subject: What Do You Need For Stock Market Trading? [print this page] There's no doubt that a great number of individuals are interested in making stock market trading profits. What some don't know though is that investing is never simple or easy. There are a couple of important tools that traders need to study and use correctly before profits can be generated. Here are five tools you should invest in.
Trading System
A trading plan isn't too difficult to define. A plan or a system is what you must have to successfully enter and leave positions. With a reliable system in place, you never have to suffer the kinds of losses that can substantially deplete your trading float. You can actually use another trader's plan but some experts suggest that making a fresh, custom plan is a better option. This is because a custom stock trading system matches your risk tolerance level. If you use someone else's system without bothering to modify it, you could be taking on risks that are too much for you to bear.
Charting Software
Every serious trader invests in charting packages. Aside from actually helping you make charts, the right software also helps you perform technical analysis on trade data. At a basic level for instance, you can use a chart package to explore thousands of securities and pick those that match your preference. With just a few inputs and clicks, you can get your hands on such information as highs, lows, annual revenue, earnings per share, dividends, minimum price, closing price and average volume among other security specific stock market trading data.
Back Testing Tool
This is what traders need to determine if their plans can work well using historical data. This is a crucial resource to have because untested systems can lead to huge and unexpected losses. If a plan functions well using past data, there is a good chance it will work perfectly on present trade conditions. Some charting packages have their own testing tools but some don't quite make the cut. A lot of expert traders opt to use separate products that focus specifically on testing.
Data Provider
Charting product manufacturers can also offer their own data feeds. In a lot of cases though, it is less costly for traders to go for third party providers. In choosing a data provider for stock market trading it is best to pick one that can support multiple markets, provide fast downloads and perform regular database checks. Also, you need a provider that has a long and reputable track record. This will increase its chances of staying for a long time and saving you from having to switch to another provider.
Brokerage
Having a broker is a requirement. Otherwise, you will not be allowed to place trades. What you need to determine though is whether you should settle for a discount or full service broker. The difference is that full service providers are more expensive because they give additional trade advice. You may not need this if you are confident with the system that you are using.
Of all the tools and resources that you need, your stock trading system is the most important. Always bear in mind though that the other four tools are what you require to execute an excellent trade plan.
