Equipment and tools you need to start trading stocks
Trading stocks is becoming an increasingly popular way to earn some extra money in New Zealand. In fact, new would-be traders keep finding their way to the stock market and investments pretty much every day.
The promise of making a major profit by investing your money wisely into successful or emerging companies does have a certain allure. While some would say that it is gambling, it is definitely more than that.
You have little to no control when it comes to gambling. You can't know which card you'll get, how the dice will fall, or which field the ball is going to stop at. There is a probability that those with excellent math skills can employ, but even then, you are dealing with chances.
Stock investing is different than gambling
When it comes to stock investing, there is luck to it, certainly. However, luck is a side dish and not the main course. For stock investing you need data, knowledge, reports, historical performance info, understanding people's psychology, when is specific company's product going to explode and take the firm's value up with it, and alike.
Of course, this knowledge comes with research and time. These are the first two things that you will need in order to become a successful stock investor. In order to rule over the market, you need to understand it, and you need to be sure. You are working with large amounts of money, after all, and if you make a mistake, that money can go away.
There is little that is certain when it comes to investing, which is something that you need to be aware of right away. For example, sometimes, all indicators may point at a certain price performance for the stock you are interested in. Then, some new development might change the situation completely, in only a few seconds.
This is why you must also keep track of the news at all times, and realize how the news impacts the stock price performance.
As you can see, there is quite a bit that falls under research and data gathering, but all of this should make it quite clear that luck is hardly what you are going to rely on when it comes to investing.
Information is what you need to seek out first. However, apart from information and knowledge, there are a few other things that you may need — tools and equipment that every stock investor/trader will require in order to start getting involved with stocks. So, let's check them out and see what you should secure before you begin.
What tools and equipment do you need?
1) Internet access
Let's start with the basic requirements, such as the Internet. You, obviously, cannot reach trading platforms or acquire any of the mentioned information necessary for trading if you can't access the Internet. So, this will pretty much be the bottom-line necessity, or at least — one of them.
The next thing to note is that your Internet cannot be the cheapest you can find. You need it to be reliable and fast enough to load web pages in an instant. This is extremely important in order for you to be able to react quickly to new events, price changes, and alike.
Of course, this is usually a lot more important for FX traders or cryptocurrency traders. Stock investors usually invest long-term, and so this might not be that important for them, unless if you wish to day-trade stocks. If that is the case, then a fast, stable, reliable Internet is just as important for you as it is for a forex trader.
So, don't ignore the speed of your Internet; it might very well be crucial for the success of your stock trading/investing operations.
2) Backup internet access
With the importance of having a fast and stable Internet, you really should ensure that it doesn't go away or gets interrupted in any way. Just imagine if the price of a stock was slowly climbing towards its daily peak, and you are there, waiting for it to hit the magic number, when suddenly — your screen freezes.
Data stops coming in, nothing responds to your clicks and keyboard strokes, and who knows what the price is doing right about now. The Internet is great, but it is far from perfect. It may go in and out, depending on a hundred different factors.
You should make sure that you can return to the market ASAP in case of an outage. The cheapest and most convenient method would be to use your mobile Internet through your smartphone. Pretty much every phone right now can become your own private hotspot. All you need is to have an active mobile data plan, and ensure that it is not provided by the same firm that has given you your main internet access.
That way, even if the entire company sees issues, the other one will likely remain stable and reliable, and you will be able to continue trading until your main Internet gets fixed.
3) A computer or a laptop
There are plenty of mobile apps for stock investing and day trading, but those are meant to be used as an alternative, useful to those who are constantly on the go. If you don't live the life of a digital nomad or travel on business all the time, you should make sure that you have a laptop or a desktop dedicated to trading.
That means a device with enough memory and a decent processor, that won't keep crashing, lagging, or simply taking forever to load. The faster computer you can get and use for this purpose — the better.
In fact, you might even want to get a desktop with two monitors. That way, you won't lose yourself in endless tabs as you switch between charts and your broker, and you can react instantly as changes happen.
4) A phone
Most stock traders do not use phones to communicate with their brokers anymore. With fast internet connections, live chats, messaging apps, and other similar things, most don't bother with phones anymore. However, there are still some who prefer this method, so brokers still keep it.
But, what if your Internet and backup Internet fail for some reason? Or, what if your computer or laptop fails, sees a bug, gets infected with ransomware? What if you cannot contact your broker via email and customer support?
This is why you need to make sure that you always have a phone by your side. Whether it is a landline, a cell phone, or both, you must always have a phone nearby in case of an emergency. If you end up losing every other way of contacting your broker and the price starts moving in the wrong direction, you would want to be able to give new instructions.
So, make sure that you have a phone, as well as your broker's number on speed dial, or at least written down nearby. That way, you can quickly react in any situation and save your investment if something goes wrong.
5) Charting software
Next, you will also need to find which charting software to use. Now, most brokers already offer their own software that you can use for monitoring the price performance at any given time. However, depending on the way you trade/invest, you might be interested in different kinds of software.
For example, charts for investors are not precise enough for day traders, who need timed charts such as 1-minute or 5-minute charts in order to make the most out of each day's price movement.
Basically, you need specific software that will allow you to trade quickly and not have to deal with a lot of unnecessary steps. Simple, reliable software is the best. Alternatively, you can simply check out brokers such as Rockfort Markets, see what they have to offer, and decide on the spot if that is good enough, or if you need to use third-party software to track the prices.
The point is, charts are extremely important for day-traders, whether you trade stocks or anything else. So, finding the best charting software will result in the best charts, which will then lead to the best trading decisions, and the biggest amount of profit earned.
Brokers are services that fit this list pretty well because you need brokerage accounts for your trades and investments. They manage your trades by following your instructions so that you don't have to do the work yourself. In other words, a lot depends on the broker you pick.
Different brokers offer different services, support different assets, have different fees, different software, different quality of support, and more. It is very important to check out everything that available brokers have to offer, and then decide which one fits your needs the best.
Now, if you plan on being a day trader, you will likely make numerous trades every day. That means that you need a broker with the lowest possible fees so that you don't lose a fortune on commissions.
Next, you need the one with proper trading software that will be good for day trading. Chances are that regulated smaller brokers will be the best for this kind of work.
And, yes, definitely make sure that your broker is regulated, as there are plenty of fake companies run by scammers who are trying to trick new, unsuspecting investors into giving them their money.
These and similar details are things that you need to keep an eye on, as they tend to change from one broker to another. This is a very important choice, and you need to ensure that you do it properly.
7) Trading capital
Entering the trading world is meant to make you money, and that is not being questioned. However, as the popular saying goes — you need money to make money. Therefore, you will need some trading capital to start your trading career.
How much — that depends on what you trade, as well as your broker's own rules and limits. You will have to purchase stocks with your own money, and then earn more of it by making correct trading decisions, and exploiting price movements.
Also, prepare yourself for experiencing losses, as well, as things are bound to move in an unfavorable way from time to time.
However, you will never get anywhere if you measure your earnings and losses on a daily basis. Instead, measure it on a monthly, or at least two-week basis.
The market is alive, it is volatile, and it shifts. Some days, you might see nothing but losses. Others, you might have more wins than ever. The third type of days might bring a mix of the two, and you will only know if your trading strategy works if you choose one, stick to it, and then decide whether or not it works based on your monthly progress.
Basically, if after a month of trading you have more money than you had when you started, the strategy works, and you can keep going with it. If you have less, then you might want to try out a different one.
Trading stocks in New Zealand is extremely easy and popular these days. At least from the technical standpoint. However, if you want to become truly good at it, you cannot make random decisions based on luck. Instead, you will need to prepare, and that includes research and education, but also some technological preparations.
Knowledge will matter little without a good internet connection, and you can't do anything with your Internet if you don't have a good computer at your side.
So, make sure to create a proper setup, find good software, a broker you are satisfied with and prepare a bit of money to start your trading. After that, your performance will show whether your effort to prepare and educate yourself was good enough, or if you need to improve. Keep trading, keep growing as a trader, and your earnings will grow with experience and knowledge.
Author: Ali Raza - A journalist, with experience in web journalism and marketing. Ali holds a master's degree in finance and writes extensively about the financial markets and fin-tech industries.