How Technology Can Aid in Sustainable Stock Trading

From: Tyler Trunnell
December 5th, 2013 | 0 Comments

Trading now takes place faster than ever – so fast, the average investor won’t ever see current information about his or her stock performance. “By the time the ordinary investor sees a quote,” says author Sal Arnuk, “it’s like looking at a star that burned out 50,000 years ago.” Sure, the information may appear bright and appealing, but that could lead the investor to make a decision based on outdated information – deadly in the stock trading game.

How do modern, savvy investors (especially day traders and swing traders) stay current with market performance in order to choose the best investments? Through advances in stock trading software that allow even novice investors to analyze trends, identify signals, and participate in high-volume trading. There has never been an easier time for a person to become involved in the trading of sustainable stocks.

Stock Trading is Faster Than Ever

Many of us still think of stock trading as working in “The Pit”: the noisy, aggressive floor space where traders yell over each other to make deals. However, as technology has (predictably) advanced, improvements have been made to the stock trading system that makes stock buying and selling faster than ever.

In fact, new technology allows millions and billions of trades can take place per second. Researchers are attempting to develop hardware and software that can ultimately provide updates from Wall Street without any lag whatsoever, providing whoever owns this software with a huge monetary advantage.

Think of it: if you spot an emerging trend before your competition, you can buy or sell and make a profit before they do. If you’re trading electronically, it only takes a nanosecond of advance notice to gain this advantage. That’s why so many stock tech developers are working so hard to develop technology that pulls market data, analyzes trends, and makes smart trading decisions all as close to real-time as possible.

While many of these technology solutions are priced in a way that keeps them out of the hands of everyday investors, a lot of consumer-level tech is now available that provides even small investors massive time advantages.

Stock Trading Software: Your Personal Analyst

Imagine you had a personalized stock analyst working for you. But this isn’t just any stock analyst: it’s one who can read and analyze thousands of stocks at once. This analyst can track trends, identify signals, and make hundreds of recommendations in a moment. This analyst can even buy and sell stocks for you.

That’s essentially for stock trading software works. The better the software, the more advanced algorithms will be used to analyze market performance, identify accurate signals, and make correct recommendations. Since the market moves faster than ever now, the ability to instantly analyze stock prices and trends by the millisecond can be crucial for day traders.

However, properly using this software isn’t just plugging it in and watching it make money for you. Just like traditional investors, those who use this software need to understand how to read different signal trend types.

Knowing How to Read Types of Signal Trends

Taking advantage of stock trading technology requires more than setting up the software (although with so many software options available, finding the right fit for your needs can be a challenge in itself). It’s essential to know how to read the trading signals and understand how high-frequency, up-to-date information is different than the traditional daily stock quotes many investors still rely upon.

The type of signals traders need to learn will depend on the type of trading they do. The long-term trends watched by “buy and hold” long-term investors will vary quite radically from those day traders use.

This is where signals come in. Signals – market performance indicators – are as much an art as a science to read. There are many different types of signals, and they can be advanced or simple. Software can be set up to automatically analyze stock performance, identify signals, and make recommendations to the investor. Software can even automatically perform trading.

Signals are investor-type specific. Swing traders, for example, look for specific swing trading signals that indicate a trend is reversing. Some swing trading signals include:

  • Reversal days. A change in the direction stock price is headed is a strong indicator a trend is reversing, although caution should be used in acting on unconfirmed reversal signals.
  • Volume spikes. A period of high-volume trading usually indicates an active struggle between buyers and sellers and usually means the end of a short-term trend.
  • Narrow-range day (NRD). One of the stronger signals, a narrow-range day is marked by an exceptionally small trading session. Though this signal needs to be confirmed, it is a strong signal that a current trend is about to turn.

Of course, these are not the only signal trends swing traders use, and these are also very simple examples. Additionally, learning to read and accurately identify these signals requires years of training and experience – that is, unless signal software can be used.

More Stock Technology Advancements To Come

Right now, stock trading is already taking place at unfathomable speeds thanks to technological advancements. However, more advancements are on their way. As technology researchers refine their signal algorithms, everyday investors just like you and me will have access to the same advanced software that allows big Wall Street traders to make their decisions, thus leveling the playing field and making it possible for any of us to make it big on the market.