Using stock analysis software is basically the standard these days. Although, believe it or not, there are still people who will manually draw stock charts using standard graph paper.
Analysis software comes in a number of different forms. Most people who trade stocks online are familiar with their broker's stock trading platform. Online stock trading platforms will typically have stock charting capabilities. This allows a trader to not only view charts, but use a variety of technical indicators on those charts to make trading decisions. Once a trader has made the determination of what and when to buy and sell they can do so quickly and easily as they are already logged in to their broker's trading platform.
Some analysis software is to be used on the trader's computer. Most of this type of software runs under Windows, although there are versions of some software available for Mac users as well. The features included can range from very basic to extremely sophisticated. An example of very basic software would be that which allows charting as well as the use of a few basic technical indicators.
Screening software has become incredibly popular. Before this type of software a trader would have to go through a large list of stocks individually to see which stocks met particular criteria for trading. With screening software the trader can set up a set of parameters or specific price patterns that they are looking for and have the screening software scan through thousands of stocks in a very short period of time. Here's a simple example of what this type of software may screen for. — Find all stocks whose daily price just closed above the 200 day moving average. The trader looking for stocks of these types would be looking for stocks to buy as they have searched for stocks which closed above a moving average.
The most sophisticated types of stock analysis software are those which help you to test out your trading ideas and create a stock trading system. Software of this type will allow the trader to create simple formulas from their trading ideas. The software will then have the formulas run on a predetermined amount of historical data. This is done to see how well the particular trading idea might have performed in the past. The process of testing trading ideas on historical data is known and is “back testing”. By back testing the trader hopes to find trading ideas that are profitable. In addition, the trader hopes that the price patterns and other specific criteria he identifies will repeat themselves for future profitability.
The most sophisticated stock analysis software can test trading ideas as mentioned above and some software can actually automatically place those trades with your broker. This type of automated trading has become increasingly popular with short-term traders such as scalpers and day traders. Automation isn't necessarily advantageous to those of us who stay in trades for weeks or months at a time.
As you can see there is a wide variety of stock analysis software for you choose from. It's best to evaluate your current as well as anticipated future needs in order to select the software which will serve you best.
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