Over the course of a twelve-month period, it’s reported that only 5% of traders are actually profitable. That’s a pretty exclusive club, and if you want to be a member, you need to use all of the tools at your disposal to make that a possibility. One way you can do that is by taking advantage of the various trading software solutions available to you in order to improve your trading record and increase your profits. So what exactly is trading software? Well, in short, it’s any online tool, program, or service that helps you view, observe, analyze, and execute trades on the stock market.
These handy little tools come in all shapes and sizes, and which ones you decide to incorporate into your trading routine largely depends on the type of trader you are and the way you prefer to enter and exit your positions. In this article, we will break down the key categories of trading software and how you can use them to your advantage when trading the markets.
Practically every trader uses some form of charting software to view trends and predict future price movements. There are all kinds of charts out there, some of which are more sophisticated than the next, so you need to do your research to find out which solution will best match your needs.
The most popular charting software solutions, such as Tradingview, offer various technical analysis tools that you can overlay onto your graph to get deeper insights into the market. However, it’s important to remember that more indicators isn’t always better, so try to stop yourself from getting too excited and adding every indicator possible to your chart view.
For the most part, less is more, so find the indicators that work best for you and stick with them until you’ve mastered them.
If you don’t already use a market scanner, stop what you’re doing and go get one right away. These amazing pieces of technology will save you a tonne of time when searching for trading opportunities. They work by scanning the entire market based upon the predetermined criteria that you give to it. Once it’s finished its search, it will highlight all of the potential stocks that fit your requirements, and thus, saving you hours of scrolling through the markets.
In other words, market scanners swiftly bring your attention to potential trade setups in a simple, easy way. You can even keep them running all day long and set alerts when a stock reaches a certain price point or area of interest. This means you can keep your focus on your trades and not on painstakingly scouring the market for new trading opportunities.
Backtesting provides an excellent way to refine and improve your strategies without actually risking any of your trading capital. So how does it work? Well, backtesting software allows you to test out your trading systems against historical data to see how they would have performed in the past.
While it’s not perfect, backtesting is a great way to gain insight into the profitability of your strategy and get a sense of how profitable (or unprofitable) it is. The ability to test the viability of a new strategy is pivotal to a trader’s success as once they know a strategy works, they can hit the market with increased confidence when employing it moving forward.
Trade execution software
Now that you have access to your charts, data and you’ve back tested your strategy; you’re going to need somewhere to place your trades. Fortunately, most brokers offer software directly linked to their in-house systems, which means you can place trades seamlessly on their platform. However, these offerings aren’t always the most user-friendly, and they certainly aren’t the fastest. As any trader will tell you, time is money!
Fortunately, most brokers allow you to integrate third-party applications such as MetaTrader so that you can benefit from their feature-rich software and improved trade execution speed. You can even trade with several different brokers at the same time using one single interface, which makes it a lot easier to trade across multiple markets.
Remember, a few seconds can make all the difference between a good day and a bad day when trading, so do your research and look for software with good reviews and a fast execution speed.
If you’re an active trader looking for new ways to beat the market and improve your strike rate, you simply must make use of the fantastic trading software tools at your disposal. These tools are specifically designed to make your life easier and go a long way towards increasing your profitability and eliminating the headaches typically associated with trading for a living.