committing real capital to the project. I recommend at minimum 4 months of consistent profitability before risking real money. Note that it may take several months before one can achieve profitability; so, the actual time required demo trading is most likely much longer than 4 months and can be as long as necessary. The most important thing to remember when demo trading is to treat the account as if it was real in order to get a general idea of how trading real money feels. A demo account will also help first time traders learn to manage their emotions in a low stakes environment. The type of demo account depends on the type of market one plans to trade. For those trading stocks, there are countless “stock simulators” that will work for a beginner’s purposes and a simple internet search will return dozens of results. Forex demo accounts are next in line in terms of ease to obtain. Many foreign FX brokers will have demo accounts available. However, some notable names include en.myfxchoice.com for a foreign option and www.forex.com for a U.S. based option. Futures demos are harder to come by as these are more specialized investment vehicles. However, www.stage5trading.com does offer demo accounts for a limited time. New traders will also need access to a feature packed charting platform to study the markets. Most of the above listed brokers will also give clients access to their charting platform. However, for more advanced charting, Thinkorswim by TD Ameritrade is by far the most advanced and well developed platform available. A demo can also be obtained for this platform but opening a real account and having access to realtime data can also be done easily. It should be noted that TD Ameritrade is a full service broker allowing clients to trade all of the above listed products; however, I have personally found that TD Ameritrade is much better at being a data provider and charting platform than it is a broker and clearing agent. With access to these tools, a beginning trader has all of the necessary hardware to begin trading. These platforms are the same platforms used by multi-million dollar professional traders. Thus, the only thing holding one back at this stage is lack of knowledge and experience. In future posts, I will discuss some of the terminology discussed here and the exact specifications of these products.

CFTC Required Rule 4.41:

Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.

Hypothetical Performance Disclaimer:

Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.