Apologies for the sound quality, this was recorded outside directly into the laptops internal microphone.

Trading over, now I’m back off to watch Wimbledon – we have a tradition where a bunch of us get together somewhere in Europe for the Wimbledon fortnight, and trading takes a bit of a back seat!

Don’t forget, you can get my videos delivered automatically through iTunes – see the link on the right.

“I was wondering what do you recommend I do with a minimum capital of about 1600 dollars? What should I trade?”

Lots of people have this kind of question, so perhaps my reply will be of use to others:

A budget of $1,600 is quite low, but certainly not uncommon. Given that amount, I suspect most people would suggest forex, because it’s easy to open an account with a deposit of that size.

Forex is also easy to trade on massive margin, giving you lots of leverage. If you’re a beginner, that’s a very dangerous thing indeed. Leverage makes it very easy to lose a lot of money very quickly. As traders, our first priority is to preserve capital.

As you probably know, personally I prefer trading US stocks, because I believe they are one of the easiest markets to make consistent profits in.

The sheer number of stocks available, and their predictable nature, means that you can find good high-probability simple trades every single day of the week.

So my recommendation would be to find a way to trade stocks with your budget. A regular account will let you day trade a couple of times a week. If you hold overnight, you can trade as often as you want.

If you can get a CFD account (which depends on where you live), then you can day trade as often as you like. If not, there are other options such as umbrella accounts, which can overcome the 2 day trades per week limit for accounts under $25k.

Having said all that though, your priority should be to learn to trade without risking any real money at all. Make sure you’ve learned the basics, and have a solid strategy ready to trade. Practice that strategy inside out on a simulator, or on paper, and *only* risk real money once you’re consistently profitable.

A lot of traders dismiss paper trading saying it doesn’t accurately represent the emotional and psychological challenges of live trading. That’s true, but that also means if you aren’t profitable paper trading, you have very little chance of being profitable in live trading.

In summary then: Learn the basics, then pick a strategy and practice it on paper until consistently profitable. Then open an account and start trading with that real budget. If you follow those steps in that order, the choice of market will already have been made by the time you get to the opening an account bit.

Hope that helps.

In this context a tick is a trade execution. So instead of dividing your chart based on time periods, you’re dividing on number of trades.

A possible advantage of this method is that you will see a more regular representation of activity during slow and fast periods.

To take an extreme example, in a slow moving market with very few trades occurring, you could potentially have five minute bar representing just a couple of trades. Using a tick chart, the bar would not complete until the required number of trades had passed.

In other words, in a tick chart, all bars are equal. Tick charts smooth out fast and slow periods of trading to give a kind of ‘quantized’ view.

Whether that’s *actually* an advantage or not depends entirely on your trading method though…

Trying to figure out if a tick chart is “better” is a bit like trying to figure out if a 10 minute chart is “better” than a 5 minute chart. They both show the same data, just formatted differently (although you could argue a 5 minute chart shows more data points than a 10 minute chart, but for the sake of illustration, they essentially show the same thing). It’s not the chart itself that matters, it’s how you interpret it and act on that interpretation that counts.

This works on Windows as well as Macs. You can get a free version if you don’t want to backup too much stuff, or pay a few bucks a month for unlimited space.

Your data is valuable, so if you don’t have a proper backup solution (ie not just an external hard drive but some kind of off-site backup), then I urge you to try this or one of the many alternatives out there. This saved my ass…don’t wait until it’s too late!

In this presentation I talk about the business of trading, and trading as a business. I also try to answer possibly the most commonly asked question of all….

I’ll try not to leave it so long before the next video. In the meantime, I hope you’ve been profiting from these exceptional times.

The short answer is ‘no’. There are hundreds of brokers and hundreds of charting programs out there for a reason; what’s right for one person isn’t necessarily right for someone else.

To explain this better, and to offer my advice on how to choose what’s right for you, my latest video delves into the question.

Note: This video was release earlier in the week through iTunes.