Automated Stock Trading Software - How to Choose the Best
Get the Information You Need to Evaluate Stock Trading Software
In today's market, investors are wondering if they should even buy stocks and if they can make money. The answer to both is "yes." Stock market trading is a wonderful opportunity now, with prices lower and volatility higher than in many years. Stock trading online has never been more popular.
Automated trading platforms, robotic trading programs, online day trading systems-there are many terms used to describe the stock trading systems that can help you to make a stock investment and to grow your money. Review the criteria below and understand your own personal preferences by talking with other stock traders. Identify the facts you need to compare programs. You'll need a good understanding of the automated trading tools' features and costs before you make a decision.
Many types of companies offer stock trading advice and stock trading strategies. They run the gamut from educational programs that aim to teach you how to trade, to a list of recommended stocks to buy and sell at certain triggers, to brokerage firm proprietary software, all the way to fully automated robotic software. Prices can vary from thousands of dollars to less than $50 a month for some auto trading software. With such a variety, how do you choose? This article will guide you through the features and benefits of the programs that are available for online stock trading. We will not discuss trading software for options or Forex trading. Many of the programs are geared towards "day traders," who technically open long positions (buy) or short positions (sell short) and close these positions the same day. Not everyone who uses these programs closes out their positions by the end of the trading day--sometimes they hold their positions for days, weeks or months. We'll call this "active trading." Sometimes this is also referred to as "swing trading."
The essential features of a stock trading program include a data feed for stock quotes and indicators, stock charts or charting capability of major indicators, current balance and positions and an order entry system. The order entry system should allow stop (loss) orders, stop limit orders and trailing stops. A trailing stop limit is similar to the stop (loss), except its loss will be measured from the stocks highest point achieved. The preferred method would be to keep the trigger prices in stealth mode, not viewable by the market makers, rather than as actual orders. Most automated trading software should include a watch list of the stocks to potentially trade based on the parameters the stock trader has entered.
Exchange Traded Funds (ETF's) can be part of an efficient trading strategy. These are mutual funds that are traded intraday on the stock exchanges, unlike traditional mutual funds that are a basket of securities priced at the close of the market. Online stock trading systems should also include trading capabilities for ETF's.
Other features to look for include safety measures that stock traders may take, such as establishing a profit goal--the minimum price increase a trader would expect a stock to gain before closing their position. Also highly desirable is a form of profit protection for your investments, which is the reduced profit goal. After the stock reaches its profit goal and continues to rise, the stock trading software should wait and let the profit increase. If the stock price decreases or pulls back, the online trading program should close the position and lock the profit. This pullback value should not have any effect before the profit goal is reached and is intended to improve stock performance. More sophisticated auto trading programs will also offer the percentage gain from stock trader's entry price, and the trader can also specify a minimum amount in case the percentage gained is too low.
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