Fish or Cut Bait

[responsivevoice_button rate=”0.9″ pitch=”0.5″ volume=”0.8″ voice=”US English Female” buttontext=”Play”]

Previous posts covered single options and vertical spreads. We initiated a few trades and followed them on their paths to profit or loss. If you are reading this because you want to try your hand at option trading, you should already have or be close to opening a brokerage account and installing a trading platform on your computer.

I’ve tried to keep my posts broker and platform agnostic, though my trading preference has been to use TD Ameritrade’s ecosystem of trading tools. I’m less agnostic about trading hardware. I think trading on a phone is painful both because of the small screen and the relatively slow downloading speeds of 4G. This summer I’ve been using a small laptop with a 14-inch screen. It has been adequate, and I appreciate its portability. On occasion, I’ve had to rely on my phone’s hotspot to connect to the internet. That has worked, but it wasn’t much fun. I prefer to have a dual screen setup with 24- or 27-inch monitors and fast broadband access. I’ve found fast wireless networks work well with my style of trading. If you want to do high-speed day trading, you might have to limit yourself to a wired connection.

If you’ve read previous posts, I’m sure you’ve noticed the math used in evaluating trades is tedious. Good trading platforms will do the math for you. They also provide advanced charting and trade analysis capabilities as well as essential portfolio management tools.

Before you risk real money, thoroughly learn your trading platform and take plenty of time to practice trading using a trading simulator, also called a paper account. Overlearn your approach to trading. It might take a year of paper trading to reach confidence and proficiency levels appropriate for live trading.

Key takeaway: A lot of hands-on practice on an appropriate platform with a good brokerage is an essential prerequisite to live trading and potential profits.