Trading Software Options for Investors
Trading software options are probably a topic of interest if you’re looking to invest in certain assets. Before buying or selling assets, the first step is to figure out the current conditions. If you follow the charts, you probably use favorite indicators to help spot opportunities. Perhaps you follow influencers to learn the fundamentals and basics of trading. Depending on the influencer this can be both enlightening and confusing. Some are extremely patient and repetitive while teaching what is second nature to them. The lessons still sound like Greek to most investors. The truth is, most of us are looking for the easiest avenue to profitability and do not have the time to learn. That is not a criticism – just a reality.
You need to spend time on the computer everyday trading stocks, commodities, options, currencies, or cryptocurrencies to be a day trader. Prep time is required prior to trading sessions, and a good number of trades must be made before a significant profit is realized. The need for a solid trading strategy is important. You have to make at least 5 to 10 trades each day as a “day trader” to turn a profit. But what if the opportunity for profit doesn’t present? Do you have the patience to stick to your strategy? Forex traders will find opportunities that open up sooner than the stock market because the market trades 24 hours a day. Volatility is higher for digital assets that trade 24/7, which presents an opportunity. However, if trades are not performed quickly you could spend the entire day in front of the computer. Might trading software offer an advantage?
After the trading session has concluded, is it time to kick back and relax? Not so fast. Now you need to analyze your trades to ensure they are on target and see if you might have done something differently. It is now time to research what new opportunities might be opening up. Then scan the Internet for reliable news stories of events that could impact trades in play. The conclusion is that day trading is extremely time-consuming and leaves little time for life’s other activities. Hence why trading software is appealing. But what works and what doesn’t? What is worth pursuing and what isn’t? Let’s explore some trading software options for beginners.
Software for Copy Trading
This type of trading software, like TradeSoEz, allows individual investors in various markets to automatically “copy” positions opened, managed, and closed by expert traders. By linking a portion of the copying investor’s funds to the account of the copied investor (via API), this trading software option can be an effective choice for beginners. While there are risks when trading any asset, copying the trades of a professional using TradeSoEz™ has two distinct benefits:
- Funds are always in the possession of the investor;
- Every operation executed by the expert is automatically copied.
Whether trading Forex, stocks indices, commodities, interest rates, ETFs, or digital currencies, the backbone for market movement is liquidity. The ability to quickly buy or sell an asset without causing a drastic change in the asset’s price. Copy-trading software was originally created for the Forex market due to its immense liquidity. Almost all the other markets and their instruments can be copy-traded. Volatility in a market can present a significant risk, but when harnessed correctly can generate solid returns for shrewd investors. There is an opportunity to profit when the markets are choppy, surging, or crashing.
The “broker” required to invest in most markets can be the platform software for copying trades. The software allows the investor’s account to receive the operating signals to copy the actions of the trader being copied. The “trader” is the signal provider for the copy trade software. Platforms allow investors to review and evaluate a trader’s operating performance data and strategies. When a copied trader opens a new trade, the platform trading software receives the data. All investors copying this particular trader are verified, and details for opening the new trade per the allocation settings are transmitted. New trades are visible in the copy trading platform and the individual’s account. The process is fully automated to happen in a fraction of a second.
Best Practices for Copy Trading
Professional traders are the “signal providers”. They signal the copy trading software by using fundamental analysis, indicators, or price action techniques. Most traders specialize in one but have at least a basic understanding of all three, and generally categorized by the timeframes in which they trade:
- Scalper (seconds or minutes)
- Day Trader (hourly or daily)
- Swing Trader (daily or weekly)
- Long-Term Trader (monthly or yearly)
The performance of an expert trading team can be determined by a combination of trading strategies.
As an investor, you are responsible for the management of your own funds. If best practices are not followed, it is entirely possible to copy a top trader and blow your account. Setting the proper allocation and maintaining the recommended minimum balances is key to success.
Allocation controls how much of your account balance is used to copy trades. Minimum balances prevent missed trades. Copying an expert trader that has a $50,000 account with a $2,000 account balance and a 50% allocation would not be optimal. Chances are the expert will make far more trades than the $2,000 account can reasonably copy. Actual trades copied could result in losses, while missed trades could have been winners. Allocate properly to minimize losses and maximize profits. This requires progress to be monitored and adjustments made to find the right balance.
Pros and Cons of Copy Trading
|Success depends upon the expertise of the expert copied.||Copy trading is largely passive, requiring little knowledge.|
|Provides little incentive to learn to trade or do your own research.||Observing an expert’s trades can help to develop your own strategy while limiting risk due to inexperience.|
|Copied expert dictates the strategy for which your portfolio funds are traded.||Your portfolio benefits from the efforts of an expert’s successful strategies used to trade his own funds.|
|Subscription fees could outweigh your gains if the account balance is insufficient to copy an expert’s trades.||Using sufficient funds to copy an expert trader can result in significant gains and reduce loss due to inexperience.|
Trading With Automated Software
Trading software exists that can give traders the ability to automate strategies to set trade parameters, allocate capital, open or close positions. Automated trading software allows traders to take the emotion out of trading by using computer algorithms to monitor markets for certain conditions. this complex, sophisticated trading software allows the user to set guidelines, as well as potential entry and exit points, which are automatically executed when conditions meet the parameters set. The automated bots can search the markets with a speed no human can match, spot a trend reversal, and execute a new trade in a fraction of a second, without emotion to delay the response.
Pros and Cons for Using Robots
There are pros and cons to using automated trading platforms. A certain level of expertise is required, unlike copy trading. Trade execution is fast and a predetermined strategy offers no deviation. However, the predetermined strategy dictates the rate of success. There are strategies that can be successful when performing backtests but fail in realtime. While automated trading software can be programmed to do the heavy lifting when it comes to watching the markets 24/7, they must be managed and adjusted. Therein lies the problem for most investors. Automated trading can work while you sleep, but only if you understand the market and program the parameters with successful strategies.
Less than 5% of those investors who attempt to use automated trading software are successful. Those that are successful are experienced traders that watch constantly, monitor performance, and make adjustments. Changes in market conditions require traders to step in and intervene when random unexpected events occur. Traders that successfully use automated trading bots put in the time and work needed to develop profitable strategies. Beware of the sales claims that promise automatic “effortless profitability” – which is more or less an oxymoron.
Conclusion of Software Made for Trading
Automated trading software is not easy for the average investor to master. Copying trades of experts is easier, but will not guarantee success. Investing and trading assets requires a certain level of knowledge regardless of what method or software or platform is used. Make decisions for your investments based on realistic expectations and clearly defined goals.