What Tools Are Utilized In Day Trading?

by Manny Backus, Day Trading Strategy Expert

The most important tools utilized in day trading encompass many components.  First, it is important to choose a trading platform for your computer, which is offered through a brokerage house.  This trading platform enables you to access market centers such as the NYSE or other ECNS (electronic communication networks) which allows you to see the quotes (prices at which you can buy or sell stock) and size (how much you can buy or sell).  

An account is opened and money is deposited.  Most offer a margin in each account.  This leverages your buying power.   What does this mean?  For example, if $100,000 is deposited, they will usually give you 4:1 margin which means you can buy up to $400,000 worth of stock that day.  They charge "margin" or interest on that money.  It is small intra-day, but can add up if you hold the stock a longer period of time.  Along with the ability to buy and sell stocks, these platforms offer stock charts, breaking and historical news, and access to analysts comments. They also allow you to set up customized lists to monitor various industry groups and sectors.

On a practical level, in order to utilize every aspect of day trading in an efficient manner, you will need a high speed computer as well as high speed connections.  Since time is a major factor in day trading, it would not suffice to have a DSL line, but rather a cable modem which can transmit information quickly without having to worry about screen freeze or dropped connections.

Also, in order to be able to research and, at the same time, monitor a particular’s stock progress, it would be advantageous to have two monitors (preferably 19 inch LCD screens).  In this way, while you are checking charts on a company or reading technical analysis on one screen, you can immediately place orders on the other.  Needless to say, several phone lines will be needed to allow you to day trade with efficiency and, especially in case of a power outage, would render your computer inoperative.  As back up, most day traders use cell phones to make transactions in the event neither the computer nor traditional phone lines are operable.

Whether you work from home or at an office, most of the software platforms are offered by whatever brokerage firm you are using.  Once you have the availability of accessing trading software, you can be assured that you are receiving the analytical data in real time so that you can make an honest judgment about which trades to make based on all of the information available to you. 

The trading software platforms not only help you in receiving the necessary data such as: the stock quotes, market indices, market news, and price alerts in real-time but they also store and present the data in an organized manner so that it becomes much easier for you to understand and read the information quickly and with less confusion.  While each chart may be different from one another, there are also tutorials which are available for new day traders to teach you how to read the charts and give you detailed explanations of what each term signifies.

Having the proper tools to begin the day trading process are important features to ensure you are running your operation with the latest technology, software, and communication systems.  It’s all about timing, and having the proper software for charting, news information, and technical information as well can make all the difference in the amount of money won or lost on any given day. 

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