Automated Stock Trading Software - How to Choose the Best

In today’s market, investors wonder if they should buy stocks and make money. The answer to both is “yes.” Stock market trading is a wonderful opportunity now, with prices lower and volatility higher than in many years. Stock trading online has never been more popular.

Automated trading platforms, robotic trading programs, and online trading systems are many terms used to describe the stock trading systems that can help you make a stock investment and grow your money. Review the criteria below and understand your preferences by talking with other stock traders. Identify the facts you need to compare programs. Before deciding, you’ll need a good understanding of the automated trading tools’ features and costs.

Many types of companies offer stock trading advice and stock trading strategies. They run the gamut from educational programs that aim to teach you how to trade to a list of recommended stocks to buy and sell at certain triggers to brokerage firm proprietary software, all the way to fully automated robotic software. For some auto trading software, prices can vary from thousands of dollars to less than $50 a month.

With such a variety, how do you choose? This article will guide you through the features and benefits of the available programs for online stock trading. We will not discuss trading software for options or Forex trading. Many of the programs are geared towards “day traders,” who technically open long positions (buy) or short positions (sell short) and close these positions the same day. Not everyone who uses these programs closes out their jobs by the end of the trading day–sometimes, they hold their places for days, weeks, or months. We’ll call this “active trading.” Sometimes, this is also referred to as “swing trading.”

A stock trading program’s essential features include a data feed for stock quotes and indicators, stock charts or charting capability of major hands, current balance and positions, and an order entry system. The order entry system should allow stopping (loss) orders, stop-limit orders, and trailing stops. A trailing stop limit is similar to the finish (loss), except its loss will be measured from the stock’s highest point achieved. The preferred method would be to keep the trigger prices in stealth mode, not viewable by the market makers, rather than as actual orders. Most automated trading software should include a watch list of the stocks to potentially trade based on the parameters the stock trader has entered.

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Exchange Traded Funds (ETFs) can be part of an efficient trading strategy. Unlike traditional mutual funds that are a basket of securities priced at the market’s close, these mutual funds are traded intraday on the stock exchanges. Online stock trading systems should also include trading capabilities for ETFs.

Other features to look for include safety measures that stock traders may take, such as establishing a profit goal–the minimum price increase a trader would expect a stock to gain before closing their position. Also highly desirable is profit protection for your investments, which is the reduced profit goal. After the stock reaches its profit goal and rises, the stock trading software should wait and let the profit increase. The online trading program should close the position and lock the profit if the stock price decreases or pulls back. This pullback value should not have any effect before the profit goal is reached and is intended to improve stock performance. More sophisticated auto trading programs will also offer a percentage gain from the stock trader’s entry price. The trader can also specify a minimum amount if the percentage gained is too low for Vinzite.

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Check the Features and Ask Questions

Several Technical Indicators – Stock traders can use hundreds of indicators to determine which stocks to buy and sell and when. The most robust programs will offer hundreds of technical analysis indicators, such as Bollinger Bands, and some will even include indicators for Candlestick Chart formations. Robotic programs use these indicators to set conditions for online investing.

Complexity – Automated stock trading programs vary greatly in ease of use. Some online stock trading systems do require actual programming expertise. Others point and click. Check out the online demo to see if it fits your comfort level before committing. Talk to others using the auto trading websites, and check out their online communities for more comments.

Number of Long and Short Strategies Per Account – Due to the online trading platform’s size, there may be a limit to the number of strategies you can have loaded on each account. If you want to run, say, two long trading strategies, you may need two versions. Also, confirm if your computer has enough memory for two or more versions. Experienced active traders may run two or more live long and short strategies while having additional charges for systems they are testing in a simulator mode.

Find Out How Advanced Your Software Can Be

Recommended Additional Features – The best automated stock trading software will include additional features that active traders will find invaluable once they have begun automated trading.

Additional strategy and order entry features include adding to a position as a stock goes up or declines, as well as a minimum purchase interval that the stock price should drop before it begins purchasing additional shares. A maximum bid/ask range will also be helpful, as the size of the spread can directly impact a swing trader’s ability to make profitable trades.

If there are hundreds of indicators, as with robotic traders, see if the indicators’ definitions are readily available. The purpose or formula for hands may vary from one electronic trading platform to another, so be sure you understand them first.

Recommend you have a program that displays the current Profit and Loss (P&L) on your open positions and the rules’ status on your watch list. For example, if the stock on the watch list hasn’t traded, is there a feature where the trader can pull up the rules and indicators to see which one(s) is preventing the trade?

Some automated stock trading programs visually display the percentage of symbols up and down in each sector from the specified time to the current time so you can see how the market is turning. Does the platform include the ability to block certain symbols from trading? If you’re running a long trading strategy, you won’t want to be buying ETFs that short the market.

Day traders will want automated trading software that tracks and displays the remaining day trades. Day trading is regulated by the SEC, so it’s important to understand if you will be day trading first.

Orders in Stealth Mode – A standard feature of many trading software programs is the ability to enter limit, stop, and stop limit orders. While having an exit strategy from your positions is important, telegraphing it to the institutional traders in the form of publicly viewed limits is not. It’s a little like poker–whoever can see all the hands has the advantage. Instead, newer programs allow users to enter these price points in the auto trader system but trigger a market order when the conditions are met. This is one advantage of a truly robotic stock trading program.