What Tools and Software Do You Need to Start Trading?
It can often be overwhelming with the amount of things you need to get started with trading. To make things easier, here are a few things you'll need to get started trading in the live markets:
Charting Platform
Perhaps the most important thing you’re going to need is a way to view the charts and be able to analyse them. This is where a trading platform is going to help you. There are many different options available depending on the type of trading you do.
Trading platforms show the price movements of an asset, typically displayed as candlesticks. These platforms have various tools that can be drawn, and indicators which can be added to help your analysis. The charts can usually also be customised to your liking.
A charting platform isn’t just for live trading, it can be used for backtesting, demo trading, retrograde analysis and much more. All things that will improve your trading.
Two common platforms include Metatrader and Tradingview. As a quick overview:
- Metatrader is usually available for free from most brokers and is relatively simple to use. However, it’s mainly focused on forex trading, although it does offer some alternative assets depending on the broker.
- Tradingview is a popular alternative. The platform is more modern and includes many different assets. However, some important features are locked behind a paywall.
There are many other charting platforms available and I’d recommend trying a few out. The type of products you trade and your location may also be a factor. For example, option traders in the US may prefer to use a platform like thinkorswim for its option analysis tools. But this platform isn’t available outside the US yet.
After trying a few out, you can stick with the one you prefer. You can always use a mixture of platforms if you choose Metatrader, but want to access other assets too.
Brokerage Account
A broker will execute trades in the market on your behalf. If you want to open live trades in the market you're going to need a trading broker. However, even if you’re still learning, many brokers offer demo accounts which can be a good way to build up experience without any capital at risk.
Here are some key points to keep in mind when choosing a broker:
- Make sure they are covered by one of the big regulators, particularly for the country you live in. An example would be the FCA in the UK.
- The location of the broker. Many won’t accept clients from outside the country they are based. For example, many US brokers only allow US clients..
- Check the assets they specialise in are the assets you want to trade, and compare the spreads and transaction costs.
- Make sure they offer a charting platform you want to trade on.
Economic Calendar and News Feed
There are economic data releases and news events happening every day which can cause volatile moves in the markets. We need to be prepared for these as they can disrupt our trading.
The economic calendar shows us what economic data releases are expected throughout the day. They’ll also often show when there is central bank activity happening, including any speeches from policy makers.
We’d recommend checking the economic calendar each morning at the start of your trading session and before entering a trade. This will help us anticipate when the markets become more volatile, which could cause us to not take a trading position, or be prepared to reduce our risk on a trade that’s already open.
In some cases, things that cause volatility won’t always appear in the economic calendar. However, we can anticipate them by staying up to date with the news. We’d recommend reading the news each morning and evening, or while you’re waiting for an opportunity.
And sometimes there will be breaking news which can’t be anticipated, but we may need to take some action, such as reducing our risk. We’d recommend having a live news feed which gives you more information about any events that impact the markets. These can also be used to get updates after economic releases.
Trading Journal
There are two types of trading journal you’re going to need to use:
- A qualitative journal contains information about the context of the market, and your decision making. This type of journal is kept using note taking such as Evernote or Notion, and includes screenshots and descriptions of your decision making.
- A quantitative journal tracks the other parts of your trading. This is tracked using a spreadsheet and contains the numbers along with other information specific to your type of trading.
These journals aren’t just used for tracking your trading, they should also be used for periodically reviewing and optimising your trading. We have separate articles for these if you want more information.
Position Size Calculator
This is just a quick one, but using a position size calculator before you enter a trade is an easy way to calculate your position and reduce the chance of making a mistake.
Trading Simulator
A trading simulator is something that’s more optional, but will significantly reduce the amount of time it takes to learn the skill of trading.
A simulator is software that lets you practice trading using real historical market data. Unlike demo accounts, simulators allow you to speed up or slow down time and start at any point in history, like the 2008 financial crisis.
Key features of a good simulator include:
- The ability to download historical data and choose timeframes.
- Control over time with options to pause, rewind, or speed up, letting you analyze situations more effectively.
Neuroscientists suggest our brains perceive financial threats like physical ones. Beginner traders can develop emotional responses to market losses or gains, leading to mistakes like moving stop losses unnecessarily or revenge trading. Simulators offer a space to practice without these psychological risks that lead to bad habits.
Even experienced traders can use simulators to test strategies in various market conditions, gathering data without trading in real-time. Simulators also help avoid small sample size fallacies and allow you to practice 24/7.
What Next?
While this isn’t an extensive list, it should be enough to get yourself started on your trading journey. Just to recap:
- Find a suitable charting platform
- Consider a broker which can get you started with a demo account
- Find an economic calendar to keep track of the releases each day
- Read the financial news to stay on top of world events
- Find a live news feed for breaking news
- Create your qualitative and quantitative trading journals
- Find a position size calculator
- Consider using a trading simulator