Software Fundamentally Alters the Trading Environment

16
March

Actively trading any of the financial markets, whether it is stocks and stock indexes, bonds, options, futures contracts or currencies was once confined to exchanges where traders went toe-to-toe with each other in the attempt to buy or sell any of the above financial instruments in a way that earned them a profit.

Most of this trading activity today is done electronically and has fundamentally changed the image most people have of trading where frantic trading pit activity between screaming floor traders racing in the attempt to try and outdo one another is a loud and highly stressful way to generate an income.

The modern trader can be found in a quiet office, staring intently at computer monitors displaying price data from the markets, using every possible method to forecast price direction. Further technological advances have even reduced the necessity of remaining in an office fixating on a computer monitor. Tablet computers and smart phones make it possible to conduct trading activity anywhere there is an Internet connection or cellular signal available.

This shift from trading pit to desktop computer to mobile devices is all possible because of market trading software.

Frequently referred to as a “trading platform,” trading software provides pricing information to the trader in the form of streaming data that is updated instantly whenever the price of whatever financial instrument is under consideration changes. This information is displayed as a quote window that can supply information for hundreds, or even thousands of different instruments. It can also be represented graphically in the form of a price chart that depicts the rise and fall of prices as they proceed over time.

Market trading software provides historical data regarding past prices, fundamental and technical analysis tools to aid in the prediction process, and sources of market information that might provide an edge to the trader in formulating trading strategies. Most trading software also performs accounting functions, letting the trader know the status of the trading account and also analyzing trading performance in the effort to identify beneficial trading techniques and eliminate trading flaws.

Brokers are excellent sources for market trading software. Most of them offer it free for their clients’ use and most of it is quite good. Computers are, after all, superbly designed to crunch numbers, and that is essentially what the activity of trading is based upon. Brokers constantly monitor feedback from their clients to give their trading software additional features, make it easier and more intuitive to use, or eliminate bugs.

There are also third party trading software developers that sell traders licenses to own or lease the software. Many of these trading platforms are exceptional in quality, offering the trader more capabilities than it is possible to imagine. Many of these third party developers have alliances with brokers and in many cases it is possible to receive a license to use the software in exchange for funding a trading account and trading with a certain broker. Sometimes these licenses grant the user only partial access to all the capabilities of the software, but this is frequently more than adequate for most. This arrangement benefits the trader by permitting him or her to make an objective determination on purchasing the software and thus be free to use it with any broker that supports it. The broker benefits from the commissions derived from the traders’ activity. The software vendor benefits from selling usage licenses to the broker in large quantities and by gaining exposure to traders for a relatively low cost.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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