When I started out one of the first things I wanted to know is “what is everyone else using to trade”? What is a common day trading setup for day trading forex, stocks and crypto? I had a hard time finding examples of what others were using. It seems like the most basic starting point for seeing others trading desk setup but few traders share that info. Maybe because by the time they get around to building a training course that they have forgotten what it was like to get started.
First, let me share that any products that I recommend I am likely an affiliate for. In order to be able to maintain this training academy I have to monetize the site in some way. So, if you see something you like then have a look. If you buy something I recommend then that is your way of saying “thank you” to me for putting together this free course. I appreciate your help.
So, in this section I’ll go over the tools of the trade that I use for our home trading station and our multi screen trading computers. I am a Mac user so that’s what we’ll be talking about but if you like Windows based PC’s then you can at least see how we have everything set up then build an affordable day trading setup based on what we have going.
Let’s get started.
Stock Trading Computer Setup
Once I started our journey in trading I started small; one laptop and one external monitor. (Honestly, you can get by with just a laptop or a desktop computer.) However, what I started to learn was one external monitor wasn’t enough for what I wanted to do. I am not suggesting that this is the only way to go about putting together your day trading setup but this is what mine has evolved into. And, I’ll break down what I do on each screen.
Everyone will have a different opinion for a good laptop for tradingand will likely have their opinions on day trading setup monitors. The best monitor for day trading is really up to you as well as the best day trading computers. I’ve heard that some of the gaming computers make really good Windows based PC’s to run a nice day trading setup…..
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Risk management in stock trading is the most important part of learning how to trade stocks. It’s the reason 90% of traders lose in the market. Without proper risk management you are sure to fail. The best stock traders practice good risk management and know what tools to use to calculate risk. You need a good stock position size calculator on hand to know beforehand how many shares to take on, your stock entry point and your stock exit point. In this blog post we’ll cover those details and also show you our position size calculator for stocks.
Risk Management in Stock Trading – Risk Management In Forex too!
Risk management is learning how to manage risk while in a trade. Everyone knows that when starting out learning how to manage your risk is often the most overlooked part of learning how to trade stocks. If you don’t know how to manage your risk you are certainly bound to fail.
So, how do you do it?
Learn to cut losses correctly, and quickly and use a share size calculator. This is one of the most basic forms of risk management in the book. If you cut your losses as quick as possible your losses should always be smaller than your winning trades. The idea here is that you exit a trade as soon as you realize that the stock move is not going your way. It’s hard to get used to this. It will drive you insane when starting out. But, if you cut them quick, you can live to trade another day.
You Need To Have A Plan
Without a good plan to enter and exit a stock you are, honestly, trading blindly. You should know going into a trade how large your position is, your entry and exit points and the amount of risk you are willing to take on with regards to the percentage of your account. Your plans may not always be accurate when you start out trading but they will get better with time. Eventually, you will be able to do quick calculations in your head for position size based on your entry and exit points.
You need to have a predetermined entry point and exit point based on areas of support and resistance, the patterns your are playing and an overall good feel for the market conditions. When you start getting better at risk management by cutting losses efficiently and effectively you’ll start to become profitable as a trader. Sometimes you will cut a winner too soon. We all do it. But as you become better at risk management in stock market you will learn to live with those that you exited too soon. It’s just part of the game. At some point it will click and you will start to cut losses and take in winners more intelligently. Oftentimes it is better to cut losses too quickly than to stay in a losing trade.
The key here is to live to trade another day and build consistency. You need to keep your account safe. We’ve seen too many people BLOW up their accounts and then get out of trading altogether. It happens every day.
Get Better At Your Entry Points
The best way to get better at your entry points is to set up a demo account and paper trade for a while. (You can set up a demo account for forex or stocks here. There are several to choose from.) When we started out we paper traded and practiced for over 6 months until we got better at entry and exit points and also risk management.
Here are three things you can do to get better at your entry points:
Predetermine points of support and resistance
Focus on one pattern and learn it well
Always have a trade plan, know your share size, entry point and exit point
Sounds easy and it really is once you get used to it.
If you know the resistance points of a particular stock/forex this will give you an idea of when a stock will bounce or pull back for a consolidation. Knowing the resistance points makes it easier to create a plan to enter and exit a stock.
What are resistance points? They can be previous highs or lows. If you are day trading then look at the pre-market highs and lows and then when the market opens watch as the stock moves up or down. As it approaches a resistance level then you may want to exit or enter a trade, depending on whether you are going long or short.
Share Size Calculator – How to Use Position Size Calculator
You need to have a good way of determining your share size and a share size calculator will help you develop good position sizing strategies. We’ve built one that you can use for free here. We use it every day, still. You never want to risk more than 2% of your account size on any trade. Some traders go a little higher than that regularly. We recommend staying under 2% of total account size.
Here is a good position sizing example: There is a stock that you like and your entry point is $4 and risk you are willing to take on as an exit is $3.80 and your total account value is $1000 then the max you want to risk is $20. So, you could buy up to $200 of a stock as long as you are willing to get out at no less than $3.80. Anything less than $3.80 is over the $20 max loss you are willing to lose. Check out our position sizing softwarehere.
There is no set position sizing formula that is a one size fits all. No one can tell you the best position sizing method. It really depends on your risk tolerance, your style of trading and your account size. So, if you are like us when we first started we were pulling our hair out trying to find the ONE that we should use. Bad news; there isn’t just one. You have to use the basics that we’ve recommended and then try to develop your own and use our share size calculator to determine your best position sizing method.
Our share size calculator works for swing trading position sizing as well. Have a look at it.
No Standard Risk Management Blueprint
There is no standard risk management blueprint. Just like athletes that play their sport with a particular style, so too, do stock and forex traders have their own risk management style.
So What Have We Learned About Risk Management In Stock Trading?
Basically, you need to keep your winners bigger than your losers and you need to use a good stock position size calculator. And, if that was easy then everyone would be doing it. But, you have to understand that losing is part of trading and you need to embrace it. As long as you manage your risk then you can lose on 3 trades and win one trade and make up for all the prior losses. True story. It happens to us every day. We will get on a losing streak then one stock will pop and make up for all the losses.
You need to learn how to get consistent and that comes with getting more screen time. The more you trade the better you will get. We promise you that. We highly recommend setting up a demo account and paper trading before putting your own money at risk. For stocks, we started out on ThinkorSwim then moved to TradeStation. You can choose whichever platform you want and depending on what country you are from will likely determine which account you choose.
We have reviewed brokers from all over the world. Want to set up a demo account? See our “Find A Broker” link and have a look.
If you are new and want to learn more about how to trade stocks, forex or cryptocurrency then have a look at our free training courses here.
Some of the best forex trading books are found online and books offer an easy method to learn forex trading away from online learning. These days, trading education is done mainly online with courses through videos, webinars, and paid online forex courses.
But books still remain one of the best choices to learn trading even if they’re a bit different to learn from than online learning.
In the early days, books were the only option to learn trading due to a lack of lessons online and not enough usage of the internet. But, nowadays the internet has become the first choice for learning and usage.
Forex books offer valuable lessons that can help you in your trading. And, in this article, we will share the 3 top forex books.
Trading in the Zone (Mark Douglas)
Focused on mental preparation, Trading in the Zone is one of the best forex trading books and offers very good tips and lessons on trading psychology. Emotions and psychology in general are important in forex and this book covers these lessons. In this book, Mark Douglas highlights how to overcome fear in trading and become a disciplined trader. The book covers lessons of the fear of losing money, mistakes, and more.
Tips and lessons in this book offer a complete guide to the financial market. One of the favorite quotes of the book explains the lack of trust in your trades. “To be consistent, you have to learn to think about trading in such a way that you’re no longer susceptible to conscious or subconscious mental processes that cause you to obscure, block, or pick and choose information based on what will make you happy, give you what you want, or avoid pain.”.
Further, Mark Douglas in his forex book explains why trading offers individual freedom. The book covers the most common mistake made by traders that consider currency trading like a casino. Gambling in trading is very common and highlighted well by Douglas. Besides psychology, the forex trading book contains some lessons about technical analysis. Some lessons as moving average, trends, support, and resistance are covered in this forex trading book too.
Compared with the book “Trading in the Zone”, Naked Forex focuses mostly on the technical part and is one of the best selling forex books online. The book covers the technical analysis and highlights the importance of the technical part of trading. Compared with the book “Trading in the zone”, Naked Forex focuses mostly on the technical part.
The book covers the technical analysis and highlights the importance of the technical part of trading and offers the best books on forex price action. Even the indicators make the list on the technical part, the author highlights the trading without indicators. The book focuses on “pure” technical analysis without extra trading tools like indicators or expert advisors.
You can read lessons and tips explained well about support and resistance. Besides that, the book contains lessons about market chart patterns. Some of the most common chart patterns as a double top, double bottom, inverted shoulder, etc.
The book covers Last Kiss, Wammies, and Moolahs which are not very common in trading.
The book is valuable to read as it covers the psychology part like the book from Mark Douglas. The book, Naked Forex covers the common mistake made by forex traders which is risk management. Lessons on this book are focused on mastering attitude towards risk and how to become a professional forex trader.
The book address six key steps for every trader to improve. Besides zones, market chart patterns, the book also covers the trend lines. In general, the book was written to inform traders to analyze the forex markets mostly on the technical part without indicators. and is an excellent forex for beginners book.
Day trading style is the focus of this book written by Andrew Aziz. The book describes the fundamentals of day trading style. The author explains why day trading is different from other trading styles. Beginners in trading can also read this book as the book is not complicated for newcomers in trading too.
Reading this book will help you understand trading and what to expect from day trading style according to the author. Developing a trading strategy is very important and this aspect is covered a lot in this book. Traders who pretty good knowledge of trading, can jump to chapter 7 as the first chapters cover basic lessons.
Different from other trading styles, day trading focuses on extra trading tools. The author of the book lists tools as moving average and indicators. The technical part it’s covered this with good lessons that cover different factors of technical analysis.
Most major factors in technical analysis, support, and resistance are covered in this book. You can also learn about reversal trading with charts explaining reversal movements on the forex market. The book covers the foreign exchange market chart patterns as the ABCD pattern, bullish flag, and other market patterns.
The book it’s suited for stock traders but also forex traders too. The author explains all the indicators that he uses on his daily trading basis. Strategies when to enter trades and when to close the trades are covered in this book. Take profit target and stop loss level are covered by the author of this book too.
These 6 best forex indicators can be very valuable tools to analyze the charts in-depth details. Indicators are used by beginners and experienced traders. Using the indicators can be a simplified way to analyze the markets and find higher successful entries or exits.
Besides that, indicator tools can be used to identify potential market reversal points, divergences, support and resistance levels, and more. From the indicators, you can choose indicators based on your forex strategies.
In this article, we will list the best forex indicators such as RSI, Moving Average, Fibonacci, MACD, and Oscillator and these are the free forex indicators that work.
Relative Strength Index (RSI)
The relative strength index is one of the most used indicators in trading and easily the most popular forex indicator. The indicator has been around for decades and it is used by thousands of traders. Using the indicator on your charts can be very helpful as it assists traders in finding “overbought” and “oversold” conditions.
These conditions are known as uptrends and downtrends in the market. RSI uses different periods of movement such as 14-days, 30-days, and more. Then, the past price during these periods is shown on a small chart at the bottom of the MetaTrader software.
Besides the average movement during the past days, we also have the levels on the right side of the indicators chart. These levels are known as 70 and 30 levels act as oversold and overbought zones. However, the levels can be configured to other values, but these values are most popular amongst other traders.
When the price hits the 70 levels, that’s considered as an overbought zone. RSI indicator predicts that when the price reaches 70 levels, that’s considered as an overbought. This would give us a sign to sell, as a possible bearish momentum could occur.
In the other forex strategy scenario, when the price touches the 30 levels, that’s considered as an oversold zone. The best scenario with the assistance of the RSI indicator would be to go long (buy). RSI predicts that oversold is about to end so a bullish momentum could occur.
Besides the predictions of bearish and bullish trends, RSI can help you with “divergence”. In the market, divergence can occur often and it may be hard to find a divergence without indicators. RSI is considered one of the best metatrader indicators because of the many benefits that it has on predicting the markets. Divergence occurs when the price on the charts doesn’t match with the indicator’s chart.
As we mentioned, the RSI indicator helps to detect bullish and bearish trends. The indicators can find the potential end of a bullish or a bearish trend. For traders, this can be very informative and useful information on their trading decisions. Using RSI can help you to spot potential reversal zones on the market. And, it is one of the simple forex strategies that work.
The moving average offers a comprehensive way to analyze the price using different periods of time. The MA is one of the best leading stock indicators. This technical analysis tool uses a period of time in days, weeks, or minutes. During the trends on the market, for e.x on an uptrend or downtrend, using the moving average tool can be very useful.
The moving average measures the average price of the current currency pair over a specific period of time. You can set up the moving average in any period of time you want. If you set the period for 10 days, the chart of the moving average will show the average price during the past 10 days.
Moving average is the best indicator for scalping as it can be used in shorter periods such as minutes. Honestly, many traders make a living from scalping as it is one of the simple trading strategies that work. MetaTrader platform supports the moving average on the chart. So, you can easily set up the moving average tool and analyze the market on specific periods of time.
Besides the 1 line of the moving average, you can add more than 1 line of the moving average. Adding more than 1 line of moving average can be helpful if you want to analyze the market on different periods. The moving average lines on the chart are shown in different colors and you can spot them easily. This combined with the RSI compliment simple day trading strategies.
Support and resistance can also be found with the moving average. The lines on charts from the moving average help you to spot potential support and resistance zones. Moving average can be considered as one of the best mt4 indicators.
One of the best technical indicator for trading is Fibonacci and it is an old tool that’s used very often on the market, especially in support and resistance zones. It is one of the best technical indicators for day trading. The tool uses retracement levels that can act as support and resistance zones. Besides these zones, Fibonacci can predict potential market reversal zones.
You can use the Fibonacci tool on an uptrend, downtrend, and consolidation (sideway) trends too. Fibonacci uses the 23.6%, 38.2%, 50%, 61.8% and 78.6% levels. These levels are the most popular and used levels when traders use Fibonacci. Other levels can be used and added to the Fibonacci levels, but the levels that we mentioned are the most popular ones.
The percentage levels on the numbers that we mentioned are very crucial zones. These zones could act as reversal zones or continual zones. In these zones, when the price breaks a value that can be considered as reversal zones. In scenarios where the price touches the values that we mentioned and cannot break it, that could be considered as support or resistance.
Besides the potential reversal zones such as support and resistance, Fibonacci levels can be used with stop-loss and take profits. When you set a stop-loss price on the charts, using the Fibonacci with its levels, allows you to find potential retracement or reversal zones. So, to avoid the price hitting the stop-loss, you could set the stop-loss level below the retracement or reversal zones.
You can also place your take profit target on the Fibonacci levels. Fibonacci levels can be ideal levels to place your take profit target on the correct levels.
Fibonacci levels can be drawn on trading platforms such as MetaTrader or TradingView. To find the Fibonacci retracement levels, all you have to do is find the recent swing high and swing low on the current time frame. Then, you need to connect these swings by using the Fibonacci line.
Using Fibonacci in your trading analysis can be a plus to “boost” your predictions on the market. There’s no limitation on the time frames that you can use. Fibonacci can be used for different trading styles such as scalp trading, swing trading, or day trading. The indicator can also be called as the best volume indicator forex.
Moving Average Convergence Divergence (MACD)
MACD indicator it’s used mostly to analyze the strength, momentum, direction, and duration of the trend. The indicator calculates the price from past days and calculates them mostly on the closing price. MACD values can be chosen based on your preferences, but the most popular period values are 9, 12, and 26.
MACD average values are shown on horizontal curved lines. Divergence can also be found and it’s shown on the bar graph at the bottom of your chart. MACD it’s not used often typically to identify potential oversold or overbought zones. The indicator appears on the chart with two horizontal lines. If the MACD chart shows the crossing line above the zero, that’s considered as a bullish signal. This gives a hint to buy or exit if we’re on a sell order because of a potential upcoming bullish momentum.
When MACD crosses below zero, the momentum of the market is considered bearish. In this scenario, a sell order would be the best option or if you’re in a buy position, the indicator suggests closing that order. When the two lines on the MACD chart narrow with each other, the trend can be reversed. Besides the uptrend and downtrend, the MACD indicator it’s also used on a sideways trend.
The oscillator indicator is a short-term indicator that focuses on lower time frames. The indicator provides predictions with overbought and oversold to get us the best forex trading signals. The oscillator indicator combines with the moving average tool to identify potential market breakouts or reversals.
Using the Oscillator can serve us to identify divergence, overbought or oversold confirmation, scalp trading, swing trading, and day trading. When the oscillator’s chart reaches the top, that gives a signal to a potential end of the bullish trend. This would allow us to exit from any buy positions and open sell orders.
Similar to the overbought, when the oscillator’s chart reaches the bottom, that could give a signal to buy. The bearish trend can end soon and jump on a buy position according to the oscillator would be a good idea. Oscillator is also on the list of the best trading indicators.
Bollinger Bands indicator serves mostly as an indicator to identify support and resistance zones. Besides the support and resistance, the indicator can help to identify most profitable chart patterns.
The indicators use two lines, the upper and the bottom line. These lines can tell the strength and weaknesses of a trend. If the upper line goes up, that indicates bullish momentum. This could also tell a possible strong uptrend coming in the market if the prediction is correct.
If the bottom line goes down, that’s a hint of bearish momentum. Closing a buy position would be a good decision if the indicator manages to predict correctly. Besides the uptrend and downtrend, the Bollinger Bands can help to find a sideways trend which could tell us that the market’s trend will not change.
However, if the price touches the bottom, that warns us for a potential market reversal. This could mean that the market uptrend is losing its strength and a potential bearish momentum could occur.