Day trading software is computer

software Software consists of computer programs that instruct the Execution (computing), execution of a computer. Software also includes design documents and specifications. The history of software is closely tied to the development of digital comput ...

intended to facilitate

day trading Day trading is a form of speculation in Security (finance), securities in which a Trader (finance), trader buys and sells a financial instrument within the same trading day. This means that that all Position (finance), positions are closed befor ...

stock Stocks (also capital stock, or sometimes interchangeably, shares) consist of all the Share (finance), shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporatio ...

s or other

financial instrument Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership, interest in an entity or a contractual right to receive or deliver in the form ...

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 *''Modern Trader'', formerly Futures, an American finance magazine Music * ''Futures' ...

, 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, 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 The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...

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

greeks Greeks or Hellenes (; , ) are an ethnic group and nation native to Greece, Greek Cypriots, Cyprus, Greeks in Albania, southern Albania, Greeks in Turkey#History, Anatolia, parts of Greeks in Italy, Italy and Egyptian Greeks, Egypt, and to a l ...

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) A technical, known as a non-standard tactical vehicle (NSTV) in United States military parlance, is a light improvised fighting vehicle, typically an open-backed civilian pickup truck or four-whee ...

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. As a type of active management, it stands in contradiction to ...

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 An application programming interface (API) is a connection between computers or between computer programs. It is a type of software Interface (computing), interface, offering a service to other pieces of software. A document or standard that des ...

. 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, in contrast to computer hardware, designed for mass or niche markets. This is in contrast to in-house softwa ...

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