In a world where online trading is easily accessible, there is no lack of traders. However, few are successful in this competitive industry.
To thrive as a trader in the volatile financial markets of today, it takes more than just intuition. It necessitates having access to state-of-the-art resources and services that can provide you with real-time data, analytical insights, and a competitive advantage.
Regardless of whether you’re new to trading or an experienced professional, having the right set of tools and services at your disposal can significantly enhance your trading abilities. In this article, we will delve into ten tools and services that can empower you to become a smart trader.
Installing a Trading Platform
First, you need a reliable trading platform. Different software applications will open up different avenues to the trading markets, allowing you to execute trades, gain access to market data, and manage your portfolio effectively.
Your choice of a trading platform can make or break your trading experience. This is why choosing the right trading platform is crucial. It should align with your trading style and provide you with the necessary trading tools.
Popular trading platforms that you can choose from include MetaTrader4 (MT4), MetaTrader5 (MT5), thinkorswim, and Interactive Brokers’ Trader Workstation (TWS).
If you need a platform with a user-friendly interface, then you should go for MetaTrader4, which has an extensive library of technical indicators and charting tools. If you’re searching for something more advanced, then thinkorswim is the best option for you.
Following Market Data Providers
The trick to smart trading lies in accurate and up-to-date market data. To become a smart trader, you require an accurate news feed with real-time updates. When making trading decisions, you need to rely on sound financial instruments.
While some trading platforms come with in-built news feeds, you can also buy a new letter separately, like the Power Gauge Report. Such monthly newsletters provide stock ratings, bonus reports, and recommendations, boiling down complex data to provide you with a simple stock report.
Other well-known data providers include Bloomberg, Reuters, and Yahoo Finance. These sources are easy to use and provide comprehensive market data, news, and economic indicators. If you have a tight budget, then Yahoo Finance is the best option since it provides a wealth of information for smart traders.
Keeping a Detailed Trading Journal
A trading journal helps you learn from your experiences. It’s a personal record of all your trades with entry and exit points, trade size, and the rationale behind each trade you make.
This journal also allows you to jot down your emotions and thoughts when making a trade. By reviewing your past trades, you can identify the patterns in your decision-making, recognize strengths and weaknesses in each trade, and refine your strategies accordingly.
You can either keep a manual journal, or you can use a dedicated program to help keep track of your entries. Tradervue is a software that offers advanced analytics with visualization tools to help you gain deeper insight into your performance.
Implementing Risk Management Tools
Risk management is incredibly important when it comes to successful trading. As a smart trader, you need a risk management tool that allows you to set stop losses, take profits, and manage position sizes.
Risk management tools are effective in protecting your capital and minimizing losses. Trading platforms usually have this feature installed, but using a standalone tool is more flexible and has customizable options.
If you use MyTradeSize as a risk management tool, then you can calculate position sizes based on risk tolerance and account size. Using these tools effectively can reduce your chances of losing trades on your overall portfolio.
Using Backtesting Software
The process used to test historical data of trading strategies is called backtesting. This evaluates the performance of your previous trading strategies so you don’t risk your hard-earned capital in the live market.
You can identify the potential flaws in your previous trading strategies and assess how you could have traded differently. NinjaTrader’s Market Replay is one of the most popular backtesting software.
When using this platform, you can replay historical market data and execute your strategies as if you were trading in real-time. This tool also allows you to improve your strategy development with data-driven insights.
Keeping Track of Economic Calendars
When considering an indispensable tool, an economic calendar is something you need if you want to stay ahead of the curve.
These calendars provide schedules of economic events that significantly impact asset prices. You should keep track of major events in economic calendars, including interest rate decisions, GDP releases, employment reports, inflation data, and Wall Street updates.
Using the information and understanding its impact on the market can be a game-changer for you as a trader. ForexFactory is famous for its comprehensive economic calendar. Not only does ForexFactory list all upcoming events, but also provides forecasts and historical data to help you gauge market potential and volatility. This way you can stay ahead of the market and make timely decisions.
Using Fundamental Analysis Resources
Technical analysis is mandatory for price charts and market indicators. Fundamental analysis gives insight into a company’s financial health and growth prospects.
If you’re seeking to become a smart trader, then it is necessary to have access to financial news, earning reports, and company data. Tools that are known for their fundamental analysis techniques include SeekingAlpha and Bloomberg.
SeekingAlpha is perfect for traders in search of a trove of information. It features expert articles, earnings, call transcripts, and user-generated content that provides valuable insight into individual stocks.
Getting Technical Analysis Tools
Charting tools or technical analysis tools are essential if you want to excel in the field of trading. It involves the study of price charts and the use of various technical indicators to predict future price movements.
Using tools such as TradingView will allow you to gain access to an extensive library of indicators, drawing tools, and features that will guide you in making informed decisions.
This technical analysis tool is preferred due to its social networking aspect which allows you to share, collaborate, and learn from other traders.
You can also leverage automated trading bots as compared to manual technical analysis. MetaTraders’ Expert Advisors (EAs) will enable you to automate your trading based on predefined criteria. This automation can significantly enhance your trading efficiency and accuracy.
Getting Involved in Trading Education and Communities
Continuous learning and networking with other traders can significantly accelerate your journey to becoming a smart trader. You can make use of online trading communities that offer a wealth of resources, including discussion forums, educational materials, and mentorship opportunities.
Such communities are ideal for traders to exchange ideas, share insights, and learn from each other. If you’re new to trading, then you can use BabyPips, a program that uses a detailed curriculum known as the School of Pipsology.
This renowned online community is perfect for learning about forex trading and all the basic and advanced strategies. Make use of online sources, such as Investopedia, where you can enroll yourself in an online course or webinar dedicated to trading.
With continuous learning, you also gain insight into trading aspects in other countries so you have a global perspective when making decisions. These courses provide structured education that’s tailored to different trading styles, allowing different traders to enhance their knowledge and skills.
Using Algorithmic Trading Platforms
Trading that involves automated trading strategies is known as algorithmic trading. These platforms can allow you to execute trades based on predefined criteria.
They have gained popularity among traders due to their high speed and precision. Moreover, these platforms come with a range of tools, including backtesting and resources needed for development.
You can use AlgoTrader, which provides comprehensive solutions for developing and executing strategies across multiple exchanges and assets.
Conclusion
Trading about a lot more than just stocks. If you’re looking to become a smart and successful trader, then you need to know the tools and services you can use.
While there are manual methods for keeping track of the markets and your personal investments, new software has made it easier to manage all your work from one platform. Going through these ten tools and services can help guide you to becoming a smart trader in today’s competitive world.
FAQs
What tools do traders need?
Essential tools required by traders include a reliable trading platform, charting tools, and real-time news feeds.
How do I become a smart trader?
You first need to conduct a self-assessment before arranging funds for your capital, then you need to understand the market and strategies to trade. Research and practice in the field will help you become a smart trader.
Is there skill in trading?
Trading involves a mixed set of skills. Traders need both research and analytical skills to monitor day-to-day economic patterns and chart changes in the market.
How many day traders are successful?
According to a study, only 13% of day traders proved to have a profitable business. Another study shows that only 1% of day traders make money after 1 to 5 years of trading.
