Top 5 Important Tools for Stock Traders

trading toolsStock and shares trading is relatively new compared to other types of financial instruments. It emerged on the market with the advancement of technology and the widespread use of the Internet. Stocks and shares trading are traded via online platforms, the best of which provide a wide range of tools and features to allow traders to improve their results.

Although online investing is easy to learn and is an accessible way of financial trading even for beginners, the various technological tools are an essential part of building good strategies and achieving success. Therefore those helpful tools and features shouldn’t be neglected, as many traders tend to do. The first step, of course, is to learn how to use them. We have made a list of the 5 most helpful tools in online trading, which you can read below.

Candlestick Charts

The best trading platforms are equipped with various charts and graphs that provide useful data for the financial markets. One of the most helpful types of charts in this regard are the so called Candlestick charts, which provide market data for certain periods of time. You can select the time period you are interested in and study market trends.

candle stick

Each graph represents a time period and its color shows the direction of the asset price. The colors used for this kind of charts are usually green and red − with the green color representing an upward trend and the red color identifying a downward trend. The name Candlestick comes from the structure of the graph. Each one has a body and a wick. The longer the wick is, the higher are the chances that the market will move in the opposite direction. As with every analytical tool, Candlestick Charts should be used in conjunction with other instruments for analysis.

If you want to learn more about useful & tested strategies by experts, read more in our educational article – How to Build a Successful Stock Trading Strategy?

Support and Resistance Levels

The Support and Resistance Levels charts are another essential analytical tool. These charts could come in the form of candlestick or linear graphs and show the possible limits in market movements. The resistance level is represented by a line at the top of the chart, which identifies the highest value an asset has reached for a selected period of time. The support level is a line at the bottom of the chart, which represents the lowest price values for the same time period.

Rollover and Double-Up

Unlike the Candlestick Charts and the Support and Resistance Levels, the Rollover and Double-up features are used after the purchase of the option in cases when the market takes an unexpected turn. The Rollover allows traders to extend the option’s expiry time. The Double-up feature enables the trader to double the investment in a certain option when the market takes a favorable turn after the purchase has been made.

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Sell and Buy

The Sell and Buy features allow traders to hedge their bets in case of unexpected market turns. With their help you can sell an option before expiry time if you see that the outcome will be unfavorable. That way you can keep at least some of the amount you have invested and not lose the whole sum. This tool is crucial for minimizing losses and every trader should learn how to use. Trading on the financial markets is risky and at some point even the most successful traders hit a bump. With a feature like Sell and Buy you can prevent fatal losses.

Demo Account

While the Demo Account is not exactly a tool, it is probably the best feature a broker can offer its clients. Demo Accounts are essential for both professionals and novices alike because they give traders the opportunity to test the platform and get familiar with every tools and feature available. Trading in demo mode enables you to improve your skills and try out various strategies. After practicing in demo mode, trading with real funds will be faster.

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