Setting Up Your Trading Room
This article is all about setting yourself up to start trading by establishing a place where you can do your trading. There are many aspects of this that are overlooked, but the right setup and working environment can make your trading life easier rather than harder. For most small traders, you’ll be trading from home.
When I worked in banking, I used to often visit the treasury trading room to ask them to hedge my positions. The room had a raised floor, multiple screens per dealer, special lighting and dedicated data feeds and their own IT staff. The bank had spent money to provide the right tools for the job. You don’t need to go to such lengths, but you can also setup your home office environment as a trading room.
Firstly, you’ll need a quiet place to work. You shouldn’t have other people coming in and out all the time. You need a computer, broadband link, desk and chair to start with.
If you are a Mac user (as I am), you should be aware that there is little trading software that runs natively on the Mac. You’ll need to install virtual PC software so that you can run Windows in a window. You can install some trading platforms that are Java based without worries, and of course any web based software runs fine (usually it is better to use Firefox than Safari).
You should give consideration to multiple monitors so that you can run your trading model on one screen, and use the trading platform to view market prices and place orders on the other screen. Screens are not expensive these days.
Earlier, I mentioned broadband. You could use dialup, but it is not really a preferred option. Trading is all about data. If your connection chokes when lots of data comes in, that is not really helping you.
If you want to be able to move around and trade, a laptop may be helpful. One other benefit of a laptop is that if the power goes out, you can still stay up (provided that your broadband connection is connected to a UPS). If you have a desktop machine, definitely consider getting an uninterruptible power supply if your grid is a bit unreliable.
With all computer hardware, newer and faster is definitely better. These days, it is not particularly expensive to get a decent system with plenty of memory, hard drive space and processor power.
There is a range of trading software, but the most common are TradeStation and MetaStock. Both run under Windows. The benefit of either of these is the ability to build and backtest sophisticated automated trading strategies.
Trading platforms are typically provided by your broker, and they may be web based or Java based. If you are trading a market that moves quickly such as forex, you will find that most platforms use Java for extra speed. Most brokers let you try out a demo of their platform. You will obviously need to be signed up with a broker before you start trading.
You may need to get some historical data to build your trading system. Don’t just get your PC and broker account setup then launch into trading without first using a proven trading system. Sometimes your broker will provide data, other times you will have to purchase it, and update the data separately and use a data provider for this.
This article covers the basics of setting up your trading room. In summary, get your IT infrastructure up to scratch and reliable, make sure your room is comfortable and quiet and get the software tools (trading system and trading platform) and data that you need to make informed trades.
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