Stock Trading Software

It used to be that if you wanted to place an order to buy or sell a stock, you used to have to call your broker or visit them in person. The broker would then call in the order and eventually it would make it to the trading floor and get filled.

This all took quite a bit of time and this certainly didn’t lend itself all that well to shorter term trading for sure. Not only didn’t we have fast executions, we didn’t really have much in terms of information either, of any sort.

Stock Trading SoftwareThings sure have changed though in the information age. Computers have been around for quite a long time now, first by the industry starting to use them, and then seeing them being available to individual stock traders to manage their trades.

Now, there is a wealth of information and tools available to us to allow and help us to buy and sell stocks, to a degree that people in the stock market probably couldn’t have ever dreamed about in the old days of paper and pen and telephone.

Some people still trade that way, over the phone, and maybe even reading stock quotes in the newspaper, but this has been well surpassed by electronic trading. You don’t even have to be at a computer anymore to trade, or to assess the markets, as this can now be done from anywhere at any time on mobile devices such as cell phones and tablets, as long as you have a data connection.

With the computing power in place to drive this, many software programs were designed to assist traders in both their execution of trades and their management of information. This has allowed traders to have up to the second information at their disposal, as well as the ability to execute trades instantly, a huge advantage over days gone by.

Stock Quotes and Execution Today

Online brokers now provide traders with access to real time quotes, which is helpful if you’re buying or selling in a longer term or medium-term time frame, and essential if you’re looking to do shorter term stock trading.

Stock quotes are provided free of charge to the public on the internet, but these quotes are delayed. If one wants to receive real time stock quotes, one must pay the exchange a small fee, which your broker can arrange and facilitate.

Online brokers also provide software to place trades, where the order is initially sent to your broker over the software platform, and this is then sent to the market electronically and executed. This will all happen in a matter of seconds if it’s a market order, although online stock traders may also place limit orders as well as other trade conditions as desired, which will be filled as the conditions merit.

Some beginning traders try to do too much with their orders, and this can lead to a lot of mistakes. While limit orders can be used at times, they run the risk of missing out on the strong trades and only capturing the weaker ones.

For instance, if you are looking to buy a stock that is moving, and looking to get a discount over the market, this will require that the market goes down a bit to get you filled. If it’s moving up that may not happen.

If it’s a very short-term play, by the time you get in the trade, it may have moved in the direction you were predicting too much to make it a good trade anymore. Regardless of the duration and movement of the trade that you were expecting, having to pay more due to a mistake in execution is never a good thing, even if you’re planning on holding it for years.

So we need to be careful with limit trades, and make sure we take this into account. If a stock’s price is stable in a tight range and you’re planning on seeing it break out a little later, limit orders can actually be helpful overall. If the stock is moving the way you expect already though, this could work against you rather than for you.

With the tighter spreads we see today, for the average individual trader, limit orders may not be worth the risk, and one can’t go too far wrong just letting the market fill it, which means that your broker will get you the best price available right now. If you try to take on the market makers and make the market, well they are pros and they hold the deck of cards so you might not get dealt as good a hand as you think.

Charting Software

Trade entry systems are all easy to use, and this is the easy part of trading. At one time, online brokers only provided the basics as far as software, just giving you the ability to place orders, and if you wanted some more information, you had to get it externally.

One could get some free software charting programs on the internet, although they were pretty basic. For a fee, traders could purchase more robust programs, which were of professional grade but usually came with prices that were as well.

Most traders could not justify putting out this kind of money for charting software though, and many didn’t really care or didn’t appreciate how better software may help them. There was also a big gap in skill with most people and in other words they really didn’t know how to effectively use charting even if they had the best charting programs at their disposal.

Brokers realized that they could make more money if they educated their traders more, as more educated traders tend to trade more, and the more people trade the more money brokers make. Brokers make their money from people placing trades, and to expand their business, they can attract more traders or they can just encourage the ones they have to trade more often.

As they focused more on education, this involved providing traders with some pretty decent charting programs so that they could better employ the strategies that were taught. The information that online brokers provide is pretty basic, as is the information they provide overall, but it is enough to get newer traders off the ground and at least whet their appetite to acquire more knowledge and experience.

More serious traders may want to use some of the better trading software platforms out there, which can now be acquired from premium trading platforms at no additional cost, or for a reasonable fee in other cases.

More Robust Trading Software

While one can trade successfully with just the basics, for instance moving averages can be used very effectively, some do prefer some more advanced charting software as well as the ability to back test various trading strategies

Some traders tend to overdo the testing part although in some cases this can better point traders away from what doesn’t work so well and toward what does. It also can encourage traders to trade more systematically instead of either acting too emotionally in a trade, paying attention to one’s current profit loss position and having that negatively influence exit decisions, or just guessing too much while in trades.

More advanced trading software platforms have more indicators available to be used, although traders want to be careful not to make their trading strategies so complex as to have them make decisions more difficult. This can lead to both too much indecision and too many mistakes. Good trades may be missed by not seeming to have enough ducks in a row when the problem may be that you are looking at too many ducks.

You can also program these trading platforms to automatically execute trades for you if certain conditions that you specify are met. Many third party add-ons are also available that come with pre-programmed signals that you can trade with.

If one is relying on these signals instead of one’s own talents, this can take away from the learning experience, and ideally, we want to be finding and executing our own trades if we’re looking to get better.

Successful stock trading is both an art and a science and when you rely completely on science you will never achieve your full potential as a trader.

As one seeks to learn how to use trading software effectively, there’s lots of opportunity to trade with fictional balances while one seeks to improve. This used to be called paper trading, when budding traders would write down trades that they wanted to take on paper, although this wasn’t a particular realistic simulation.

Although some still call today’s simulations paper trading, it is much more realistic, and is identical to the real experience other than the money on the line not being real. Even though one may be able to do well with fictional balances, they may struggle with real money on the line due to the psychological differences between the two.

The only way to combat that is to actually trade with real money, although traders don’t want to rush into that. When one does, it’s important to trade with amounts that one is very comfortable losing, as no matter how well prepared you might be, newer traders often start out by losing money.

Trading stocks with contracts for difference, if you live outside the United States, is actually a great way to learn to trade stocks, as well as many other instruments, due to the fact that you can get in on this while only risking very small amounts of money. That should be the goal at this point, to expose yourself to the least risk possible until you are confident enough to take on more.

Stock trading software has come a very long way, from not even being around not all that long ago, to being available to those who could afford to spend the money on it, to some pretty good programs being available to anyone who has the minimum amount to deposit, which can be as little as $100 these days.

John Miller


John’s sensible advice on all matters related to personal finance will have you examining your own life and tweaking it to achieve your financial goals better.

Contact John: [email protected]

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