What is Day Trading?

Day trading is a time-bound trading activity where stocks—or other trading instruments—are bought and sold (usually online) in a 24-hour period. This is done with the goal of making profits in smaller price differences but on large order volumes by a process of frequently buying and selling. In this article, we will discuss day trading software and offer the best day trading software options.

  • What is day trading software?
  • How does it work?
  • What are the benefits and risks of day trading?
  • What makes good day trading software?
  • Who offers the best software for day trading?

What Is Day Trading Software?

Day trading software is a computer program that would usually be provided by a brokerage firm. Its purpose is to help clients carry out their day trading activities in a timely and effective way. These programs often automate analysis and enter trades by themselves, enabling traders to reap the profits. This would otherwise be very difficult to achieve by a human, but this software can easily handle it.

How Does It Work?

There are three basic features when it comes to day trading software:

  1. Functionality. The software will allow you to setup a trading strategy, based on such things as news, trading signals, technical indicators and pattern recognition.
  2. Automated order-placing function, once certain criteria are met. This would usually involve the software having access directly to the market.
  3. Analytical tools that continually assess existing holdings (if any) as well as market developments and features. The software will then act on them accordingly.

Any day trading software will require a one-time setup in order to program a trading strategy, set trading limits, put the system on live data and let it execute trades.

What Are the Benefits and Risks of Day Trading?

First, let’s look at the benefits that a professional day trader can enjoy:

  1. Work from home possibilities. Having the freedom to work in any location, especially if you have other responsibilities in life such as young children or caring for family members, is a real advantage.
  2. Nearly unlimited potential for earning money. In today’s workplace, it can be a fight to gain a promotion or get a raise to increase your income. If you choose liquid assets that can be bought and sold easily, only your rate of success will limit your income.
  3. Independence. You don’t have to deal with a difficult manager; you are your own boss. You can enjoy the satisfaction of taking control of all your income and losses.

But what are some risks that a day trader would want to be aware of?

  1. Capital losses. Even when most of the trades you make are profitable, as a day trader you may see your profits being eaten away by commissions, minor losses, and fees. All of this results in earning less money.
  2. Your income is not guaranteed. The market’s unpredictability and the potential for losses can cause unwanted stress, especially if you have a family, its important to have guaranteed income.
  3. Psychological addiction. Just like gambling, trading can become a very strong addiction, you may find you are always wanting more of the action.

There are a few good articles that you can look at regarding rules for day trading here that will give some more insight and also take a simple look at day trading.

What Makes Good Day Trading Software?

So what separates the great ones from the average? Here are a few of the important things to look out for.

Low commissions and fees. Day traders have a large amount of trades each month, sometimes performing more than ten trades a day. This differs from long-term investments which, you may hold on to for years. This means that commission prices and fees are more crucial to day traders than a long-term buyer. Even small amounts in the price of commissions can make a big difference for day traders.

Mobile trading. Some of the brokers offer platforms that enable you to trade on a tablet or smartphone which, can be a truly invaluable help for full-time day traders who want to keep an eye on things 24/7.

A complete, responsive platform. Day traders rely on quick movements to make income on their trades, especially those who sell the moment their stocks become profitable. Therefore, the top trading platforms have to be responsive and provide up-to-date research to help you plan and trade more effectively. These platforms should be simple to use and logical, helping the process to flow smoothly.

Minimum account balances. Most of these platforms will have a minimum balance. They can range from $500 for the more basic accounts and up to $10,000 for the more professional platforms. Ensure that regardless of the option you chose, you have sufficient capital to meet the minimum account requirements before you sign up.

Excellent tools for research. It’s important to have research tools such as market analyses, news on market movements, and expert editorials. The top trading platforms will also offer research and news pertaining to a wide variety of assets and industries so that you are given a complete picture of how the market will change from day-to-day.

So we arrive at the big question:

Who Offers the Best Software for Day Trading?

1. Interactive Brokers

Their platform was made to meet the needs of the professional and active day trader. This is isn’t meant for long-term or casual traders. You need to maintain an account balance of at least $100,000 or accrue at least $10 a month in trade commissions then you will need to pay a monthly inactivity fee of $10. That doesn’t sound like much, but other brokers will only charge you around $4 to $7 per trade. Also, the commissions of Interactive Brokers’ are some of the lowest around.

Interactive Brokers offers more discounts for those traders with the highest volume. Their workstation has a large and extensive number of features, including customization alerts, watch-lists, tools for volatility measurement and even “heat maps” of market sections that experience more than the usual activity. Having a huge selection of stocks, advanced trading tools and very low fees, Interactive Brokers is a useful tool in the right hands if you are an experienced day trader. However, it may be viewed as a bit expensive and complex for new traders.

2 . E-Trade

E-trade offers three platforms targeted at specific segments of traders: E- Trade Pro, E-trade Web and OptionsHouse. E-Trade Pro offers the largest number of analysis tools and features but access is limited: Only those with an account with at least $250,000 can use it.

The app E-Trade mobile is responsive and simple, it allows traders to track stock quotes in real-time and place orders with very little delay.

The commissions with E-Trade are a little more costly than most competitors at $6.95 per trade, but if you are a new trader then you can get 60 days of free trading if you open an account with a $10,000 minimum deposit.

3 . Charles Schwab

Charles Schwab caters to all skill levels, research needs and capital with its brokerage suite. New day traders will like their Trade Source platform, which is both easy-to-use and has a 24/7 customer service. Seasoned day traders will love the StreetSmart Edge platform, live news, in-house stock ratings, earning reports and its extensive research options.

The Charles Schwab mobile app is also highly functional, with a responsive interface, fast system, and easy trading options.

However, please be aware that opening a Charles Schwab account comes with a mandatory $1,000 minimum deposit, though with monthly $100 deposits or promotions you can often have this fee waived.

4 . Tradespoon

Tradespoon is very good software for traders who want to further their growth. Tradespoon offers traders the resources to build trading intelligence. Its software is user-friendly and screens the entire market, which is favorable for both stock and optimal trading.

Tradespoon provides one-on-one assistance and mentoring so you’ll be able to ease into the market profitable opportunities.

5 . Yewno | Edge

Yewno has a research platform that leverages Yewno’s Knowledge Graph Technology and proprietary AI to improve traditional fundamental and technical stock research with additional helpful data to benefit the user. Its component-based and modular approach helps you customize and build a workspace that has all the necessary data-points needed to watch your portfolio live.

Stock Screener and Strategy Builder software can help educate you about the concepts most important to your trading strategy. It can also help you find new opportunities for profitable trades.

Day trading can be a profitable, rewarding investment tool. With the right software, the trading process can be simplified and streamlined according to your trading style. It’s best to take your time and investigate several options before committing to one. If you’re able to find a profitable strategy, you can replicate it and reproduce your success. It’s best to keep track of what you do, when, and how it turned out. You can then use this to adjust your approach for more success—and more money.

For help choosing strategies for trading options and stocks check out RagingBull.com, which gives you access to a free webinar to help take your trading to the next level.

Jeff Williams

Jeff Williams is a full-time day trader with over 15 years experience. Thousands of entry-level and experienced traders alike – day-traders and swing-trade small cap stock traders – credit Jeff with guiding them to turning small accounts into big accounts.

Jeff’s "Small Account Challenge" shows people how to transform accounts from a few thousand dollars into $25k, $50k or even $100k.

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