Day Trading

The day trading program is a powerful tool to help you make money. However, like all powerful tools, it should be used with caution.

Automated day trading software has been around since the 1980s, and has achieved wide spread growth since the 1990s when a typical desktop PC could become powerful enough to handle it. Now that we’ve had another decade computer development on both the software and the hardware side, the question becomes – what’s the best day trading program out there? How can I use it to make money?

Let’s identify the traits we’d like to see in a best of breed day trading program.

First, it should be able to pull information from multiple sources, and be able to provide graphs of what’s going on. It should be user configurable so that the trader can make informed decisions and can turn off or turn on features to avoid ‘graph explosions’ and user interface clutter.

Second, it should have an automated trading component. A large part of what’s changed in how stock trading is handled is that more and more of it is handled by computer programs. Rather than being bottlenecked by how quickly you can reach your broker on the phone, day trading software focuses on getting your trades to your broker’s computer for automated or semi automated execution.

Third, the best day trading programs should provide interpretation as well as numerical analysis. They should compare current market trends to existing trades, from those that were made and input into a database when the software was written, and comparing to trades since the software was activated. Where modern day trading programs excel is in this original database

While there are advances in neural network programming that will allow computers to learn, be cautious about anyone currently trying to sell software that learns from its own trades. This is on the outer edge of possibility, and is probably more marketing hype than actual capabilities at the moment.

All that said, the best stock trading program out there is only a tool. Don’t go into one expecting it to be a turn-key solution to make money off of the fools on Wall Street. Anyone who’s trying to sell you that is more interested in getting your money than in helping you make money.

Focus on day trading software that comes with an educational program, something that explains the tools of day trading, from leverage (taking out a short term loan to buy stock you think will increase in price, paying it off with the proceeds of selling the stocks) to short selling (borrowing a share of stock, selling it, using the proceeds of the sale to do other transactions, then buying the stock at a lower price to return it to the person you borrowed it from) to reading volatility indexes (which way is the market moving, and how rapidly do trades need to be executed.

In the end, you need to exercise human judgment in using even the best day trading program out there. It’s no substitute for experience, though it can make getting that experience a lot less painful and expensive.

Author: Peter Skotnicky
Article Source: EzineArticles.com
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