As stock trading grows in popularity, it is easier than ever to become a stock trader. Successful stock traders can make huge profits, but there is a lot of risk involved as well. That’s why it’s important to use tools designed to help traders analyze potential investments to reduce risk and earn decent profits.
Here’s a list of six essential trading tools you need to get started and succeed as a stock trader.
1. Choose the Right Trading Platform for You
A robust and easy-to-use trading platform should be the first item in your trading toolbox as a stock trader.
Brokers are the bridge between you and the stock market and are an integral part of the trading process. Trading platforms are where you will deposit your trading money and execute your trades. There are many trading platforms targeting different types of traders. Be sure to choose what suits your trading style and budget.
Note that the most advanced platforms come with the highest commissions and the most trading requirements, so it’s not just about picking the best-rated platform on the internet.
Here are some things to consider when looking for a broker:
Commissions: These can vary widely. Make sure you know how much it will cost you to complete a transaction.
Minimum account balance: Some brokers will require you to maintain a minimum balance in your account.
Hidden fees: Brokers love to add extra fees for platforms, administration, position adjustments, etc. Make sure you are aware of all charges.
Customer service: Make sure that a human, not a bot, will answer the phone when you call. If you have questions about your account, you should be able to reach someone.
Stocktrading.net reviews many stock trading companies to help you make the best choice for you.
2. Trade on a Mobile App
If you want to do frequent trades, you’ll want to be able to do it on the go, which means choosing a broker with a powerful mobile stock trading app. Common mobile apps are equipped with features that let you view quotes and execute basic trades.
The more advanced ones for stock traders are almost as comprehensive as desktop platforms, with advanced features such as charting, complex options transactions, and filters.
3. Make Good Use of Stock Charts and Analysis Software
Stock charts are essential for any trader who uses technical analysis, which involves evaluating past movements as a means of predicting future performance. A stock charting software tool helps you gauge the performance of a security or stock and make more informed projections.
Stock charts show a stock performance over time, allowing traders to recognize patterns and examine various technical indicators such as support and resistance. Users can use charts to dig into a stock’s history and see its past returns, as well as compare multiple stocks and benchmark performance against indices. Many platforms use artificial intelligence to help you analyze and understand the price chart.
Online brokers offer charting capabilities that vary in depth. External resources include websites such as TradingView and StockCharts, both of which offer a number of free features as well as enhanced memberships.
A number of financial sites also offer free charts. Yahoo Finance is known for its robust charts and is a useful tool for stock traders. It also offers a strong news feed from a variety of financial sites on a range of moving market topics.
Owned by MarketWatch, BigCharts offers stock charts screeners with interactive charting and research tools. You can filter stocks for a large number of indicators, styles, and performance comparisons with indices.
You may have the most powerful mapping and analysis software in the world, but without reliable data, it’s worthless. It should be noted that exchanges charge for their data because it is a huge revenue generator for them. Remember, you get what you pay for. Free data has the downside of being delayed or inaccurate, which can hurt your trading.
If your broker or charting software offers you free data, check to see if you can upgrade to premium data. Some mapping and analysis software build data charges into the monthly fee to make things easier for their customers.
4. Take Advantage of Stock Screeners
Stock screeners are tools that allow you to review or filter stocks using specific indicators and ratios. They reduce the homework you have to do before settling on an investment opportunity. A screener should help you create a watchlist. Beyond that, it is the completeness and accuracy of your research that will determine whether or not you succeed.
Stock screeners allow you to quickly find a stock based on the criteria you set, such as market capitalization, dividend yield, industry, or share price.
Most trading platforms offered by online brokers include a screener. Many advanced traders recommend Finviz for day trading. This site has really deep screening capabilities that can help you seize trade opportunities. Finviz also offers charts, maps, and quotes for the U.S. and international markets. Basic services are free, but for just under $25 per month, you get access to an elite subscription.
5. Use Trading Simulators
Trading simulators allow investors to assess the impact of trades in a virtual environment before executing trades with real money.
Several major financial sites, such as Investopedia, Virtual Stock Exchange, and Wealthbase offer stock simulators.
Several major brokerage firms also offer simulation tools that traders can use to test their ideas, including TD Ameritrade and TradeStation.
For brokerage firms, offering a robust trading simulation tool serves a dual purpose. It is a way to help educate traders and it provides a way for the broker to show off their abilities.
6. Find Trading Ideas
There are many ways to find trading ideas as a stock trader. One is to use subscription-based services. A reputable market briefing can save you hours of analysis and provide you with in-depth market insights. External analysis will help you keep an open mind and consider alternative opinions about sectors and companies.
Briefing.com is one of the most popular, offering everything from live market updates to IPO previews to emerging growth stock opportunities. Another service, Seasonalysis, identifies seasonal trends in stocks.
The other way traders research stocks is through fundamental analysis, which involves digging into financial statements, company news, and external research reports written by professional analysts. When you do this, you get a clear picture of how individual companies and industries are doing, and it can lead to investment ideas.
For instance, Morningstar is packed with analytical tools for stocks, mutual funds, and exchange-traded funds (ETFs).
Many brokerage firms also offer robust analytical tools for researching stocks. Fidelity, Schwab, TD Ameritrade, and Vanguard all offer data and research on a variety of stocks. Fidelity in particular is known for the breadth of its research. Some tools may require you to have an account or at least register with the site.
As a stock trader, developing your knowledge base is important. Use this article as a starting point to begin as a stock trader and remember to always keep learning to become even more successful.
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