We Should Live - Ben Bateman

General advice for the beginner on how to go about learning technical trading.

When I started this blog two years ago, I was passionate about improving the quality of my writing. As part of that project, I had the idea of doing a series of “How To Write” posts, working from the ground up. In short order I discovered two unalterable truths: 1) comprehensively explaining an entire subject is an awful lot of work, and 2) other people have already done that work, and done it better than I could. So I ended up writing only about the particular language topics that interested me on any given day.

Now I suspect that it’ll be the same with technical trading. Investopedia.com has a wealth of well-organized information on the stock market, including technical trading. The trouble with writing a comprehensive curriculum is knowing where to start, and what sorts of questions students are likely to ask. Some people aren’t clear on what stocks are exactly, and why they would fluctuate in value. Others need the basics of interpreting a chart, such as the difference between a bar chart and a candlestick chart.

The first step to learning technical trading is to start doing it—but not with real money. If you have a few thousand dollars you can open an online trading account with a variety of brokers. They will vary somewhat on fees, but particularly on their customer service and the details of how their trading platforms work.  All of them should offer a virtual trading option that allows you to practice trading with pretend money.  Use that option.

I’ve been through three different brokers in the past year and a half. Cybertrader impressed me not at all. Optionsxpress has a very beginner-friendly web interface, but it’s like riding a bicycle with training wheels: They’re great at first, but you quickly get sick of them and want something less restrictive and more powerful.

That more powerful trading platform is ThinkOrSwim. It’s very scary the first time, even if you mostly know what you’re doing. But it’s also very powerful once you learn it. Think of it as being like a sports car: hard to control at first, but ultimately very satisfying if you climb the steep learning curve. And they have great customer service. They’re very patient with silly newbie questions, especially if you call them after the market is closed.

ThinkOrSwim is so powerful because it doesn’t require a web interface. With the other two brokerages I’ve tried, you work through a web browser, using the same communication protocols that all other web sites use. Eventually you’ll want something faster. With ThinkOrSwim you run their program on your computer, and it communicates directly with their servers using whatever protocols they’ve chosen specifically for that purpose. No browsers are involved.

ThinkOrSwim will also give you the best charts that I know of, which are Prophet charts. ToS also has its own charts, which are occasionally useful for specific purposes. But generally Prophet is what you want, and ToS is a cheap way to get access to them. Much like ToS, Prophet charts are fantastically powerful, so much so that it’s unlikely that you’ll ever use most of what it offers.

Bottom line: Go open a ToS account. I think that the minimum is $2,500 to open one. Then start playing with the many, many options you find. They have some great video tutorials. And after you watch those, open up some Prophet charts and play around with those for a while. It’s all terrifying at first, but if you take it one step at a time and consult Investopedia frequently, it’ll slowly make sense.

Or you could do what I did and pay Investools an obscene amount of money for classes. Investools holds live seminars all over the place, and they teach a variety of trading systems so that you can pick one that matches your risk tolerance, your available time, and your budget for purchasing classes.