How to Choose the Right Software for Day Trading
by Christian Ofori-Boateng on Jul 16, 2017 9:53:00 AM
The emergence of stock trading has led many fledgling investors to enter the market from the comforts of their own home, instead of seeking assistance from brokers. Subsequently, many tools have emerged, supposedly to help stock traders earn more from their investments.
Many of these actually help to yield bigger profits, as they allow investors to explore and discover the various opportunities available, according to an article by Finance Magnates. On the other hand, the sheer number of platforms available today can either confuse or overwhelm fledgling traders in terms of which one of these is actually helpful. In fact, all the trading software systems fall under one of three categories: data, charting, and trade execution.
Types of day trading software
Data software, as the name suggests, provides users with viable information, such as stock prices, that they need in order to help them decide which stock, currency, or future they can invest in or trade.
However, it is not enough for you to know what the prices are. It is just as important to know the movements of these to know which ones are more marketable compared to the others. This is where charting software comes in. It shows the movements of the stocks. This is particularly helpful for those who want to monitor the best time where they can buy or sell assets. The beauty of charting software is that the movements are presented in visual form via charts, so even for beginners who are not particularly proficient in predicting the market yet, can see which ones they can profit from.
The last type of software is for trade execution. This is the actual trading platform where people can create their personal account so they can purchase or sell off stocks, currencies, and futures in their portfolio.
It does not necessarily mean that a company’s offered online trading tool exclusively fits under one category, as it can also provide a combination of two or three of the services enumerated above. Various platforms allow users not only to trade currencies via the website, but also to monitor market movements. It also provides on-demand lessons and trainings, which will help fledgling trainers learn more about the industry so they can make smart investment decisions.
Choosing the right trading software
It’s important to take your time when choosing which software to purchase. The Balance suggests there are various types of trading software available in the market, so make sure that you evaluate which will fit the area that you want to trade in. For instance, if you want to get involved in forex trading, you need to ensure that the software you purchase is actually for that specific type of trading. As trivial as it sounds, beginners are susceptible to mistakes.
One thing that you need to watch out for is accuracy. The fast-paced world of trading means that the value of stocks, assets, and futures can rise or fall in the blink of an eye, so the software needs to be updated in real-time. FXCM state that buying and selling currency in the forex market is much easier compared to other forms of trading. Nonetheless, it is important that the trading tool you get reflects the real-time prices of the currencies so you are able to execute trades as soon as you pinpoint investment opportunities.
Similarly, it is important that you factor in how user-friendly is the software? Some are quite easy to use, even for beginners, while others may require the technical know-how of expert traders to use it effectively.
In a previous post - The Sensational Way Business Intelligence Improves The Finance And Banking Industry - we discussed that tools can be used to reduce risk. This same principle applies in trading, especially given the fact the market is volatile and it is just as likely for investors to gain returns as it is for them to lose a lot of money. Through these tools, stock traders are more likely to mitigate the risks and get their money’s worth in the long time if they learn by their mistakes.
However, the tools aren’t enough to ensure success. Traders also need to take the time to understand how to analyze these trends so they can make sound market decisions.