Online stock trading software – it had to come, and it’s well and truly arrived now. You can even get “robots” that do all your trading for you – at least, that’s what it says on the box. But, whichever one you select to help you make trades, how exactly do you use it, and how much can you rely on it? Can you stop having to keep abreast of news and developments in the market?
Before we get into that, let’s check our priorities. And number one there must be to select one that is right for you. As someone seeking to be a successful financial trader, or investor, you should select one that gives you the information you need, without burdening you with masses of data that you’ll never get through. So, should it be one that is a “robot” or makes recommendations, or a simpler one that merely provides raw data, charts and a few indicators?
I believe a simple program that nevertheless covers a large range of financial markets and instruments is ideal. Whether it comes from your broker or not isn’t so important, though probably a program independent of your broker is preferable. “Robots” and other programs that “suggest” trades are too unreliable for the serious trader. They are for games, not for putting your real, hard-earned money on the line.
The key point is this. All the successful financial traders use online stock trading software strictly as a supplemental aid to making trading decisions. Their actual trades reflect the information they obtain, not from this software, but from simply keeping abreast of developments and news in the particular market or markets that they specialise in.
And this is what I suggest you do as well. Copy the successful traders, and specialise in just a few markets. Get to know the company and its stock before you put money down on its expected price movements. Get to know the commodity, if you’re in commodities, and any production problems, what the demand is likely to be in a few months’ time, and so on. If you prefer international currency trading, study the currency pairings you plan to specialise in, get to know the state of the economy of both countries concerned, their prospects, their problems, and the way they intend to deal with them.
You can easily obtain this information from newspapers and magazines, and on the internet, from specialist web sites and forums. Once you start doing that, the charts and indicators you study relating to the same market will start to make sense. The wise beginner will resist the temptation to trade with real money at this stage, but will use a demo account or simply trade on paper until he is confident he has mastered that market and can predict what is most likely to happen.
Too many people using online stock trading software make the mistake of thinking it can give them all the information they need to make profitable trades. Probably it can’t. You need to do your own due diligence as well.
Philip Gegan
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