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I dedicate this and related web pages to all math teachers, eager students and beginning traders. It clearly shows that all you need is your clear head, pencil, piece of paper and KNOWING what you are doing. In essence, no technology is needed or at least it plays the supportive role only. It's just you and your common sense. Good luck!
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Experience may come to trader in many forms. With today advanced technology we may narrow it to 3 distinct routes:
algorithmic-robotic trading: trader has to learn the features of the tool and know its applicable markets
backtesting: trader invests needed time to test his/her strategies.
selecting your favorite 'guru', reading her/his analysis and choosing what works for you. In our case we love the 'Think or Swim' school of thought
Before going the above routes you have to know or research foundation of the chosen trade subject: be it index or specific company. It's like knowing house or car design before building it. In trading case you have to know the volatility in the nearest past time frame. It will help you to set correct trade ranges while having real references. Here is an example of what I have in mind:
Let's say you trade a weekly time frame. That means you look at the Close quotes or Low / High quotes of the past 2 weeks.
If you find the ups and downs as I found in this example than you know that level of volatility to trade is +/- 30 points.
You know that your trading strategy brings profits for trades 20+ points one way and thus our found volatility provides this range, you are good.
If your time frame for trading are different than do this simple analysis accordingly to your chosen time frame.
There are also other important features to understand.
Granularity - set difference between Option strike prices: some stocks have Gran=5, others =2.5, 1, 0.5. Ex: stock xyz = 50, option strikes ...45,50,55... has Gran=5. 45, 47.5, 50, 52.5... has Gran=2.5 etc. The smaller Gran, easier to trade and control the risk.
Maximizing profits
Strive to separate facts from sensational writings
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