Trading Software

What Exactly is Trading Software?

Trading software makes it easier to trade financial products. These include stocks, options, futures, and currencies. It makes it easier for the individual, self-directed trader/investor to execute trades from their computer.

Some brokers provide the software as part of their trading platform. The software can easily be downloaded and launched from your desktop or mobile device. Some of the programs only require you to navigate to a website and log on to your account. There is even an option to download a third- party software to accompany your broker's trading platform. Your goal will be to find a platform that works for you and that you feel comfortable using.

Main steps to learn so you can get started

Use the software to make it easy to analyze and make trades.
Develop of a system to trade and invest in addition to learning the software.
Learn the important features: Placing Orders, Technical Analysis, Fundamental Analysis, Automated Trading, and Paper Trading

TRADING SOFTWARE USAGE 101

There's great news for traders and wannabe traders because commission costs have been falling and continue to fall. Some platforms have zero commissions on basic trades. This has led to an increase in the number of self-directed traders and investors. The demand for trading software is rising. It is becoming a necessity for traders to have effective software as they trade in real-time scenarios. Having the right software can be an important factor in a trader's overall success.

The software can provide the following features: up-to-date pricing information for assets, special orders, charting capabilities, fundamental and technical analysis with indicators, and other statistics. Some will even have chat rooms to discuss trading ideas. The functionality and number of features keep improving as technology advances. Traders and software developers use these features to attract traders so they can try out their services.

Application programming interfaces, or API, are also playing a part in the trading software industry. APIs allow a user to link two or more software programs so they act as one program. The trader can utilize the benefits of the two programs at once. Of course, the trader has the option to run both separately on their computers and monitors, but they won't communicate with each other.

TYPES OF TRADING SOFTWARE

There are several trading software programs provided by broker and third-party developers. The most common features include:

Placing trades:

Here you can place market, limit, and advanced orders. You will have access to real-time quotes and be able to view the Level 2 order book (which shows recent real-time trades). You may be able to track other trading statistics, such as your win rate and average profit/loss on closed trades.

Technical Analysis:

The software will provide extensive charting capabilities where you can draw trendlines and other shapes right on the chart. You will also be able to include technical indicators such as moving average lines and other price momentum oscillators.

Fundamental Analysis:

You will have access to company fundamental statistics such as their financial statements, earnings data, analyst ratings, and other proprietary tools to further help you make wise investment and trading decisions.

Programmatic Trading:

This advanced software feature can enable traders to automate their trading through their own trading system. The computer will execute the trade for you.

This can help eliminate trading on emotions as the program will execute the trade only if it satisfies the trading system's parameters. It will exit the trade as instructed according to the trade exit rules of the trading system. Some programs will even provide backtesting to see how the system would have performed in the past before using it in real-time.

Paper Trading:

No pressure, test your system without using real money. You can place risk-free trades to test out your trading and investing skills. This is used especially in the Forex market, but can be applied to almost any market.

WHICH TRADING SOFTWARE IS RIGHT FOR ME?

What type of trader are you? Do you plan to trade more actively in the future? You must answer these questions first before you decide on the trading software right for you. If you are an active trader and need to be at your desk for some or most of the trading day, your needs will be different than someone who is not watching the market all day and placing many trades.

Keep in mind that each software program will have different fee structures, performance features, as well as other factors that will affect your bottom line. You may like a broker because of the low trading fees, but not like their trading platform. You can then find some third-party software to use for your charts, strategy and trade decision making. When it is time to trade, then you can use your broker to execute the trade.

SOME EXAMPLES OF BROKERS AND THIRD-PARTY SOFTWARE TO START YOUR SEARCH

Some brokers have their own trading software that comes with their platform, yet some provide a third-party software application. Many forex brokers provide programs like MetaTrader 4 or MetaTrader 5, which is a popular trading platform for forex traders.

For stock traders, most brokers provide their own software. Here is a list of some large brokers:

Fidelity (uses Active Trader Pro software)
Interactive Brokers (TWS platform)
Charles Schwab> (Streetsmart Edge)
Trade Station (has its own platform popular with day traders)
TD Ameritrade (ThinkorSwim platform, popular among option traders)

Some third-party software and trading platforms include:

NinjaTrader (has charting, analysis and trading capabilities that can be linked to many brokers)
TradingView(has fundamental and technical trading tools which you can use along with your broker's trading platform)
StockCharts (similar to TradingView)

Recently, Charles Schwab and TDAmeritrade have merged their companies. Please see each individual broker to check on trading fees. Some companies are moving to commission free trading and I foresee the majority of brokers offering free trades as they compete to earn your business.

WHAT MATTERS MOST FOR AN INVESTOR

Becoming a successful trader/investor requires a lot of time and dedication. There is no magic formula or holy grail. Developing your skills and making good decisions will determine your success or failure as a trader. If your develop those skills effectively, you will take control of your financial future.

Do you think you have what it takes to be a skilled investor?

Do you want to dedicate your time and energy so you can learn professional investing skills?

We can help you on your path to financial security. You will know how to profit in bull, bear, or sideways markets and not have to worry about the state of the economy like many others. Here at Online Trading Academy, you can learn about our patented investment strategy. Sign up for a FREE half-day introductory class and see what we have to offer for an aspiring successful investor like yourself.