Stock trading software is a program that allows you to trade stocks and other securities, such as futures or currency, and provides a wealth of information to help you trade smarter. Stock trading programs allow you to slice and dice historical data, stream stock quotes, test strategies, and screen for stocks, among other capabilities. In short, trading software provides a faster way to sift through data and improve your performance. (Here are the pros and cons of trading stock.)
Most full-service brokers offer fully featured stock trading software, and even smaller discount brokers that aggressively look to attract high-volume traders (such as day traders) may offer access to the programs as well. Brokers often will provide the software for free or at a reduced cost, but if not, you typically can license the software yourself and plug it into your brokerâ€™s system.
If youâ€™re thinking of taking up day trading and looking to make consistently smart decisions, you should consider checking out and then mastering stock trading software.
Stock trading software can offer a number of benefits to traders and investors. Here are seven of the top ways stock trading programs can help you make better decisions.
Trading software often allows you to create trades (â€śalgosâ€ť) that will execute when certain conditions are met. This automated trading goes beyond simple limit orders, which are found on all brokersâ€™ platforms, and allows you to set up complex conditions that trigger a trade.
One benefit of automated trading is that it can keep your emotions in check. You set up your trade while youâ€™re calm â€” helping you avoid an emotional decision and keeping you from a boneheaded decision later on in the heat of the moment â€” and the trade executes by itself.
Many software platforms also allow you to backtest trading strategies. If youâ€™ve ever wondered how a trading strategy would perform on a certain stock, you can test out how it would have performed historically and track the results. While there are no guarantees that the stock will perform similarly in the future, backtesting can give you perspective on how the stock may trade and how you might profit on it.
Streaming quotes are the most typical feature of trading software, and having a running series of stock quotes is always useful. From buying to selling, you canâ€™t make an informed trade without knowing how the market is pricing the stock. Some software packages also give you deeper insight into the market by letting you look at the order book so you can get a sense of how the stock might move in the near future.
Even when you have streaming quotes, itâ€™s easy to become inundated by the data and miss the bigger picture. Thatâ€™s why charting can be so useful, allowing you to see the trends behind the series of numbers. Of course, itâ€™s not just stock prices these charts allow you to see.
If you perform technical analysis on a stock â€” that is, predict where a stock may go based on its past prices and trading action â€” then charts are invaluable to you in finding trends. The best software provides moving averages, key technical levels and other tracking techniques to help you detect where a stock may move in the future. It also allows you to build custom indicators so you can track the elements that work best for you.
If youâ€™re more into fundamental analysis â€” analyzing a companyâ€™s business performance to predict how its stock will move â€” then software also can help you ferret out good investment ideas. Stock screeners can be your guide as you sort the universe of stocks based on certain fundamental characteristics â€” for example, profit growth, margins and debt levels. These screeners can rapidly help you find interesting companies based on the numbers.
Screeners also are useful for finding stocks that have performed well or poorly so trend followers can detect stocks that are likely to continue or reverse their performance.
Every good trading platform provides news flow so you stay informed. But many software packages also provide press releases and filings with the Securities and Exchange Commission, where so much of the excellent information pertaining to a stock is buried. Some platforms also include streaming feeds of financial channels, such as CNBC or Bloomberg.
Many trading platforms also provide you with research, perhaps using a brokerâ€™s own proprietary reports or third-party research. Research runs the gamut from fundamental (a companyâ€™s business performance) to technical (how the stock has performed and might perform in the future) analysis and data.
Proprietary research from a large investment bank can be especially useful because the bankâ€™s analyst often has good connections in the industry. A solid report provides information about a business that investors might not obtain from press releases or the financial media.
If youâ€™re looking to get started with stock trading software, the first and easiest thing you can do is check what your current broker offers. Many brokerages cater to the needs of high-volume traders and often provide high-powered trading software as part of their trading fee, meaning thereâ€™s no extra cost.
Some of the most popular include the following brokers:
If youâ€™re looking to try new stock trading software, the next best place is to try out a new broker. Many brokers will allow you to take a test drive â€” using virtual or paper trading â€” for free. The brokers above all allow you to try out their platforms and really get your hands dirty.
If youâ€™re looking for highly regarded third-party software, here are two options to consider:
There are many other attractive stock trading programs out in the market, and you may want to search for the one that best meets your needs and budget.
Stock trading software can help traders make smarter decisions because it gives them more information to base a decision on. However, more information is not always better information, and traders should find the platform that works best for them.