Stock Investing Software
The aim of this article is to help those of us who have decided to take a more involved approach with our finances. Given the recent impact volatility in the markets, and the many conflicts that stockbrokers and financial advisors seem to have, it makes sense to take another look at our finances and investments in this day and age, and if necessary to make trading and execution decisions ourselves.
While there are many available tools to help an individual investor judge the quality of bond or equity funds or to provide stock screening assistance, it is rare to find reviews of the execution software a self trading individual might need. This article looks at three types of stock investing software – eSignal, NinjaTrader, and Interactive Brokers.
However, before delving into the different services offered by each of these, it will help us to first consider what any trader requires before trading. First, generally (and very broadly) speaking, there are technical traders, and fundamental traders. Fundamental traders typically will do their research on a stock, based on its industry, financial performance and some type of value analysis. When they have concluded that a stock is worthy of a buy (or indeed, a short sell), fundamental traders can simply use a pure execution service such as a stock broker, or indeed E*TRADE, Charles Schwab etc, to carry out their trades.
On the other hand, technical traders look for cues to carry out their trades primarily on price action, and chart indicators, such as looking at average prices over a period of time, and looking at the balance between sell and buy orders over a period of time. Because there is a lot of graphical input and output, as well as what can be repetitive calculations (for example, when calculating moving averages over a long period of time), it should be no surprise that most stock trading software tends to lend itself to the technical trading business. With that in mind, we can look at the three software providers mentioned above – eSignal, NinjaTrader, and Interactive Brokers.
Of the three, Interactive Brokers is the only one that also allows execution directly through the same platform. With eSignal, or NinjaTrader, the user will typically open a separate trading account, which they can trade with either over the phone, or in cases link to their eSignal and NinjaTrader software. The eSignal software is free for a trial, but in order to make full use of its capabilities, it is required that you pay a monthly fee for access to live, or historical data series, which they do supply in abundance. With eSignal, it is extremely easy if you are a beginner to use charts, identify trends, and to manipulate data.
For more advance users, programming options are available, whereby a trader can write their own trading macros that are linked to live markets – in essence, if you can write something that replicates a trading rule, you’ll just need to activate it, sit back, and just watch it trade. NinjaTrader is a similar type of software, but which is entirely free. In fact, the user can download data series from any source they wish, and upload it for testing with NinjaTrader, to produce technical trading signals. As with eSignal, programming is available to advanced users, but unfortunately, the programming language used between the two is not easily transferable. Simply because of the ease of data supply, most technical traders who do not wish to spend time digging for data, will find the reasonable eSignal fee a good incentive to start their trading using this company.
Finally with Interactive Brokers, the cost of use can be different depending on the user – for example, if you are a particularly heavy trader, it is possible that IB will charge you no fees at all, except for the trading commissions that you generate with them! However, of the three, apart from its execution ability, IB also stands slightly apart because it offers options trading. For the short term stock traders, options provide another dimension to their tool set, whether it is in the form of option and stock arbitrage, or if it is to use options to hedge existing positions in stocks.
Hopefully, this article will have provided you with an introductory insight into the world of trading software available to you – ultimately, any consumer should be quite clear that all reputable software providers will offer free trials of their services, and that whether one or the other is preferable will ultimately be up to the trading experience that each individual comes across. Good luck and good charting.
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