Trading Tools, Techniques and Technologies

Some people know their spread betting platform inside out. They know what every button does, but they still lose money because they don’t have a good trading strategy. They know how to use the trading tools, but their trading techniques need some work.

Some people have a good strategy but can’t make money from it because (for example) they are trading rapidly via an unsuitable stockbroker account rather than a spread betting account. Their trading techniques are good, but they are using the wrong trading technologies.

Some people are applying the right trading techniques on the right trading technologies, but they make silly mistakes because they don’t know how to operate the trading tools.

In order to be a good trader you need to understanding all three of the trading tools, techniques and technologies.

It’s surprisingly difficult to distinguish between tools, techniques and technologies, but I’ll have a go.

Trading Tools

Tools are the things you use — the steering wheel that you turn and the brake pedal that you press in order to practice your driving skills (the techniques) in your car (the technology).

So when I think of trading tools, I think of things like trading tickets and triggers provided by the trading platform. Hence my articles that help you understand the tools, so that, unlike the poor workman, you can’t blame your tools.

Trading Techniques

As suggested in my introduction, having complete mastery over the tools isn’t enough. It’s necessary but not sufficient, just as mastery over Microsoft Word is necessary for any writer but is not sufficient if he simply has nothing interesting to say.

When I think of trading techniques I’m thinking of (for example) my Seven Pillars of Position Trading or My Daily Routine.

Trading Technologies

When it comes to trading technologies I’m thinking primarily about the different kinds of trading platforms and accounts like spread betting, contracts for difference (CFDs), stockbroker Individual Savings Accounts (ISAs), Self-Invested Pension Plans (SIPPs) and regular brokerage accounts. We might even include financial fixed-odds platforms.

Each of these has pros and cons, depending whether you intend to trade frequently or infrequently, depending whether you have a lot or a little money to trade or invest, and depending whether or not you like paying tax. Okay, the last one was a joke!

Tools, Techniques, and Technologies

Now it’s time for a little introspection. Thinking about your own trading, do you fully understand the trading tools or do you prefer to blame them? Do you have a set of trading techniques formulated into a trading plan? Are you even using the right trading technology, or are you trying to fit the round peg of rapid trading into the square hole of a long-term investment account?

In a nutshell: do you have all three of the trading tools, techniques and technologies covered?

Tony Loton is a private trader, and author of the book “Stop Orders” published by Harriman House.

Tags: trading techniques