GET STARTED TRADING NOW!
Set Yourself Up for
Your First Simulated Trade
Setting Up Your Software Once you have decided which software you will use and have acquired a copy, you will next need to set it up properly. Depending on your software, this may be no small task. In my experience, I usually learn just enough to get my software up and running so that I see that everything is working. When you see that your software is working well, this is no time to lay back and let things ride. Now is when the real work starts. You should set up a daily plan to learn more about your software until you have completely mastered it. In some cases this could take many weeks or even months. That doesn’t matter and is well worth your time and energy. The reason why it is so important to fully master your software is that it is very likely that you will discover things along the way that will greatly boost your chances for success with your market transactions. I can’t tell you how many times during this process that I learned a key concept or idea that improved my results dramatically. I am embarrassed to admit how many times I learned this key concept several years after having bought the software!
Setting Up Your Data Feed Next, you need to feed price data into your software. If you are working with real-time intra-day data, this could be a little tricky to set up for the first time. Obviously, there is always support available for any problem you may encounter. Support is usually available from both your software vendor and your data supplier. I use real-time intra-day price data from three different sources. This is in case one of my sources stops working for a while, I can still keep the data flowing. I don’t recommend this to you necessarily, especially at first. I live in Quito, Ecuador and sometimes we experience problems here that most first-world country services don’t. Several times each week I have to rely on my backup systems. If you decide to trade daily or weekly bars, you can usually find what you need for free on Yahoo Finance . Their data comes in the form of ASCII and is usually compatible with most trading software.
Almost all market trading software comes with public domain technical indicators already built in. Many years ago when computers were relatively new, these technical indicators worked very well and offered a huge advantage. However, over the last 10 years or so, every trader and their dog, millions of people, have and use the same indicators. The advantage they offer is greatly diminished now. It didn’t take me very long to realize that if I wanted to regain the advantage of having technical indicators that few other traders have, I would either need to buy them or learn how to create and program them myself. I actually did both. Over time, I came to learn what works and what doesn’t, and what is truly unique, and what is simply a re-hash of the same old stuff. After many years of trial and error, research and discovery, I finally discovered what I had been searching for. I discovered some very interesting astronomical / geometrical proportions in a series of pre-Inca astro-archaeological ruins in remote areas of the Andes Mountains. I was able to convert that geometry into some different algorithms that serve as the basis for my own, proprietary indicators. You can see my indicators in action in my FREE NEWSLETTERS . The rest of the details will be found in an upcoming book that I am writing. It will be up to you to decide which indicators and combinations of indicators you will wish to use to create a Trading System with trading signals.
Setting Up a Trading System with Trading Signals Once you find indicators that you like for your particular market and time frame, you will need to figure out just how to employ them and perhaps find a combination of indicator behaviors that provide you with transaction entry and exit signals. There are some great books and internet information out there about how to create a successful Trading System. These details are way beyond the scope of this brief course. It is also important for you to know that there are trading systems available for sale out there. They usually cost in the thousands of dollars and 90% of them are of no use whatsoever. However, some of them are very good and sold by reputable vendors. You must use extreme care when purchasing an “out-of-the-box” trading system.
Broker Account is Open and Funded Your next step is to have already identified your ideal broker. You should have sent your funds to your new broker according the financial transfer instructions that were supplied. Most brokers supply a free simulated trading account with fictitious money. You should plan to take great advantage of this account. In fact, you should NEVER EVER consider trading with real money until you have mastered the practice account with regular, plentiful profits!
A written trading plan is a succinct description of an exact procedure that you will follow during trading hours. It describes the exact conditions that must occur in order for you to enter or exit a market position. The whole idea here is to completely eliminate emotions from the formula. Your trades should be based on proven, tested indicator conditions and not on what you think or feel may happen in the near future. Unless you have a darned talented psychic working beside you, this is some of the most important information you will ever get from me. And, if you have never before traded an amount of money that is important to you, you may think that you are able to control your emotions and not allow them to cloud your trading judgment. However, when the day comes and your heart is racing, I promise, you will remember these words. In the best of all worlds, a great trading plan could eventually lead to a fully automated Trading System where you just sit and watch the profits accrue over time. That is a whole different topic that I will address more in my writings in the future. For now you should know that a trading plan should never be modified during trading hours. It should only be modified in the “off hours” and preferably when you have a couple of days to think it over clearly. Modifications are best made as a result of backtesting historical data, if your software is able to do that.
Once your written trading plan is prepared, you are ready to start working with your simulated trading account. Familiarize yourself with the mechanics of how to enter, exit and place stop loss orders. Once you know the mechanics of the trading account, you can begin to make your transactions according to your trading plan. This will be your big opportunity to test your trading plan with exact results and then to modify it as many times as may be necessary in order to achieve consistent positive results. You should never consider trading with real money until making regular, simulated profits is second-nature to you.
Lesson 4 will be about “Entering and Exiting Your First Real Trade”.
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