When considering our stock trading software, as we have already seen, there are several issues we need to consider very carefully, and this applies both to the software we use for our online trading, as well as that for our stock market analysis and screening, in order to draw up and target our watch list of stocks. In addition, we also need to consider carefully the type of online trading account, including such issues as to whether we use a cash account, or trade using margin, a very important decision, whilst from a trading perspective we need to decide on the depth of market liquidity required, which is generally referred to as Level I, and Level II. There is a Level III, but this is only available to institutional market makers. However, level II provides a significant insight into both the depth and liquidity of the market, and is particularly important if we propose to use a day trading strategy, and to be successful you will need a dedicated day trading software package along with this market data.

Best stock trading software

In order to find the best stock trading software there are many issues we need to consider in selecting our online trading account and stock broker, and I have broken these down into the various items as follows:

Trading tools

  • The first item to check is whether the trading platform offers both Level I and Level II data feeds. The second is vital if you propose to use a day trading strategy for your stock trading. For longer term trend trading this is generally not required, and is only valuable for short term trading strategies.
  • The next point to consider is automated trading signals. This will allow you to enter certain criteria such as a particular price, and for the system to automatically generate an alert when this target price is met – this will save you considerable time in checking your watch lists all the time and will trigger an automatic alert when your trading criteria is met.
  • Following on from the above point, your trading software should also provide sophisticated criteria based search tools to allow you to research stock markets around the world and undertake your market analysis accordingly, as well as the ability to construct watch lists of your target stocks
  • Most good online stock trading software will come with analyst and research reports to help you in your analysis
  • If you propose to trade from different locations or while travelling, make sure your online trading platform is available on the most popular hand held mobile platforms such as the IPhone and Palm.
  • All good software platforms should come with a virtual trading platform for you to trial the software and execution services. This will give you a good idea of the ease of use of your proposed trading platform.
  • Your software should come with a good charting package for your analysis. However, personally I have always found these to be inadequate and for my own stock trading have always used one of the following using their end of day charting data – Chartsmart for the US markets and Canada, and Sharescope for the UK and Europe.
  • Check the markets covered by your broker – some only offer limited stocks in overseas markets which may not suit your trading strategies.

Trading fees and commissions

Naturally we all want to trade as cheaply as possible, but cheap does not always mean the best I’m afraid, so it is always a balance between the two. Whilst online trading commissions are one of the costs you will need to consider carefully, there are several others which can be overlooked in your haste to open your new account and get started, so here are the main ones to consider :

  • Check that there are no account maintenance fees – some online brokers charge annually or quarterly, others do not, and some charge depending on the level of trading activity on the account, so do check this carefully in the small print.
  • Trading commissions will often be tiered, with costs falling as your volume increases. Check the costs for any broker assisted orders as these can be high, and indeed also check whether your broker offers telephone support. You may not need it now, but imagine if your broadband is down and you need to trade, then a mobile is the only way to contact your broker, so check if they offer this as a back up to online trading.
  • Check the costs for any specialist orders such as GTC ( good til cancelled) Limit Orders or Stop Loss orders. Again some brokers charge, others do not, but most will charge a fee for guaranteed stop loss orders which will take you out of the market, irrespective of market volatility.

Finally always look for free tutorials and free seminars from your online broker, who should be able to provide a complete overview of their platform and services. Now the last item we need to consider very carefully is that of margin trading and whether we open a margin trading account or a cash account – let’s look at the implications of this important decision.