Active futures trading can be a humbling endeavor. Long days behind a computer monitor, often without reward, cause many people to flee the market before ever reaching their trade-related goals. Why is answering the question of how to become a successful trader so difficult? If I make more money than I lose, I win ― don’t I?
In many ways, yes. In fact, a good number of market professionals live by a very simple mantra: make money every day. As legions of failed traders will tell you, adhering to this philosophy is easier said than done. If you fall prey to the number one mistake made by new traders, then an early retirement from the markets may be closer than you think.
And The #1 Mistake Is …
In reality, a wide variety of pitfalls regularly ensnare new traders. From wild, emotion-driven trading to working with a subpar broker, market newbies learn dozens of hard — and sometimes expensive — lessons.
However, each misstep ultimately stems from one spectacular error: not having a plan. Plunging into an environment as competitive and dynamic as the futures markets without a comprehensive trading plan is at best ill-advised. If there was a book titled “How to Become a Successful Trader,” the first chapter would be all about the importance of having a concrete game plan before ever placing a trade.
A viable plan for the markets thoroughly addresses three basic areas of trade: psychology, strategy, and technology. The latter element, technology, is a vital and indispensable part of making a living in the contemporary marketplace. Without being technologically proficient, any active trading plan is doomed before it starts.
Active futures trading can be a humbling endeavor. Long days behind a computer monitor, often without reward, cause many people to flee the market before ever reaching their trade-related goals. Why is answering the question of how to become a successful trader so difficult? If I make more money than I lose, I win ― don’t I?
In many ways, yes. In fact, a good number of market professionals live by a very simple mantra: make money every day. As legions of failed traders will tell you, adhering to this philosophy is easier said than done. If you fall prey to the number one mistake made by new traders, then an early retirement from the markets may be closer than you think.
Building a Robust Technological Infrastructure
The good news is that getting up to speed in the technology department is not overly complex. By acquiring the necessary hardware, software, and internet connectivity, building a solid foundation for conducting trading operations is doable.
Satisfying the following technological facets of contemporary trade are crucial aspects of how to become a successful trader:
Hardware:
Today’s marketplace is electronic in nature, available almost exclusively online. In order to be an active participant, you will need some form of computing power. A desktop PC, laptop, or mobile device are possible alternatives. By far, the most important parts of any trading computer is processor speed and available RAM. Currently, an Intel I5 or I7 processor is preferable (or one with an equivalent benchmark processor score), as is having a bare minimum of 8 MB of RAM. In addition, graphics cards and additional power supplies may be necessary to run setups with more than two monitors.
Software:
Accessing the market via an advanced, user-friendly interface is invaluable to active trading. Choosing a software platform that is easy to use, yet sophisticated enough to support advanced analytics and functionality is the name of the game. A great platform needs to include the following features:
- Charting: The pricing chart is the active trader’s window to the marketplace. Minute, tick, and volume data are useful elements of basic charting, as are the various chart types.
- Technicals: A good software platform needs to provide a formidable catalogue of technicals for use at your discretion. From proprietary third party add-ons to public domain indicators, a platform is best equipped with an extensive collection of technical tools. Also, flexible script and programming language is often desirable to build or integrate custom indicators into the platform.
Internet connectivity:
If you’re going to be active in the modern futures environment, then you must understand that latency is the enemy. Securing market access through a robust internet connection is critical to staying competitive. While high download speeds are ideal for streaming market-direct data, fast upload speeds are equally as important, if not more so. Sending orders to market as fast as possible is vital to entering and exiting trades efficiently. Running regular ping tests between your computer and broker or exchange servers is a great way to monitor performance and identify any data lag issues.