Choose the right intraday trading software

Computer applications make it easy to automate trading, especially for short-term intensive activities such as day trading, making the use of trading software very popular. The debate about the profit potential that can actually be obtained from day trading activities using online trading platforms continues, as it is said that brokerage fees and commissions account for the main part of the available profit potential. Therefore, choosing the right day trading software, through cost-benefit analysis, assessing its suitability for personal trading needs and strategies, and the features and functions you need becomes very important.

Intraday trading is a time-limited trading activity in which buying or selling positions are established and closed on the same trading day. The purpose is to use frequent buying and selling (usually leveraged) in the small price difference of a large order volume Profitable.

Key points

  • Day trading software requires tools and an order entry platform to enable day traders to work in an efficient and consistent manner.
  • These platforms usually include automated trading based on parameters set by day traders, allowing orders to be sent to the market faster than human response.
  • Choosing the right day trading software system requires understanding the costs and benefits of each product, and whether you maximize its functionality.

What is intraday trading software?

Intraday trading software is a computer program, usually provided by a brokerage company, to help customers conduct intraday trading activities efficiently and in a timely manner. They often automatically analyze and enter transactions on their own, so that traders can obtain profits that are difficult for ordinary people to achieve. For example, an intraday trader may find it impossible to manually track two technical indicators (such as 50-day and 200-day moving averages) of three different stocks of his or her choice, but automatic intraday trading software can easily do this and place it once When the set standards are met, the transaction is carried out.

The available features and functions may vary from one package to another, and there may be different versions. In addition to brokers, independent vendors also provide day trading software, which often has more advanced features.

How does the intraday trading software work?

The three basic functions of any intraday trading software include:

  • Allows the ability to set trading strategies (based on technical indicators, news, trading signals or pattern recognition) in the trading system
  • Once the criteria are met, automatic ordering function (usually using direct market access)
  • Continue to evaluate existing assets (if any), market development and characteristics of analysis tools to act accordingly

Any day trading software requires a one-time setting of trading strategies and trading limits, placing the system on real-time data and allowing it to execute transactions.

A simple example: Suppose the stock ABC is dual-listed on the New York Stock Exchange (NYSE) and Nasdaq. You are looking for arbitrage opportunities and intraday trading software is available. You set the following:

  • Choose stock ABC for arbitrage, and choose two markets (New York Stock Exchange and Nasdaq) for trading.
  • Assuming that the brokerage and commission fees for the two legs of intraday trading are $0.10 per share; your goal is to find the price difference between the two markets that exceeds that amount.So you set (such as $0.20 or higher) as the price difference-that is, the software should execute buy and sell orders at the same time if only If there is a difference of $0.20 (or more) between the buying and selling prices of the two markets.
  • Set the number of stocks to be bought and sold in an order (for example, 10,000 shares).
  • Let this setting go live.

Suppose the software recognizes that ABC’s quoted price on the New York Stock Exchange is $62.10, and the quotation on Nasdaq is $62.35 (the difference is $0.25), and the order exceeds the set limit of 10,000 shares. The intraday trading software will initiate the transaction when it meets the defined criteria and send the order to the two exchanges (buy at a lower price and sell at a higher price). If all goes well, this intraday trading software will bring traders a net profit of ((62.35 – 62.10) – 0.10 = 0.15) * (10,000) = $1,500 in an instant.

Further enhancements to the above software may include stop-loss functions-for example, if you only execute your buy transaction and not execute the sell transaction. How should intraday trading software conduct long positions? The software can include several options as enhancements:

  • Continue to look for selling opportunities at a certain price at a certain time. If no opportunity is found within the specified time, the position will be closed at a loss.
  • If the limit is reached, set a stop loss limit and close the buy order
  • Switch to averaging technology-buy more stocks at a lower price to lower the overall price

Features and functions

The above is an example of short-lived arbitrage trading opportunities. Many such intraday trading activities can be set up through intraday trading software, so choosing the right activity that meets your needs becomes extremely important. Some features of good day trading software:

  • Platform independence: Unless traders run highly complex algorithms for day trading and require high-end dedicated computers, it is recommended to use network-based software products. Benefits include connecting from anywhere, eliminating the need for manual installation upgrades and maintenance costs. However, if you are using highly complex algorithms that require advanced calculations, then it is best to consider dedicated computer-based installable software, although this can be expensive.
  • Your specific needs for day trading: Do you follow a simple intraday trading strategy tracked by stock moving averages, or do you want to implement a complex delta neutral trading strategy, including options and stocks? Do you need foreign exchange feeds or are you trading specific products such as binary options? I believe that the statement on the content of the stockbroker’s website is not sufficient to understand the product. Request a trial version and thoroughly evaluate it at the initial stage. Or, check the screen-by-screen tutorial (if available) provided by the stockbroker or supplier to get a clear understanding of the method that suits your day trading needs.
  • Additional features: Intraday trading attempts to take advantage of short-term price changes during the day. In turn, this short-term price change is mainly driven by news and supply and demand (among other factors). Does your intraday trading strategy require news, charts, level 2 data, exclusive connections to specific markets (such as OTC), specific data feeds, etc.? If so, are these included in the software, or do traders have to subscribe separately from other sources, thereby increasing costs?
  • Analysis function: Pay attention to the set of analysis functions it provides. Here are a few:
  1. Technical indicators/pattern recognition: For traders trying to benefit from predicting future price levels and directions, a large number of technical indicators are available. Once traders finalize the technical indicators to be followed, they should ensure that the intraday trading software supports the necessary automation in order to effectively process transactions according to the required technical indicators.
  2. Arbitrage opportunity identification: benefit from the small price difference of dual-listed stocks in multiple markets, while buying (low-price trading) and selling (high-priced market) can bring profit opportunities, which is one of the commonly followed strategies. Use day trading software. This requires connecting the two markets, being able to check price differences when they occur and execute transactions in a timely manner.
  3. Strategies based on mathematical models: Few automated trading strategies based on mathematical models exist—such as delta neutral trading strategies—allowing trading of combinations of options and their underlying securities, where transactions are placed to offset positive and negative delta values. In order to keep the portfolio delta at zero. Intraday trading software should have built-in intelligence to evaluate current holdings, verify available market prices, and execute stock and option trades as needed.
  4. Trend-following strategies: Another set of a large number of strategies that are usually implemented through day trading software.

Cost and other considerations

As can be seen from the above list, the limits of computer programming and automation software systems are unlimited. Anything can be automated and there are many customizations.In addition to choosing the right software, test the determined strategy based on historical data (discounted brokerage costs), evaluate the actual potential profits and the impact of intraday trading software costs and if only Then Go to subscribe. This is another area that needs to be evaluated, as many brokers do provide backtesting capabilities on their software platforms.

  • Software cost: Is the software provided as part of a standard brokerage account or does it require additional fees? According to your personal trading activities, a cost-benefit analysis should be carried out. Care should be taken to evaluate the available versions and their functions. Most trading software provides a standard brokerage account for free by default, but it does not necessarily have all the necessary functions to meet your trading needs. Be sure to check the cost of the higher version, it may be significantly higher than the standard version. These costs should be discounted when evaluating transaction returns and decisions made based solely on actual benefits.
  • Price accuracy: Do brokers and intraday trading software support NBBO (best buying and selling price in the country)? Brokers who are NBBO participants must execute customer transactions at the best available bid and ask prices to ensure price competitiveness. Depending on the regulations of a particular country/region, brokers may (or may not) be required to provide the best bid and ask prices. Traders who trade international securities with international brokers and software should consider confirming this for specific markets.
  • Protection function: It is exciting to let the software make money for you, but protection is the most important. With the advancement of technology, “sniffing algorithms and software” have also appeared, trying to identify another party’s order in the market. They aim to “perceive” the order on the other side so that their owners can benefit from it. It is worth considering whether your intraday trading software is susceptible to such sniffing, or whether it has a preventive function to hide exposure to other market participants.

Bottom line

Using computer programs and automated software systems for trading can explore unlimited horizons. Clicking a button to make money can be very exciting, but you need to fully understand what is going on behind the scenes: whether automated orders get the right price at the right price in the right market, whether they follow the right strategy, and so on. Many trading anomalies are attributed to automated trading systems. A comprehensive evaluation of the day trading software and a clear understanding of the trading strategy you want can allow individual traders to benefit from automatic day trading.


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