Whether you’re a day trader or a hobby investor, you’ve probably heard about stock-trading software. Here’s what you need to know to most effectively use these investing platforms to be market smart.
What is stock-trading software?
Stock-trading software gives investors access to price data, stock analysis, trade execution tools and more, and there are many options to choose from. Discount brokerages including TD Ameritrade, online platforms such as TradeStation, and third-party companies all offer trading software that can be accessed online, on your smartphone or through a download.
Trading software providers tout their platforms’ endless features. Here’s a guide to common services offered and how they can help you make smart investment decisions.
- Scanner: Scanning tools constantly comb the stock market for trading opportunities. Investors can personalize their scanning tool to search for certain criteria and get alerted when they are found.
- Charts: Customizable charts help investors analyze the markets. Choose various indicators to compare recent or historical data and visualize changes in the market to recognize stock patterns.
- Streaming data: Constant access to data gives traders the knowledge to make wise choices about their investments. Software platforms provide access to data about stock prices, companies’ worth, quarterly reports and more.
- News: Major trading platforms can provide up-to-date news from third-party sources including Dow Jones, CNBC and Business Wire to keep investors current.
- Research reports: Trading software gives investors access to relevant industry research from third parties about specific stocks or analysis of more general market issues.
- Simulation: Sometimes known as “paper trading,” simulators give investors an opportunity to practice playing the market without real money at stake.
- Automated trading: A tool that buys and sells securities automatically based on pre-programed criteria, used mostly by serious investors who make multiple trades each day.
- Customer service: Although online trading platforms are rooted in a “do-it-yourself” mentality, most major software providers have some type of customer service, whether it’s 24/7 assistance, live-chat capabilities or a chance to speak with an advisor.
Online platforms are generally much cheaper than full-service brokers who manage your money for you. Still, prices and fees can add up, so think carefully about what you spend on trading software so you can maximize the money you have to invest.
Brokers make money through commissions. For stock trades, these are generally charged either at a flat rate per trade or per share. Additionally, there could be extra fees for features including data, software and certain types of trades. Some platforms also require a minimum balance.
Some providers give traders the option to test the software with a demonstration before signing up to pay for the service. Some also offer commission-free trades and cash bonuses starting out to give traders an incentive to use their product.
Trading Software Platforms
- Thinkorswim: From TD Ameritrade, this is a popular platform for active traders.
- TradeStation: This platform offers both per share and per trade plans.
- E*Trade: Choose between E*Trade 360 for casual investors, or E*Trade Pro for active investors. A mobile version is also available for on-the-go trading.
- Cobra Trading: Choose from three desktop versions – RediPlus, RealTick EMS and RealTick Express – and a version for tablets and smartphones.
- LightSpeed Trader: This platform offers both per share and per trade plans.
Being an active or semi-active investor is a big commitment of time and money. Do your research before choosing a software platform to ensure you get the best bang for your buck.
Trading illustration via Shutterstock.