Information is too much to be able to digest every little piece of news that takes place in financial markets and evaluate how prices would react to it. In Why Day Trading is Dangerous we discussed the implications of high frequency trading (HFT) and automation on the markets. In this article I would like to list some of the tools that I find extremely useful in helping me reduce market noise and to be able to quickly spot opportunities that fit my trading style.
1. StockVision PowerScan – whether you are swing trader, active day trader, or a buy and hold investor this tool must be part of your arsenal. This is a real-time scanner and it tracks 3,000 US and UK stocks at present. Most similar services don’t even come close to this powerful software and use subscription based model where you pay every month or quarter. You pay a one off lifetime fee of $239 for StockVision and then you receive all future updates. This is peanuts and money that you can easily make from a single successful trade the tool can help you identify once you start using it.
The power of StockVision is that it allows you to create your own filters by combining technical indicators, candlestick patterns, and stock components (high, low, volume, etc). By using this tool you will be able to answer the following type of questions:
Which stocks that trade on average 3,000,000 shares are 5% away from their 52 week lows?
Which stocks whose RSI is below 20% have gapped down and have a volume increase of 3 times their standard volume?
Now this is power! To be honest, I was thinking of designing a similar software myself at some point, but once I found StockVision it was totally unnecessary to do so and I was able to spend more time trading and doing research.
2. ThinkOrSwim Paper Trading - it is critical to spend at least 1-2 years paper trading before jumping in the markets. Develop the discipline to be patient. Remember that trading is a long-term business and the same way that you cannot finish high-school and become a dentist, you need to put the hours in that will give you the confidence that you are prepared to start your journey as a trader or investor.
ThinkOrSwim is a broker recently bought by Ameritrade famous and winning multiple awards for its advanced powerful trading tools. Using ThinkOrSwim allows you to trade the stock, currency, futures, and options markets (of course do your own research to see if the commission structures they offer suit you). What is great about ThinkOrSwim that they offer a paper version of their trading software which you can use to experiment with trading strategies and improve your knowledge about various technical indicators. Most of the charts on this blog are generated using ThinkOrSwim. They also offer a mobile app which you can install on iPhone or Android device so you can track things on the go if necessary.
3. Zecco Trading Email Alerts – If you don’t have the time to constantly track the markets, but still want to be made aware when stocks reach critical levels or major moves in the market take place, you can use Zecco’s email alerts. I myself have setup alerts for several stocks and I receive emails when they move by 10% up or down or they approach multi year lows from which the stock has bounced in the past. This can be sufficient information for me to do some analysis of what is currently taking place in the markets if I have been busy running my other businesses and was not able to dedicate sufficient time to tracking the latest developments. You can of course customize the alerts you want to create to fit your own trading style and needs.
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