Tips for the first-time online trader-1

So you have tasted blood in the stock markets and want a fuller engagement for bigger spoils? You could consider getting into online trading.

Online trading gives you total command over your trades and is also cheaper since broking firms pass on their cost savings from the process to clients by way of lower brokerage slabs. Not to forget the additional advantage of cutting the time lag between deciding to trade and actually initiating it.

The process does have a few disadvantages, but these can be tackled. At any rate, the advantages far outweigh the disadvantages.

In this article, the first in a two-part series, we look at the logistics and security aspects of online trading. The second part will cover the actual nitty-gritty and tips and tricks to learn ‘screen reading’ as the professionals do.

Hardware/ software
Many first-timers are mentally unprepared for the concept of going online and using passwords and bank account codes online for fear of hacking/ phishing and identity thefts. While these are very real worries, luckily, the World Wide Web offers freebies that can turn your computer into a fort offering reasonable protection from attackers.

As for the hardware required, it is a myth that your processor has to be the latest to work online. PII processors will work just as well, though the later the hardware version, the better it is for you in the long run.

But, I suggest dollop loads of RAM for any PC as it is the key to performance. It ensures faster response time and faster ‘order fills’. In a volatile market, the last thing you want is time lags.

Also, your display is more important than your processor, since you need to stare at your screen constantly. You need not only a low/no radiation monitor, but one with a flat screen.

As a chartist, I can prove to you that a price chart appears as “A” on a curved CRT screen and as “B” on a flat screen monitor. If you use Fibonacci measurements, your support and resistance levels may appear “tilted”. Most online trader terminal software offer online charts and these are invaluable tools for any trader.

I suggest windows XP as the operating system. Your security patches must be constantly upgraded to keep attackers at bay.

Where net connectivity is concerned, even dial up connections work just fine. I use a mobile data card on my laptop that powers two different brokers trading terminals at reliable speeds.

If you have a broadband connection, you are in nirvana zone - no crisis of speed whatsoever. Just make sure your LAN card is up-to-date and is geared to handle the bandwidth internet service providers offer. Most good LAN cards cost less than Rs500 and may be you should just buy a new one before trading online.

Security
Take this issue very, very seriously. Almost all brokers will link their trading terminals to your online banking account and you don’t want attackers to trade on your behalf, steal money from your account and go on a holiday, while you file FIRs at the nearest police station.

You don’t have to spend a rupee with the systems that I use and they are all legal and freely available online.

First, enable your Windows Firewall from the Control Panel and keep it on with the “don’t allow exceptions” option checked on. Keeping your XP security updated via patch downloads will keep your firewall up-to-date.

Additionally, Microsoft offers a free security software called the Windows Defender which is available free of cost from the Microsoft website. As the name suggests, it defends your operating system from online attackers.

Also, download the excellent free firewall called Zonealarm from www.zonelabs.com and install it before you go online. A word of caution, Zonealarm tends to switch your Windows Firewall off by default.

Go into options and disable that function and you have a triple line of defence. Zonealarm has an automatic update function which downloads patches and keeps itself up-to-date.

The next free tool I suggest is the anti-spy tool Spybot Search and Destroy from www.spybot.info. This is absolutely free, offers manual updates up to twice a week.

The function of this software is to guard your open ports from intruders, plugs loopholes from malicious software, Trojans and password stealing software. Keep scanning your PC every week and download free updates to keep fresh anti-spyware vaccines at hand.

Lastly, download the free anti-virus AVG from www.grisoft.com and keep updating the anti-virus vaccines once a day. Scan your PC at least once a week with this software for any hidden viruses.

As for maintenance, you can keep your Windows registry free of garbage by downloading the free registry cleaner from www.ccleaner.com and running this application at least once a week. Your PC will continue to run as fast as a new one as long as you use this application.

Keep deleting your temporary internet files, forms, passwords and cookies from the Internet Options of your Internet Explorer.

(To be continued)

Vijay@BSPLindia.com