The development of financial investment software has reached a point where it is possible to access a broad spectrum of trading opportunities like stocks, futures, bonds, Forex, mutual funds, and ETFs.
Trading online is facilitated by two things: financial investment software and online brokerage accounts. It’s far easier to trade online than the traditional way of talking to a broker over the telephone. Instead of trying to visualize market trends, you can see the data in real time on charts. With all the tools available, from screening tools to advanced option analytics, from streaming news apps and easy access to other traders on social media, it’s much easier to trade.
When you get into your car on a long trip, you probably have a map and GPS to figure out where to go and how long it will take to get there. You also have gauges to monitor your time, speed, gas, mileage, and engine temperature. You need all this information to go from your home to your destination. Similarly, when using financial investment software, you need a dashboard to keep track of opportunities and make informed decisions about where you’re going.
Financial investment software is essentially a trading platform that allows you to participate in trades. Think of it as an information conduit that allows you to get quotes, read charts, and enter orders to be executed by your broker. You can get real-time and historical data from a platform, and it can be installed on your hard drive or be entirely web-based. Usually, web-based platforms, run on a dynamic web language like Java, are easier to use because you can access it the platform from any computer.
Since different platforms provide different levels of functionality, when deciding on financial investment software here are some questions to ask:
- What is the cost? Is it free? Is there a nominal fee? What features can you access?
- What technical indicators are included in the charting features?
- Is it a Windows or Mac based application, or is it a Java or HTML based application for the Internet?
- What does the order interface look like? What types of orders can you place?
- Is it possible to trade from charts? Is it possible to access historical data? Is it possible to backtest a strategy?
- Do you like the GUI – the Graphical User Interface? Does it allow you to look over a lot of data at once?
For the sake of simplification, let’s assume, you’re interested in stock trading. The steps for other types of trading in other financial markets are similar. If trading online is something you’re interested in doing, here are some steps to take:
1. Figure out how much money you want to use to trade. This money should be in an easily accessible place. You could, for instance, park this money in a money market account or a high-yield savings account.
2. Open an online brokerage. Find a broker who fits the particular type of trading you want to do. You can check on the legitimacy of a broker using BrokerCheck, an online tool by the Financial Industry Regulatory Authority’s online tool. Many brokerages offer a beginner package, which may include allowing you to trade free for a month. Naturally, you shouldn’t base your choice of brokerages on whether or not they allow you a trial period where you can trade free. You want to make sure you like the overall services the company provides.
3. Review the “rules of engagement.” There are numerous rules on stock trading that you need to know. You need to do some reading on the rules of stock trading. The Securities and Exchange Commission offers free and very useful tips for investors.
4. Study stocks. With hundreds of stocks on the US exchanges alone, there are plenty of stocks to study. Find out how other people are doing on forums, and become familiar with where to get news sources and investment advice. Look at this data from the perspective of fundamental and technical analysis. In learning the jargon, you will get lots of help from information portals like Investorwords and Investorpedia.
5. Learn to use financial investment software. An all-in-one trading platform like the stock charting software by eSignal can give you tools such as global market screeners, charting tools, and market data that you must become familiar with to get good at trading.
Finally, when you have all these five pieces in place, do some paper trades before committing any real money. This is a safe way to test out your investment strategies.
When you get started, you should have two objectives in mind: getting things set up right and the correlation between your theoretical understanding and buying and selling stocks in the real world. Over time, with lots of study and plenty of practice, you will get familiar with how to best invest your money.