Using a software package to select and time your trades can be a great help to most investors but with so many software packages available and all sorts of confusing claims from producers, choosing the right trading software can be an extremely difficult decision.
In this article David Larsen, from investment firm DTL Capital, outlines what trading software can do for you, the types of packages available, and provides some tips to help you find the right package for your needs.
There are many different investment styles, but successful investors share a few common characteristics - they are disciplined, organised and can remove their emotions from the investing process. Having the right tools at your disposal will help you acquire these characteristics, and one of the most important tools is the right investment software package.
What will DTL Capital Software do?
DTL Capital software can help improve your investing by:
Presenting complex information visually - Humans process information better through images than streams of facts and figures. DTL Capital software displays share price data in charts to help you easily see trends, areas of support and resistance, and allows you to gauge whether a stock is overbought or oversold.
Testing and implementing a trading plan - Disciplined trading requires you to set rules about when to enter and exit the market, and how much money to commit to each trade. DTL Capital software will help you build and test your trading plan to manage this process, and take the emotion out of trading.
Saving you time - Scanning tools let you scan over 1500 stocks on the LSE for opportunities based on your criteria.
Which software is right for you?
Of course which package you choose is going to depend on what you need it to do. Our experience in selling a wide range of investment software has enabled us to put together the following guide to point you in the right direction.
Step 1 - Decide which features you need
Software programs can offer hundreds of different features so we start by looking at the key components:
Charting/Technical Analysis Software Displays historical share price data and indicators in a graphical format. This allows you to see emerging trends and price patterns, support and resistance levels and overlay indicators on a chart. These indicators are particularly useful for short to medium term traders looking to time their entry into the market.
Scanning Software Quickly scans the entire sharemarket using your stock selection criteria to find possible trading opportunities. May use one or both of fundamental (financial) or technical (price and volume analysis) criteria to find stocks.
Step 2 - How experienced are you and what is your investing style?
One size does not fit all with investment software. To find the package best suited to your needs now and in the near future, you will need to consider your experience and style of investing. We classify software according to an investor's experience level:
Beginner You have a basic understanding of the stockmarket and are looking for a tool to more easily display information and organise your trading.
Intermediate You have been educating yourself and trading for a reasonable period of time. You have a trading plan which incorporates a consistent strategy to enter and exit trades, and manage risk for each trade
Advanced You have a detailed understanding of trading, and a rigorously tested trading system which you have back-tested against many different types of markets and use consistently to make trades. Some advanced features you may be looking for include customised scans and build-your-own indicators.
The vast majority of investors fit into either the beginner or intermediate experience categories and should not be fooled into thinking that they need all the bells and whistles of the complex and expensive packages available.
And style of investing:
Passive Investor You typically buy and hold shares for periods of 6 months or longer and look for stronger returns than bank interest. You don’t have the time or desire to get too involved and typically make decisions in consultation with a financial advisor.
Active Trader You typically buy and sell shares within a 1 day to 6 month period. You actively monitor and adjust your portfolio and aim to generate a significant income from trading.
Day Trader You typically buy and sell shares either on the same day or within 2-3 days. You spend a significant proportion of your day in front of a computer screen, and make revenue through small profits on large numbers of trades.
Most software packages are designed for active traders. This style is best suited to self-directed investors looking to build their wealth through share trading without spending their lives in front of a computer screen.
Step 3 - What else will I need?
Data Feed To use any investment software, you will need a data feed. These come in a number of formats including historical data, end-of-day data, snapshots, real-time data, and fundamental data. For advice on your data requirements please contact us.
Step 4 - Pick your package
Speak to an experienced account manager at DTL Capital today who will discuss the benefits of the trading system that is right for you and start generating money from the stock market today.