Stock Trading Tools – What Exactly Are the Best Tools For Trading Stocks?
In common with nearly all specialist software applications, stock trading tools have exploded in number and in their capabilities since the early 1990s. What exactly are these tools and which are the best ones for you?
1. Trading platforms and other stockbroker services
These are arguably the tools that have evolved the most quickly and to the greatest extent. Even the original, basic platforms that first appeared in the late 1990s were revolutionary compared to the system we had before – using the telephone to instruct your broker. Now with the latest developments you can enter, amend, or close a trade with just a few mouse clicks, and it’s almost (though not quite, of course) foolproof, with prices being displayed automatically, different colors for buying and selling, and so on.
Apart from the trading platform the main service that such sites provide is up to the minute news and news feeders. Now you have at your disposal all the instant news that the internet provides, all the information bearing on your trading that you could desire. Unless you are a strict technical analyst taking no notice of news or other events that may influence future price movements then you need constantly updated financial and market news.
2, Charts and indicators
These have evolved beyond all recognition as well. Most brokers, and many web sites not linked directly to any individual broker, have charting services available, which invariably include a host of indicators that are customisable to your requirements or those of your trading system.
Now charts are available on any stock, index, commodity, bond or currency traded on any financial market, and in most cases they can go back for ten years or more. In seconds you can load your own simple moving average settings or any other indicator or combination of indicators onto them.
3. Online educational resources
Most stock brokers have their own customised training available to their customers. It’s unwise to rely too much on any such package but nonetheless it is often possible to learn a great deal from these resources. My own preference is for independent coaching from an experienced and successful trader, rather than a broker. You have available online video, DVD video as well as audio and the more basic ebooks, none of which was available to any degree before about 2003.
One most important and significant development is that of the “demo account”. This is without doubt a major breakthrough and valuable asset of the trader, both new and experienced. This account enables you to test strategies and techniques in real time to see if they really work, without risking real money. There’s a temptation to trade recklessly precisely because it’s not real money, but my advice is always to treat is as real money if you really want to learn and to have reliable results, whether good or bad.
4. Trading robots
These are the latest tools to arrive on the financial trading scene. Pioneered in the forex market, they are beginning to establish themselves as mainstream stock trade software. In theory, you set your parameters, e.g. how much of your capital to risk on any one trade, stop loss levels, and load your chosen indicators or “expert advisors”, and the robot will open and close your trades for you, taking away the human emotional element that so often leads to losing trades.
At the present time they don’t seem to be able to take into account the fact that market prices are influenced by humans, with all our emotional baggage. But there’s nothing to say they can’t evolve and improve. In the meantime, if you’re tempted to buy one, test it out thoroughly with a demo account before risking real money with it.
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