Have you read or heard about trading software in some article on the web or through some ads on a social network and are you wondering what it is?
Well if you are looking for comprehensive answers, you have come to the right place. In this article, we provide you with a complete guide on the best trading software. So that you can better understand what trading software is, how trading software works and how to choose the best ones.
Online trading is spreading like wildfire and many, like you, are trying to find out about the subject. However, there are also those who do not do it properly, falling into scams of those who create platforms only for the purpose of cheating others.
Not surprisingly, in this article on trading software we will also talk about how to recognize scams. So let's go.
Trading software: What It Is
What is trading software? If you are a beginner looking for the best software for trading, we are here to tell you. Trading software means a program with which you can execute orders on the market through the broker you work with. It is therefore a software that allows the trader to place orders with the broker.
For example, once you have selected an asset (e.g. Tesla shares) and set the quota to invest, you can place an order with the following parameters:
- Order type: up or down, or buy or sell (long or short)
- Stop Loss: an order that automatically closes a losing position
- Take Profit: An order that automatically captures a profit once it is reached
- Pre-orders: closed market orders
Trading software has improved a lot over the years, thanks to technological improvement and the increase in demand for online investment services. Today it is enough to download an app on a smartphone or tablet to have easy access to a wide range of assets.
And it is no coincidence that trading tools have grown out of all proportion. And this is also to your advantage, because competition has increased between brokers who offer you conditions in terms of spreads and commissions.
In addition to trying to offer innovative services to beat the competition. Think for example of eToro's Copy trading, a system that allows you to copy what the best day traders do.
Trading software: How it Works
How does trading software work? First of all, a Broker must apply for a license to operate. So as to gain credibility on the market. The license must be requested from the authority responsible for supervising the financial markets of the State where the Broker has its registered office. For instance:
- SEC in the USA
- FCA in the UK
- ASIC in Australia
- CySEC in Cyprus
- BaFIN in Germany
- Consob in Italy
A licensed broker must comply with various impositions, in favor of the trader's safety in economic terms and for sensitive data. In fact, when you sign up with a broker you will have to provide various data. As:
- personal data
- telephone number
- email address
- 2-Step Verification
- the data of the payment system you will choose for deposits and withdrawals
Now you will realize why we said that your choice of a broker with the best trading tools must be very important. Also remember that a broker cannot bombard you with phone calls to push you to deposit more money. Or, clog your inbox to push you to enter the platform and deposit or open trades.
Demo trading software
Once you have chosen the broker, you can still test it with a demo account, a sort of trading simulator before making a deposit and start trading real.
The Demo Account helps you practice without spending real money. But later, it will also help you not to risk your capital if you want to test the goodness of a new trading strategy or trading signals sent by the broker, or by external services, to which you have signed up.
On a trading software you will also find sections dedicated to training. So as to also have a theoretical education on online trading.
Here, for example, is the page that Capital.com dedicates to training.
You will then be able to decide on which assets to invest. Assets are financial instruments with various characteristics that you will have to study well to understand how to open a position, in which direction to position (up or down) and so on.
This, for example, is only a small part of the vast choice of assets made available by eToro. You will always have it under your nose as you move on the dashboard , but to enter it more specifically, just click on the Markets item:
As you can see, at the top there are the various items on the various types of assets that the Broker makes available.
A trading software allows you, through an interface that is as user friendly as possible, to make your decisions in the best way. Also giving you access to clear graphs on which you can evaluate the performance of an asset through a timeline.
Which can expand over a variable timeline, ranging from hours to years. The projection will instead be made clear thanks to candlesticks , graphs that graphically resemble candles.
What is the best trading software?
What is the best online day trading software currently available?
Among the best trading tools in the world we cannot fail to mention the most used professional software, MetaTrader. It would be a bit like not mentioning Apple or Microsoft in the IT field.
Today it is presented in the MT5 version, even if the MetaTrader 4 version has met with great international success and is still among the most used.
Its trading environment is highly technical and features a large variety of features as well as applicable technical indicators
Unlike other browser platforms that populate the web, MetaTrader allows you to:
- Create your own trading advisors, developing them in an internal development environment on the platform
- Access free and paid libraries of various kinds
- Purchase or develop automated trading systems
- Operate with multiple brokers at the same time by connecting to a dedicated server
But what are the substantial differences between MT4 and MT5?
While the first is exclusively for trading in the Forex market, the second is for multiple markets. Therefore, MetaTrader 5, in addition to Forex, makes it possible to trade stocks, futures, and CFDs. And for that reason, it is on this list of the best software to invest in Forex.
The successor to MT4 does not lose anything in its functionality, since it is quite efficient, easy, and intuitive to use in the same way. Have the MT5 and analyze the charts, execute the orders and coordinate your risk appetite without difficulties. Another positive point is its extreme flexibility to operate in several modes of execution at the same time.
The best technical analysis software
Is there really the best technical analysis software for trading? The honest answer is complex, because the applications for technical analysis are not standard, some specialize in stocks, others even specialize in specific and/or geographic markets.
To make a good comparison, it is therefore necessary to compare the characteristics of technical analysis software in the same segment.
A brief review: Technical analysis is the interpretation of the graphical and statistical data of a given price, carried out using statistical and mathematical tools called indicators, which has as its ultimate goal the forecast of future market movements of a given financial instrument.
In this regard, it is therefore important to consider in the day trading software the availability of technical indicators applicable to the charts, historical and in real time, which allow the trader the possibility of making technical interpretations of the current market.
The technical analysis software mentioned below offers this possibility.
MetaStock is a suite of products developed specifically for real-time trading, it provides professional-grade charts and data analysis tools for intraday trading. With these tools for traders, a trader makes decisions and executes transactions in real time based on the most up-to-date data.
In short, MetaStock is for those who have to make very fast decisions.
The platform provides a complementary and separate service through which it publishes news, data and statistics, and essential comments on market trends. The service is called XENITH and is provided by Refinitiv.
Also available is the version for end-of-day traders with daily charts.
The platform of eSignal is complete in many respects, it caters to all markets and understands equity securities and bonds, derivatives and forex signals.
This trade signal software therefore provides news from the markets, fundamental metrics, charts with numerous customization possibilities. Technical indicators are available, with backtesting and alert functions.
NinjaTrader is a system that combines trading platforms and data analysis systems all in one. A platform with great potential thanks to 1,000 add-ons with which to perform specific tasks. NinjaTrader specializes in forex and futures trading.
The system provides fundamentals, technical indicators, charts, research tools; it is also equipped with a simulator through which you can test your strategies and learn the job of the zero-risk trader.
The basic version is a free trading software that includes advanced charts, market analysis and the simulator.
MarketMilk is one of the best trader software designed by BabyPips for new traders who have recently approached the world of trading. The application is a market analyzer that transforms complex data into an easy to understand visual experience.
This best software for trading is not for those who want to make the leap towards the semi-professional or professional world, therefore, but very suitable for that segment of traders who follow a "weaning" path (MarketMilk in fact).
Real-time data is transformed into colorful and intuitive graphics, decorated with cute emojis.
The trading software is specific to forex trading, and provides information on what is happening in forex at that moment, provides information on the most traded currency pairs in real time, but also which ones are the most sold. This free trading software also provides information on the volatility of the pairs over time, both on a daily and weekly basis.
How to choose the best trading software?
Choosing the best algorithmic trading software is sometimes challenging for Traders. Before going through this trading instrument, you need to understand the concept of it along with the capacity to meet your needs. The best Algorithmic trading software allows the trader to trade perfectly & automatically. However, the whole process is not simple like that. Before proceeding to the algorithmic trading strategy, a trader should have a suitable forex trading strategy.
The automatic trading tools speed up the traditional trading strategy only. However, acquiring the best algorithmic software may increase your profitability in trading. In this article, we will see two different ways to choose the best algorithmic trading software along with the other things that a trader needs to consider.
What is Algorithmic Trading?
An algorithm is a specific set of systematic instructions that completes a specific task. It is simple like computer games or spreadsheets that has many functions. The algorithm follows a specific set of instructions based on the strategy set into it.
However, Algorithmic trading is the process of using computer software that follows predefined instructions to take a trade order. This trading software identifies profitable opportunities that place the trades in order to generate profits. The main characteristic of the process is that it can perform at a speed and frequency that is impossible by the human brain.
Nowadays, algorithmic trading has become popular due to its fast execution speed & trading activities.
Users of the Best Algorithmic Trading Software
The main users of the algorithmic trading software are the investment banks, large hedge funds, and proprietary trading firms. In most cases, the larger firms have built their own trading systems with dedicated data centers and support staff.
At a retail level, experienced proprietary traders use the algorithmic trading. Many proprietary traders purchase a readymade trading software based on their trading needs. Mainly Forex Brokers and other third-party providers make the software and sell to the traders.
However, some forex brokers provide free algorithmic trading software based on some conditions. Moreover, some Quantitative Analyst with good programming knowledge develops their own software.
How to Choose Best Algorithmic Trading Software?
In order to be a successful trader, even algorithmically you should know yourself. It sounds strange but true, as the forex trading is a mind game. Algorithmic trading may lose your all money from your investment. Therefore, it is quite necessary to Choose Best Algorithmic Trading Software before proceeding to trade.
Build the Algorithmic Trading Software Based on trading Psychology
It is the most important part of before going through details of trading software. Like other trading methods, Algorithmic trading requires a significant degree of discipline, patience, and emotional impartiality. At first, you need to make sure the trading software will not interfere with your strategy after executing the trade.
This part is extremely difficult, especially when the trader faces an extended drawdown. Many strategies with a highly profitable back-test can ruin the total balance with simple interference. Therefore, before proceeding to any type of trading strategy, you should test yourself mentally.
Identify the Trading Strategy
After setting up your brain for trading, you should know what type of trader you are. You should question yourself- how much time you can spend on trading?
The answer will help to determine the trading strategy with the frequency of trades. For a full time employed person, it is impossible to grab the intraday trading strategy. The trading methodology and strategy depends on your available time for the trade.
The algorithmic trading strategy will be perfect for those who have a lot of time. However, the trading software will have a little impact on the overall trading activities. Hence, you should perform continual research into your trading strategies to maintain a profitable portfolio. Some trading methods stay "under the radar" forever. Therefore, ask yourself whether you are prepared to do the trading activities or not.
Affordable Trading Capital
The generally accepted ideal minimum amount for a computable strategy is $50,000. However, the amount may differ based on the trading strategy and algorithm. Moreover, for high- frequency strategies, you need sufficient capital to absorb when in the time of drawdown.
If you are thinking of starting the trade with less than $10,000, you should restrict yourself to low-frequency strategies. In that case, you can trade only one or two assets. Otherwise, transaction costs will eat into your returns. Interactive Brokers, with the Best Algorithmic Trading Software, has a retail account minimum of $10,000.
Build Best Algorithmic Trading Software
It is important to have the programming skill to create the best algorithmic trading software. Therefore, you need to have knowledge about the programming language such as C++, Java, or Python. This knowledge will allow you to explore the higher frequency strategies with full control of your "technology stack." You need to perform several tests to eliminate bugs. This process requires more concentrations and you should spend much time coding up the infrastructures. Therefore, you should work hard at the beginning of the algo career.
Moreover, you should know how much you want from the algorithmic trading strategy. It might be as a regular income or can be a passive income. The strategy of long term trading is not the same for the short term scalping methods. For regular income, there will be a higher withdrawal that requires a high- frequency trading strategy with lower volatility.
Outsourcing Algorithmic Trading Ideas
It is often hard for all traders to build the best algorithmic trading software to achieve their trading goals. Therefore, they focus on finding software from the market by hiring or buying. However, you should consider some precautions while outsourcing the best algorithmic trading software for you:
Market and Company Data
All trading algorithms act well on real-time market data and price quotes. Some programs are customized based on the company's fundamental data. In most of the algorithmic trading software, there are real-time market data along with the company data feed. However, you should find the software that has a provision to integrate from alternate sources.
For the multiple market use, you should confirm that the data feed is in a different format, like Multicast, TCP/IP, or a FIX. The software should be capable to aggregate market data from different exchanges. The algorithmic trading software should be able to process these aggregated feeds when required.
Customization & Configuration
Most algorithmic trading software offers a built-in trade algorithm. Some software has a crossover of the 50-day moving average (MA) with the 200-day MA. In that case, traders can change the experiment by switching to another moving average. The trader will perform this when the software allows only. Best algorithmic trading software has options for a high degree of customization and configuration.
In the algorithmic trading software, the Python, Matlab, C++, JAVA, and Perl are the common programming languages. However, most of the software has the option to write your own custom programs. This allows a trader to justify any trading concept he develops. In that sense, the best algorithmic trading software offers to code in the programming language of your choice.
This is the most important feature of algorithmic trading. Latency is the time-delay of the price movement of one application to another. Say, it takes 0.4 seconds to transfer the price quote from the exchange to the vendor’s data center. The 0.2 seconds to reach the data to your trading screen. Then 0.1 second from the software to receive a quote. Moreover, 0.1 seconds to analyze and taking entry. Then the process completes with 0.2 seconds to reach the broker and 0.2 seconds from broker to exchange. Therefore, total time passed = 0.4 + 0.2 + 0.1 + 0.1 + 0.2 + 0.2 = Total 1.2 seconds.
The original price takes 1.2 seconds to complete the process. This delay is harmful to the algorithmic trading strategy. The Best algorithmic trading software should minimize the time as much as lower. Direct connection with the exchange will provide faster data eliminating the mediums.
Back-testing allows the trader to justify a trading strategy on historical data. It assesses the performance and profitability of past data. Back-testing certifies the success or failure of a trading strategy. The back-testing capability and historical data is a mandatory feature for the best algorithmic trading software.
Moreover, choosing the trading software is very delicate. In fact, you will have to evaluate a whole series of aspects. Which are generally these:
The broker must put you in a position to have an intuitive and responsive site in front of you. Without having to do the so-called "treasure hunt" to understand where what you are looking for is
Fast and secure deposit and withdrawal
Now the brokers who respect themselves give the possibility to deposit money and withdraw it with various alternatives. So bank transfers, cards (debit, credit and prepaid), virtual payment platforms (PayPal, Skiller, Neteller, etc.). Be wary of unclear methods. The timing of sending or crediting the money varies according to the method chosen.
Services reserved for traders
The broker must offer services that help the trader in his work. As:
License to operate: it is the first aspect that you must evaluate if you do not want to run into scams. Evaluate whether the broker you have chosen has not been referred to as a scam by the regulatory authority responsible for controlling the financial markets they operate.
Clear charts to see how the asset price has moved over time.
Trading signals which are suggestions that experts send to traders who request them on the position to be taken on the market
Demo account: which we talked about earlier. Training material such as eBooks to download, webinars edited by trading experts to follow comfortably remotely, personalized coaching, videos uploaded to the trader's site, etc.
Artificial intelligence: even software trading can predict AI, which is now becoming more and more popular in our lives. Very interesting is the trading software from Capital.com or ForexTB, which provide algorithms to help you correct your mistakes.
Copy trading: you won't find this service anywhere other than eToro. It gives you the opportunity to copy what the best traders do, not surprisingly called Popular investors. You can choose them by sifting through a series of parameters such as area of origin, preferred assets, preferred trading strategy, level of risk, percentage of winning trades on the total, etc. The copied trading can be customized by setting your Take profit or Stop loss level. You can also stop trading when you want and you can copy up to 100 Popular investors at the same time.
Finally, do not make any mistake by believing the Algorithmic trading software as a money-making machine. The algorithmic trading strategy is not a get-rich-quick scheme rather than it is a become-poor-quick scheme. It takes significant research, discipline, and patience to be successful at algorithmic trading. It can take months to generate consistent profitability.
Trading Software FAQ
Ques 1: What is trading software?
It is software that allows you to trade on the financial markets online from your desktop computer or mobile device.
Ques 2: Is trading software free?
Yes, they are generally free. After you sign up with the broker of your choice, they will then provide you the free trading software. However, some trading software may have fees.
Ques 3: Can you try trading software without paying?
Of course, with a demo account.
Ques 4: What experience does it take to use trading tools?
It depends on the trading tools. Some of the best trading tools require a certain experience and others that do not require any experience but a little practice using them.