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You Can't Become Rich In Your Pocket Until You Become Rich In Your Mind | ||||
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This strategy of having distinct accounts for day trading and swing trading helps me to keep the different trade setups separateHARDWARE AND SOFTWARETOP TOOLS FOR TRADERS Dress a goal in silk and it's still a goat. CELTIC PROVERB HARDWAREITS ALL ABOUT THE RAM This chapter is about creating a level playing field for all traders with respect to the equipment and software they are using to tackle the markets. If traders can get this pan right, they are at least going to have a fighting chance to compete on a level playing field with everybody else. If traders are behind the technology curve, they are going to be trading at a distinct disadvantage. In trading, people without an edge in terms of equipment, mental outlook, and methodology ane like young wildebeest trying to snatch a drink at the edge of a crocodile pondthey're simply not going to make it. Why would people deliberately create a weakness in their trading plan by having trading software or technology that is outdated? It would be like entering the Daytona 500 with a Winnebago. This is the easiest part of a solid trading plan, and it is 100 percent under a person's control. The amount and type of trading equipment that traders have is going to depend a little on their own financial resources, and a lot based on the type of trading they are doing. Top of the line systems with three or four monitors are available from companies like Dell on a leasing program for less than $150 per month, so cost isn't a huge issue. If traders have a computer that is more than three years old, they need to upgrade some of its components or just get a new one. The most important component of a traders computer is the RAM. This is the amount of memory available while the computer is running applications in real time. Traders with an older computer will definitely need a boost here, as this has a major impact on how fast they will be receiving their quotes and other live data. This is also the most expensive part of die computer, though prices continue to drop. As I'm writing this on February 7, 2005, there are three ads on the Internet that boast top-of-the-line computers for $399. These are equipped with a nice 2.4 gigahertz processor, a fat 40 Gigabyte hard drive-and a puny 256 megabytes worth of RAM. This is inadequate for a trader. The RAM on a trader's computer should be at least 1 gigabyte, and nearly all basic systems come with much less than that. Realistically a trader is going to spend aboul $2,500 for a high-performance computer with at least 1 gigabyte of RAM, multiple flat screen monitors, and a solid mu Hi-monitor-ready graphics card. There are companies oui there that market trader computers for a lot more money, but exactly the same computer is available at Dell for much less. Dell also has the best customer service I've ever encountered. I've had monitors go out that have been replaced for free by Dell within 24 hours. The same thing happened with another popular manufacturer and the turn-around time was six weeks. The main thing to keep in mind is that a trading computer should be specifically set up for trading and have a minimum of other stuff going on. If there are kids in die house, make sure they have their own computer for Internet surfing and computer games, and tell them not to touch the trading computer under pain of death. One question I receive a lot from traders is, How many monitors do I need? This really depends on what you are trading, I personally utilize 10 monitors for viewing charts, and 2 additional monitors tor other tasks such as e-mail, instant messaging, and Internet surfing. These are all set up on four different computers. Most traders do not need diis many monitors, and I know of many traders who make a great living with just iwo. For me, I keep my day trading and swing trading separate, and for these trades I use different accounts, different monitors, and different execution platforms. This shows a snapshot of my day-trading execution platform. This keeps a running tally of how I'm doing on the day, for each market and with a grand total. On the day shown in Figure 3.1 the DAX and S&Ps generated a nice upside, while I kept getting stopped out in the euro. The dots on the chart show my entries and exits. All my swing trades are set up on a different execution platform. This strategy of having distinct accounts for day trading and swing trading helps me to keep the different trade setups separate, because I could be short the mini-sized Dow futures in my swing account, but long the same contract in my day-trading account. These are in different time frames and require different parameters. By keeping them in separate accounts, there isn't any confusion, and the performance for both types of setups is easier to track. Also, because Pm writing newsletters and updates during the trading day. I need access to more data than most traders. There is a danger for traders in setting themselves up with information overload, 1 visited one trader who had 25 monitors shooting data at him from all directions. Shockingly, he could never decide when to pull the trigger to gel into a trade. It is important to remember that traders don't need to know everything that is going on in the markets. They just need enough information to be able to decide whedier or not to take their setup. All of the successful traders I know focus on just a handful of setups. They don't need a confirming move in crude oil in order to take their buy signal on the S&P&. Jf traders have found one or two setups thai really work for them, then they can, and should, ignore a lot of the data out there. Laserlike focus on a small part of the markets brings expertise and a belter understanding of when to take a trade. Swing Ttades Daily & Hoiuly & Execution This shows the computer setup I use for my trading. I do like to have one computer that 1 use specifically for e-mails, instant messaging, and Internet surfing. This is the computer that is going to get attacked by viruses, so 1 want to keep it separate from the others. In addition, I also keep a backup laptop in place that is attached to a dial-up modem. Thankfully I rarely have to use it, but whenever the power goes out or my broadband connection goes down, I can still have access to my accounts and current quotes. Monitors, Graphics Cards, and Other Gizmos What to Get and Where to Get Them The graphics cards that I like the best are the Matrox G200 Multi Monitor Series (MMS) cards. These are available right off their Web site, www.matrox.coin, for about $400. They are also available on eBay (www.ebay.com) for about $ 120. The dirty little secret in the hardware business is that most hardware is available on eBay for half price or less. This used to be where people could buy products at a discount because of inventory clearance or merchandise that falls under the semi-legal arena of being redistributed without manufacturer's approval or warranty .These days, the company itself typically sets up an alias and sells its own products right on eBay in order to tap into the auction crowd. I've always purchased things like graphics cards right off of eBay, and I've never had a problem with getting ripped off or getting a faulty product. The most important thing to remember when buying something from eBay is to make sure the sellers have great feedback. If they have low ratings, or worse, no ratings, then don't touch them. I'm not a computer guy, but it was really easy to take out my old graphics card and slip in the new one. A trader who is unsure how to do this can look in the yellow pages and find a consultant to do this for a reasonable cost. Have them come to your house or office. Whatever you do, don't take your computer and drop it off at some mass-market, nonspecial-ist dealer, whose employees often have a lesser degree of computer-specific expertise. For the actual monitors, one of the best deals out there for big flat screens is (as Pm writing this on March 13, 2005) the Dell UltraSharp 2001FP 20.1 inch Flat Panel LCD Monitor available for $679 each. The LCDs are much lighter in weight than the CRTs, by a factor of more than three to one. Although LCDs cost more than CRTs, the gap is narrowing. Also, for multimonitor setups, LCDs have a thinner bezel or rim around the screen which lessens (he gap between adjacent monitors. By going down just a little bit in size, a person can save a lot of money. The same models in 19 inches are $269 each and in J7 inches are $169 each. The 19s are a great size for traders, and if resources permit, the larger ones are awesome. The Samsung models are also nice, but they are a little pricier than the Dells. I have both, and I like them both ihe same. Samsung has a very new 20.1 inch LCD, ihe model 204T, that is selling only at a few dealers as of this writing for just under $600. This model will be widely available by the time you are reading this. If you like to shop around, then check them both out. If you just want to get a trading computer as quickly as possible, then stick with DelK Two great places to find deals on monitors, or anything on hardware for that matter, is www.slickdeals.net and www.techbargains.com. These sites search the Internet for deals and coupons on anything related to technology, including monitors, hard drives, DVD players, and so on. There is always somebody having a sale. Also, public companies like Dell will issue special coupons during the last few days before they close a quarter to boost sales. These always show up on these two Web sites. A few weeks ago 1 was able to pick up a laptop from Dell using a $750 off coupon code I got from www.slickdeals.net. There is no reason to pay full retail price for anything. This is a good first test for a trader. Don't panic and buy the top. Another area of interest for traders is setting up multimonitors in such a way that they fit comfortably on a desk, don't take up a lot of space, and are easy to access. One site I like for this is www.lcdanns.com. Here traders can get different wall and desk mounting solutions for their monitors. In terms of desks and chairs, this is really wide open. A door across two file cabinets works really well as a desk. There are desks available from medical supply companies that are interesting in terms of how they are set up. The desk isn't that big of a deal, however. Traders just need a place to put their computer equipment. The chair is a different story. Traders are going to be spending many quality hours with their posterior region planted firmly in a chair. Getting a good one is worth the money. My favorites are the Aeron chairs from Herman Miller. TAMING THE TECHNOLOGICAL BEAST: KEY THINGS ALL TRADERS SHOULD KNOW TO KEEP THEIR COMPUTERS ALIVE AND WELL Once traders have their hardware in place, it is time for them to turn their attention to the software. There are a lot of software choices available for traders, but what this boils down to for most people is a charting program and an execution package. While this is important, there is another category of software that is vital to the trader, and this is software aimed at keeping a computer in top working urder. This is by far the most neglected area for traders. Let's take a look at this first, and then we will delve into the trading software. Don't worry, Tin nol a techie so this will be easy to follow, and I'll make it quick. Trading in and of itself can be one of the most stressful occupations on the planet. One day's worth of market activity can determine whether a trader's kids are going to study abroad in Oxford, all expenses paid, or are stuck at the local community college making telemarketing calls part time to pay for their books. Technological problems or disruptions increase the stress factor and cause drains of both real and mental capital. Traders who are stuck behind the technology curve are at more of a disadvantage than those who are up to speed. From software that is outdated to specific tactics used by companies to dump process-clogging spyware on the user's computer, traders who choose technological ignorance are setling themselves up for disaster. Having a trade go wrong because of technological issues is inexcusable for the serious trader who is trying to make a living at this profession. The bottom line is that traders who want to maintain a competitive edge in this business must first be aware of the technological dangers facing them in today's world. Once aware of the hurdles, determined traders must then take a proactive approach and take the time to attack these issues head on. The three main technological problems for traders today are as follows: Computer invaders: The PCs are traders' most important trading tool. Being connected to the Internet, the traders' computer is being abused without their knowledge. This causes most malfunctions on computers today, and traders must be aware of how to first remove the crud and then block it so it won't happen again. Process doggers: Use these steps to maximize computer effectiveness and prevent crashing. General technology problems: What to do when the technology around the trader fails to deliverbecause it will Ignoring these preventable issues is like trading without a stop loss. Take the time to take care of this right now and get on the path to smooth trading. Strip Away the Crud That Is Slowing Down Your Computer Traders can have the best software available for trading, but if their computer isn't properly cared for. protected, and maintained, then the greatest trading software in the world becomes worthless. Each day the trader's computer is bombarded and invaded with hidden crudT and it is truly shocking how dangerous some of this stuff is to the trader's PC. For the trader who is serious about making this business a full-time job, neglecting these next steps is the same as a professional football player drinking a 12-pack of beer the night before he is supposed 10 play in the Super BowL That would deliberately put his team at a disadvantage. Why give the other guys out there an edge? In trading, the other guys are trying to take your money. There is no reason to make it any easier for them. The biggest technical problem facing traders today is one of which most are completely unaware: staying spy ware-free. It is one of the most important things traders can do to keep their PC running smoothly and safely. Spyware will crash traders' computers, ruin their Internet connection, and make Internet surfing unsafe. Spyware is not a cookie, which 1 talk more about shortly. In a nutshell, spyware is software that companies place on users' PCs without their permission. Sometimes it is unknowingly %vith the users' permission, if the users don't read the fine print in the agreement they accept before downloading a software program. This spyware software takes over the traders' Internet browser, and collects data on their surfing habits, generates pop-up ads when the traders visit certain Web sites, and generally slows down their computer. In addition, a lot of spyware is poorly written and can cause incompatibility issues, corrupt important system functions, and threaten the stability of the trader's computer. Traders who want to keep their computer running smoothly, and keep it from freezing up and crashing, must attack back and get all the spyware off their computerand then prevent it from coming back. The first time I learned how to do a search for this malicious software, I found over 50 spyware programs on my computer. After they were removed, my computer operated faster and stopped freezing up on me. This stuff is downloaded behind the scenes, so it is invisible to the computer user. Before I did this, I was certain that I didn't have any spyware on my computer, as I don't do much in the way of Internet surfing. Needless to say I was surprised. There are two excellent spyware removal applications available, and they are both free, so there is no reason not to use them regularly. The two best applications there are for removing spyware are SpyBot Search & Destroy and Ad Aware. It is important that the trader use both of these applications, since each one finds what the other misses. Computers are not safe using just one of them. To find out where to download these, just type them into the search field on Google (www.google.com) which will provide a list of sites from which they can be downloaded for free. Once traders have installed these two must have applications, they then need to keep them up to date. I would recommend checking for updates weekly. Similar to antivrrus software, the trader needs to stay protected from the latest spyware out there. To update SpyBot, just open the application from the start menu (use the advanced mode option) and select search for updates. It will then show what updates are available for download. Always install all the updates. Another feature that SpyBot has is called Immunize.*' Select this icon and under Permanent Internet Explorer immunity select Immunize This works in block ing new spyware. It also gives the trader the option of locking the trader host's file against hijackers, a feature I highly recommend using. To update Ad Aware, just open it and select Check for updates now. Anything these applications find is spyware and should be removed. Traders who choose not to remove them have no one to blame but themselves when their computer crashes because of spyware. On a more malicious level, these programs can potentially invade traders' privacy by recording where they buy items online along with their billing and credit card information. I recommend doing weekly scans, and, as I have already said, always remove anything these programs find to keep your PC safe, Another easy way to block spyware is to stop using Internet Explorer. All spyware programs are written for this browser, since this is what 95 percent of the population uses. There is a newer Internet browser available called Fire fox, which is made by Mozilla (www.mozzilla.org). It has more advanced features than Internet Explorer, is faster, and is a lot safer to use. Cookies and SpamIt's a Bad Idea for Lunch, and It's a Bad Idea for Your Computer Another device companies use to track information on the trader's PC is called a cookie. This is a small text file that can be good or bad. It's good for visiting a favorite Web siie, such as Aniazon.com. With a cookie installed, Amazon will remember who the users are, so they don't have to always log in when they visit the site. Huwever, there are also bad cookies placed by companies such as Doubleclick that track site usage, coordinate pop-up ads, and generally invade the trader's privacy. The best thing to do here is to start from scratch and delete all the cookies on the computer. To do this, go to Start, Settings, Control Panel, Internet Options. Under Temporary Internet Files, there is a button that says, Delete Cookies. Click this. After the cookies are deleted, go to Privacy, Advanced. Once there, check the box that says Override automatic cookie handling Below that I check Prompt for First Party Cookies and Block for Third-Party Cookies. This way when the trader goes to Amazon, a message pops up asking if the trader wants to accept the cuukie. [ say yes because that is a site I visit often. Any third party cookies like doubleclick will automatically be blocked. This will prevent pop-up ads and keep the trader's computer running in top form. If I am asked to accept a cookie from a site I rarely visit, I will say no and the cookie will not be planted on my computer. Spam is typically a big problem for everyone. Mail Washer Pro (www.mailwasher.net) and Cloud Mark (www.cloudmark.com) used together are the best solution I've ever seen for spam protection. Mail Washer Pro stops spam before it ever hits your mailbox. For stuff that does get through, identify those to Cloud Mark, and they won't get through again. Both these programs together will cost about $80. I use Microsoft's Outlook program to handle all my e-mail, and these programs can work directly with it. I used to routinely get 100 spam e-mails a day. Once I installed Cloud Mark, they all disappeared. It was truly a miracle. Finally, it is critical that everyone have virus protection software. Norton And virus is good, but it takes up a lot of resources. Another one that is good is Trend Micros PC-ci 11 in (www.trendmicro.com) Internet Security. For miscellaneous software, I like Copernic (www.copernic.com) desktop search. This free software provides a great, easy way to search for e-mails and files on a computer This saves time in trying to find that missing e-mail or file. All a person has to do is type in a word or the name of the file and the software will find it in seconds. This is instead of sifting through e-mails in Outlook or trying to search with the windows function, which takes forever. During market hours, a trader does not have a lot of time to spend on little things like searching for a missing file. This speeds it up. These are the basics for the general computer software. Let's take a look at how to keep a computer running smoothly, and then we'll start looking at specific trading software. |
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