Buying Stocks 101

Not so long ago, the average investor used brokerage agents to facilitate their investments.  They took their advice and traded their strategies.  A lot could be divined about a person by what brokerage house handled their portfolio.  But that has all changed.  Investors have much less faith in the advice of stock brokers, and recognize that the only person who’s going to look out for their investment goals is themselves.  But that requires gaining significant knowledge about the market, and keeping up with changes in the market as they happen.  They must study trends, analyze charts, and implement strategies often on lunch breaks and between meetings.  That may sound daunting, but thankfully a horde of software has sprung up to assist the average investor in navigated that sea of information.  To narrow down the field a bit, we have put together a guide to some of the best stock trading software on the market, organized by where they might fit in your toolkit.

Online Brokerages

The obvious first software tool you need in your arsenal is a mechanism to make trades.  Fortunately, the internet has democratized trading to such as degree that the vast majority of trades are initiated online through a variety of high-quality brokerage houses, some of which have no brick-and-mortor presence.  The ones that opporate solely online have much lower overhead, and therefore pass along the savings to your in the form of lower transaction fees.

The top 3 I recommend would be:

• ScotTrade
• TD Ameritrade
• eTrade

Trading Simulations

Any investor who has spent any time at the school of hard knocks knows that a strong trading simulation platform is worth its weight in gold.  Fortunately, most don’t require any cash, much less gold (though some simulate trading it).  These simulators give you a certain amount of “virtual” cash with which to place simulated trades using slightly delayed stock quotes.  This allows you to test new strategies without losing real money.  Simulations aren’t just for the novice either; seasoned investors know the power of executing one trading strategy while testing how another might play out.

Some trading simulators to check out are:

• Scottrade Elite
• TD Ameritrade Strategy Desk
• Yahoo! Finance Portfolios
• Gannalyst

Charting and Trends

You will not get far with investing if you don’t begin to look at charts and trends.  This is the math and science of investing.  They allow you to see how stocks do over time, where their highs and lows are, and where they might be headed.  Any gooding charting software will let you analyse the data from multiple angles, and compare it to other stocks or market segments.  While there are literally hundreds of charting tools for buying stocks and bonds, here are a few that offer excellent data at a very low price (that price being free).

• StockCharts.com
• QuoteTracker.com
• The Market Toolbox

Specialized and Targeted

It is likely that when you begin to get a grasp on the world of investing, you will find there are some investment vehicles that best suit your personality or that you find are more aligned with your investing goals.  Once you’ve decided to focus on a specific investment type, you may find that many of the software packages on this page are too generic or include too much information for other markets that you aren’t interested in.  In that case, you might opt for a more specialized or target investment tool that takes into account the unique aspect of your chosen market.  Here are some to look into.

• Penny Stock Prophet
• Forex AutoPilot

Most Popular

The following software packages represent some of best stock trading software available at an affordable price.  They are popular because they work.  Buying stocks is a complicated and time-consuming endeavor, but these programs allow for manipulation of complex portfolios, while providing data and automation to give you the best chance at making money.

Some full-featured stock trading software packages are:

• TradeStation
• WizeTrade
• Wave59
• AmiBroker

Final Thoughts

My recommendation would be to select one of the programs from each category that you feel is the best stock trading software for your goals.  Start with the free ones if at all possible.  You are going to need tools if you are going to make money in a market dominated by professionals and corporations with deep pockets so don’t underestimate the value software plays in your investment strategy.  But I must also issue a word of caution: software cannot make up for not understanding your market.  If you haven’t studied the fundamentals of your chosen investment vehicle and its corresponding market, software tools will only help you lose money quicker.  So study up, chose wisely, and as always, good luck on your journey to wealth and financial security.

One of the most significant concepts to understand when trading currencies is that, unlike other markets such as buying stocks, a currency trade consists of both a buy and a sell simultaneously.  For example, when you expect the Dollar to go higher against the Euro, you are dealing with two currencies and an exchange has to be made between them.  In this example, when you buy the Euro, you are selling the Dollar.  This makes the foreign exchange market a unique and exciting avenue for savvy traders.  In order to learn currency trading, you need to understand the terms.

Going Long, Getting Short, and Squaring Up

As in most financial markets, certain terms are used to indicate market positioning.  A long position refers to having bought a currency pair.  A short position means you have sold a currency pair, meaning you’ve sold the base currency and bought the counter-currency.  When you long, you expect prices to rise.  When short, you expect the inverse.   When neither long or short, you are referred to as being square or flat.  If you have an open position and you intend to close it, that is called squaring up.

Rollovers

Because you are trading currency, that currency will draw interest, or accrue interest in the case of a short position. Thus, if you carry over an open position from one value date to another, you are rolling over your position and will be affected by the interest rate differential, the difference between the interest rates of the two currencies you are trading.  Rollover periods vary depending on holidays or weekends, but generally you are looking at a one-to-two day rollover.  If your just beginning to learn currency trading, it would be helpful for you to stop here and make sure you understand value dates and rollovers before moving on.

Trading in the Currency Market

There are two primary ways of executing a trade in the currency market: live trades and orders.  A live trade is executed immediately, often with the click of a mouse.  This can be a bit risky if you enter the wrong amount because there is no turning back once a trade is submitted, however the up side is that you can react to moves in the market as they occur and potentially profit from those fluctuations.  On the other side, you have orders, meaning you are requesting a broker take an action at which time the market meets your conditions.  A take-profit order requests that your position be closed at a specified level, essentially locking in your gains.  Limit orders simply trigger a trade at more favorable levels that currently exist in the market.  Stop-Loss orders do essentially that, stop you from losing your shirt by closing out a failing position.  A Trailing stop-loss order is a stop-loss order that you set a fixed number of pips from your entry rate, allowing you to neutralize losing positions quickly, but let a positive position carry on.  One-Cancels-The-Other orders is a stop-loss order paired with a take profit order.  When one triggers, the other cancels, offering a great risk-management tool when trading currency.  Lastly, contingent orders are simply a combination of several order types strategically formed to cover all your goals and manage your risks.

Where to go from here

If you truly wish to learn currency trading, your best bet is to locate a Forex broker and begin to read over their policies and training documents.  Trading currencies is not like buying stocks; it is much more dynamic and returns can be realized quickly.  But be sure that trading currency is speculating at its core, so be careful to step in the waters slowly and gain experience in the market before risking large sums.