Day trading software is computer

software Software is a set of computer programs and associated software documentation, documentation and data (computing), data. This is in contrast to Computer hardware, hardware, from which the system is built and which actually performs the work. ...

intended to facilitate

day trading Day trading is a form of speculation in securities in which a trader buys and sells a financial instrument within the same trading day, so that all positions are closed before the market closes for the trading day to avoid unmanageable risks a ...

of stocks or other financial instruments.

Types of software

Day trading software falls into three main categories: data, charting, and trade execution.

Data

Day traders often subscribe to software platforms which specialize in providing data that helps inform trading decisions. There are several types of data that may be used for trading including price data, reference data, and analysis data. Some market data software products provide data for visualization, while others provide programmatic access via APIs.

Price Data

Having access to the accurate current price of a security is central to day trading. A day trader needs to know the prices of the stocks,

futures Futures may mean: Finance *Futures contract, a tradable financial derivatives contract *Futures exchange, a financial market where futures contracts are traded * ''Futures'' (magazine), an American finance magazine Music * ''Futures'' (album), a ...

, or currencies that they want to trade. In the case of stocks and futures, those prices come from the exchange where they are traded. Forex is a little different as there is no central exchange. Price data often includes trades, which represent transactions that occurred, as well as

quotes Quote is a hypernym of quotation, as the repetition or copy of a prior statement or thought. Quotation marks are punctuation marks that indicate a quotation. Both ''quotation'' and ''quotation marks'' are sometimes abbreviated as "quote(s)". ...

, which represent the bid and ask prices.

Reference Data

Day traders also rely on software platforms that provide reference data, which is data that provides background information for a security, such as government filings or recent news. For US stocks, the Securities and Exchange Commission provides programmatic access to recent company filings.

Analysis Data

Many trading strategies rely on analyzing data derived from historical price data, volume, etc. Options traders often use the

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which are provided by some market data platforms in conjunction with stock options data. There are also a wide variety of

technical indicators Technical may refer to: * Technical (vehicle), an improvised fighting vehicle * Technical analysis, a discipline for forecasting the future direction of prices through the study of past market data * Technical drawing, showing how something is co ...

which day traders may rely on as signals of future price movement.

Charting

The vast majority of day traders will chart prices in some kind of charting software. Many charting vendors also supply data feeds. Charting packages all tend to offer the same basic

technical analysis In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the sam ...

indicators. Advanced packages often include a complete programming language for creating more indicators, or testing different trading strategies.

Trade execution

Once traders have their data and can see and analyze it on a chart, they will at some point want to place a trade. To do so, they need to use some kind of trade execution software or

electronic trading platform In finance, an electronic trading platform also known as an online trading platform, is a computer software program that can be used to place orders for financial products over a network with a financial intermediary. Various financial products ...

. Many trade execution software allow advanced traders to develop their own trading strategies by using an application programming interface. Most stock brokerage firms will provide proprietary software linked directly to their in-house systems, but many third party applications are available through

Independent software vendor An independent software vendor (ISV), also known as a software publisher, is an organization specializing in making and selling software, as opposed to computer hardware, designed for mass or niche markets. This is in contrast to in-house software, ...

s. The advantage of third party programs is that they allow the trader to trade through different brokers whilst retaining the same interface. They may also offer a number of advanced features such as automatic trade execution.

References

{{reflist Financial software