In the world of day trading, the path to success is paved with challenges and uncertainties. For those looking to embark on this thrilling journey, the right gear can make all the difference.
Ross Cameron, the founder of Warrior Trading, a renowned name in the day-trading community, emphasizes the importance of what he calls the "hard costs of admission" in his new book, "How to Day Trade: The Plain Truth," now available for purchase. We explore the hardware and software essentials you need to start your day-trading adventure, drawing from some of the many experiences and insights Cameron shares in his second title.
The Day Trader's Trusted Companion: A Decent Laptop
Contrary to what some might expect, Cameron is not one to indulge in extravagant, water-cooled custom gaming desktop rigs despite raking in profits of over $10 million as a full-time day trader. Instead, he keeps it simple and efficient with a trusty laptop. He highlights the practicality of having the flexibility to trade from the same laptop both at home and on the go. As long as the laptop has a decent graphics card capable of running two or three external monitors, you're good to go.
Cameron recommends laptops from brands like Lenovo and Falcon. However, it's not just about the brand; it's the specifications that matter. Your laptop should be able to handle the workload of trading, enabling you to keep an eye on multiple stocks and market data simultaneously.
Moreover, Cameron suggests using a Windows-based system, as most legacy trading software programs were initially designed for Windows. While larger brokers like E*TRADE and Ameritrade offer macOS support, smaller brokers are still catching up with macOS compatibility. So, if you want to minimize the "hard costs of admission," consider sticking with Windows.
Seeing the Bigger Picture: External Monitors
Day trading is all about making quick, informed decisions. To help you in this endeavor, having a couple of external monitors can be a game-changer. Cameron candidly confesses that at one point, he had ten monitors running simultaneously. However, he soon realized that too much information can lead to cognitive overload. For him, the sweet spot is two external monitors when trading on the go and four, including his laptop, when trading from home.
Cameron suggests using ASUS USB monitors when you're traveling. These 1080p monitors are easy to connect to your laptop via USB, offering the extra screen real estate you need to keep an eye on your trading setup. One monitor can host your stock scanners, one your trading charts, and another your brokerage window and chat room. He attaches his two USB monitors to the side of his laptop screen by using mounting clips by Ten One Design. This creates a three-monitor portable trading station.
When trading from home, Cameron opts for 24" ASUS HDMI monitors mounted on a multi-monitor stand. This setup allows him to keep an eye on four stocks while actively trading one. It's all about striking the right balance between having enough information without overwhelming yourself.
The Gateway to the Market: Opening a Brokerage Account
Your journey into day trading starts with opening a brokerage account. While Cameron refrains from endorsing specific brokerage companies, he suggests checking out a reliable source for up-to-date information on reputable firms. Choosing the right broker is crucial since it will be the platform through which you execute your trades.
Simulating Success: The Importance of a Simulator
One of the most valuable tools in a day trader's toolkit is a simulator. It's your risk-free playground to practice and refine your trading strategies. Cameron underscores the importance of using a simulator, especially as a beginner.
When selecting a simulator, you should prioritize several key features:
Real-time data: Your simulator should mimic real market conditions, providing you with up-to-the-minute data.
Level 2 data: This feature allows you to see the depth of the market, which is essential for understanding market dynamics.
Hotkeys: Hotkeys enable faster execution of trading actions, a crucial advantage in the fast-paced world of day trading.
Limit Order Offsets: Instead of simply using conventional market orders, limit orders allow active traders to better manage risk. However, without an offset, it's very likely a trader will be faced with a partial fill and an incomplete order execution. Using offsets allows active day traders to manage risk while reducing the frustration of only partially filled orders.
Trading history: The ability to export your trading history is vital for analyzing your past trades and learning from your mistakes.
Most of the trading platforms offered by commission-free brokers do not cater to the needs of a day trader. Cameron suggests not only practicing with paper money but also using a platform that is popular among day traders. Cameron's emphasis on simulation as a learning tool is a testament to his belief that day trading is not about luck but rather about skills and discipline.
Scanning for Success: The Power of Stock Scanners
Cameron's trading strategy focuses on momentum, where he tracks stocks that are actively moving in the market. To efficiently identify these stocks, he relies on stock scanning software. These tools help him find stocks with significant moves, high trading volumes, strong relative volume, relevant news catalysts, and the right float.
While Cameron has his custom scanners, he acknowledges that you can obtain scanning software from various providers. Regardless of the source, stock scanners are indispensable for day traders, helping them spot the most promising opportunities quickly.
Staying Connected: The Importance of Reliable Internet
The day trader's worst nightmare is a poor internet connection that disrupts trades and causes significant financial losses. Cameron shares his personal experience, emphasizing the need for a fast and reliable internet connection. In his words, it's essential to consider having a backup connection for those critical moments when your primary connection fails.
For added security, you can even invest in a load-balancing router that combines multiple internet service providers, ensuring a seamless connection without any loss of data.
The Human Element: Building a Support System
Day trading can be a lonely profession, but that doesn't mean you have to navigate it entirely on your own. Cameron encourages traders to seek out a supportive community. He quotes Otto Von Bismarck, saying, "Fools say 'experience is the best teacher.' I prefer to learn from other people's experience." In other words, learn from the mistakes and successes of others in the trading community.
Cameron identifies three critical criteria for choosing the right trading community:
Knowledgeable leadership: Look for a community led by successful traders with a proven track record.
Alignment with your trading style: Ensure that the community's tools and strategies align with your risk tolerance, personality, and current knowledge.
Positive and supportive atmosphere: Choose a community that fosters a positive and collaborative environment rather than one characterized by negativity and hostility.
By learning from the experience of day traders like Ross Cameron, you can embark on your day trading journey equipped with a roadmap to help you avoid the rookie mistakes others have made before you. Beyond the "hard costs of admission," Cameron advises to always remember that it's not about making quick profits; it's about mastering the process and refining your skills over time.
"How to Day Trade: The Plain Truth" is available in hardcover and paperback versions, in addition to audiobook and Kindle. To buy a copy, visit www.thedaytradingbook.com/.
