Can Stock Trading Software Make You A Better Investor?

Image by: OTA Photos
By Michael sterling

In this day and age, everything is going digital – even the stock market. Why go to a stock broker when you can do it over your smart phone, right? Despite how easy it may look, there are still major qualms when it comes to diving into stock trading software.

But like any software system, once you get the hang of it, you will soon wonder how you ever survived without it. That is, if you know what you’re doing.

Personal Control At A Lower Price

One of the greatest things that comes with stock trading software is the fact that you’re broker free! A broker’s job essentially is to bid on stock on your behalf while explaining the pros and cons of buying particular stocks or bonds. Though they substantially mitigate your risk, they can also create a barrier for you to bid on the stocks you want.

Whichever web service you use, they will serve as your broker – and at a much cheaper rate I might add. Brokers charge high fees, depending on their experience and expertise. Some make it clear that they only work with clients who have several thousand dollars to invest. Online trading has neither. Because of the lack of expenses, you have more money to invest. This can lead to higher returns.

One of the downfalls, however, is the lack of insight. Despite the fact that you are much more in control of your investments, unless you seriously train yourself on how to make wise choices, the lack of advice from a personal broker can be devastating.

Luckily, most web-based trading platforms give you access to sophisticated, informative tools for trading which can give you a pretty good education. But you have to do the work.

Instant Trading

The stock market is constantly trading and when you’re doing it online, you can place bids anytime, anywhere. Usually with a personal broker, you have lag time that can interfere with substantial decisions.

This new found freedom, no matter how optimistic you may feel, can also be your worst enemy. Because stock trading software allows you 24/7 trading, it might increase the willingness to constantly “be in the game” as if it were a game of poker. The stock market is inherently volatile, and anyone who decides to do it online has to know what they’re doing.

Automated Trading Systems

Also known as mechanical or algorithmic trading, this type of system allows you to establish specific rules for trading. Once programmed, all these decisions will be automatically executed online without you having to do a thing. Many platforms which offer this kind of trading have strategy building “wizards” that allow you to make selections from a list of common technical indicators.

Platforms like Tradestation and NinjaTrader are good places to start when it comes to Automated Trading. 

Though it may seem like computers are much more smarter when it comes to spotting trends, they also have major downfalls. Yes it releases much of your anxiety in that you are less emotional when it comes to decision making, but there’s always the risk of mechanical failures which might delay progress.

Depending on where the trading platform resides, either a computer or a server, a lost internet connection, computer crash, or a dead batter might stop an order from being sent to the market.

What Can The Best Stock Trading Software Offer Me? 

  • optionsXpress – Barron’s, Forbes, Kiplinger’s, and Smart Money have recognized optionsXpress as one of the world leaders in online stock trading. This is always a great option due to their constant updates in resources and user-friendly tools.
  • TradeKing – This is one of the least expensive, non-tiered commission structures of most online brokers. With a price of $4.95 per trade, plus 0.65 per options contract (with no additional fee for broker-assisted trades), they also offer award-winning customer service and trading education.
  • Scottrade has one of the best customer service rating, and allows for you to contact their team by email, phone, or visit. At $7 for trades over $1, they only require $500 to open an account.
  • E*Trade was one of the first online trading services, and paved the road for many of them. Needless to say, they know what they’re doing. However if you don’t have a large account or don’t trade a lot, this probably isn’t for you since they charge a $40/quarter fee if you have less than $10,000 in assets.
  • Charles Shwab is a good place to start if you’re looking for the whole investment package. They offer a decent price for frequent traders and more no-load mutual funds than most services. However one of their downfalls is that they don’t offer Blackberry or iPhone apps, so you would always need a computer at hand.