There are pros and cons to using stock trading software. I have a definite opinion on the subject as I not only worked in the financial software industry but also was a professional stock trader. I now write language learning software and trade on my own accounts, therefore, have not needed a real job in years.
Types of Stock trading software and financial programs
- stock charting software
- technical analysis
- Forex trading
- stock option programs
- day trading programs
- applications for pretty much anything connected with the equity or financial markets as there is big money in it
Stock trading software Pros
It is simple, you can download a program that will do your calculations faster and better than you. The best chess programs can consistently beat the best chess players. Do you use Microsoft excel? Why calculate things by hand when you could do the manual work with a press of a button and you do not higher level analysis.
Chess is not the stock market. In the stock market there are too many exogenous variable and human factors, chess does not have these external variable, it is an equation. The stock market can only be analysed based on statistical or econometric information. Although this is predictable it an not predicted it with a real degree of certainty.
Are stock trading software programs effective?
They are effective in helping you calculate and organizes data. However, the can not predict prices of equites in a systematic way so you can consistently make a profit.
Further stock trading software takes some of the emotional components out of buying and selling. People get emotionally attached to stocks and can not sell them even though they are like a bad relationship, just draining their energy. They will not sell a stock because their ego gets in the way and tells them they can not have possibly made a mistake. Applying some objectivity with help from a program will help in trading stocks, however, only in helping you make the decisions. analysis your portfolio or funds. Do not expect the software to make the decisions for you.
Stock trading software cons
Stock trading software does not work if you want the software to trade for you to make the choices for you and you can just sit back. I can almost promise you. Why? If it did earn consistently above average returns you could simply apply that trading system to a leveraged portfolio and retire in a year. You could do LEAPs or options or trade on margin or any of the other ways to leverage your equity. You could take a loan and apply it to the stock market.
Alternatively you could get paid 100 million dollars a year and work for the biggest firms on Wall Street. If you could earn consistent long terms profits above the index people will pay you more money than you can imagine, even if you can imagine a lot.
Yield to the logic of my argument. If there was anyone who could really predict the future they would and the world would know about it. The truth is there is not. Therefore, stock trading software does not work if you expect it to make the choices for you. I wrote about how to predict the stock market and it is a good rule of thumb and you do not need a program. People profit more from writing the code and selling the application than profiting from the bulls and bears.
Day trading mistake
Many people buy trading software in hopes of making a living speculating or investing in equities, currencies or futures or whatever. The rationalization is the price of software will more than pay for itself with one profitable trade. I agree, if you use it as I have said, to help you calculate not make choices for you.
Many of these people are not even day traders, but even people with the idea of being long-term investors but make scores of trades a year. Day trading or short-term trading is speculation. If you get involved in day trading your capital be aware it is too short a time frame to latch on to any meaningful patterns. There are some basic rules like in the late afternoon an hour before the market closes is the price nadir as traders clear their positions. However in the long-term you will lose capital trading in this way even with any software.
I highly recommend you take a one year or more time frame for each on of your potential buys. Use software to analysis financial condition and then make investments based on what a company’s management team is like. Do not worry about the week up and downs. This is the day trading Vegas speculation circus that is not meaningful for you.
Best free stock analysis software
I do not want to go down a list to make a comparison of programs. Why? Better than using trading software is using something like MSN money stock scouter, free stock market software. They are not trying to sell you anything. Their nine-year performance has been about 29% on their top ten picks. They have their stocks have a 1 star rating you can sell short with also. These market wizards simply use quantitative methods to give you probabilities. A paid analysis tool is valuengine.com developed in part by Professor Chen from Yale. Their five-star stocks earn about the same. It is a gives valuations on technical analysis and moving averages as well. However, I prefer free.
I use Scottrade.com for example and they have excellent chart analysis and everything is for free. If you are a real geek like me develop your own with using simply excel. I program but find that excel is often the best tool .
There are real free programs on sourceforge.net that are free for download, but why use this when you have this online on that is more powerful. Further the tool is only as good as the person using the instrument.
Often times sites that offer reviews of stock market software are doing this because they are affiliates and are trying earn a profit recommending you a program indirectly. They are writing stock trading software reviews to try to increase the market share of their own program, that is it. Why not start with an MSN stock screener. This will narrow the universe of potential investments and then you can relay on the unquantifiable factors live management’s ability to give you the edge in picking stocks and developing a portfolio for the long-term.
Conclusion on stock market software
Use the data from your online broker account and download it to excel. Use free stock screeners like MSN However, do not expect to buy some trading software and get rich. You can try their demos with paper trades, but I prefer to use valuengine.com or MSN and let other people input the data and narrow the universe from thousands to the top ten or fifty. Then I can use the information to make my decisions.