3 essential tools to better trade

To trade efficiently and earn money on the stock market, it is better to start off well equipped. Many star traders working in investment banking had a hard time getting out of the cocoon of a large structure when they started setting up their own investment fund. Of course, poorly used tools are useless, but poorly equipped traders are also ineffective.

The logbook, the key to success

If there is one tool that is too often forgotten, it is the logbook. It can be in electronic or paper form, although the former is much more convenient to use. You should keep a record of your profit and loss and especially the major trades you have made. Also write down your mistakes, this will help you to identify them. If you have several strategies, you will be able to evaluate their effectiveness in the medium term and adapt them if necessary, much more effectively than with backtesting (i.e. tests on historical data).

The trading platform

The second tool is the trading platform. The more integrated it is, the more efficient you will be and the less you will disperse during your trading sessions. Of course, it is difficult for a private individual to afford the licence for a Bloomberg terminal, which costs several thousand euros per month. Nevertheless, many brokers on the stock exchange, forex and binary shares offer you platforms that will allow you to do much more than the minimum necessary such as 24 options for example.

An efficient trading platform should allow you to create technical analyses on the graphs of your underlying assets, trade directly from the graph and track your positions in real time. Many forex platforms offer a revolutionary feature, such as the ability to create trading machines, MetaTrader allows you to test them on historical data and then connect them directly so that they can place orders with the broker. If you have an effective strategy, all you have to do is switch to cash register mode by monitoring your automatons.

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But fundamental analysis should not be forgotten, try to obtain a news flow, a calendar of indicators and if possible to be notified when they are published in order to quickly understand their impact on the market and to exit your positions if necessary. The best platforms will also offer you market reviews that will quickly brief you at daybreak on night events in Asia and the United States.

Finally, the platform or signal site can suggest positions, to be used sparingly when market conditions are optimal and they confirm your intuition (or decision-making system).

The Excel workbook, your Swiss army knife

Anything that is not possible on your platform will generally be done on the most widely used tool in the trading room: Excel. This workbook will allow you to carry out detailed analyses of your past or theoretical performances (those of the PLC backtests). Couple Excel with your logbook and your efficiency will be increased tenfold.

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This triptych should allow you to use the maximum of your abilities, we recommend that you have a computer powerful enough not to have any problem of lags or crashes that could put you in difficulty. There is really nothing more frustrating than seeing a trade go wrong and not being able to get out because you can’t access the platform. For the same reasons, it is not advisable to trade on mobile platforms when your 3G or WiFi connection is unstable.