Choosing Trading Software
Trading software systems such as TradeStation, WealthLab and Metastock Pro are common tools for forex traders, stock traders and futures traders, but there are a number of other less popular tools on the market and available for free download. This article gives you a list of things to look for when choosing trading software.
Is there a user community?
A package that has a large number of users will have a lot of addins, free trading systems, support forums, books with worked trading system examples and other benefits, while an obscure package may have have very little. For example, TradeStation is popular, and you can buy books that include a lot of information on trading systems that you can use.
Does it support your computer?
Most trading software is built for the Windows XP and Vista operating system. If you run something other than Windows, such as Linux or a Mac, you’ll need to look at emulation. If you are running Windows 98, it is probably time to upgrade.
Also, trading software generally needs fairly decent hardware. If you are running something that is 10 years old, it might struggle to keep up. The newer the computer, and the better specified it is, the better most trading software runs. The main features that consume CPU and memory are the backtesting and optimisation functions. Remember to check the system requirements for your package.
Can you develop your own trading systems?
Most high end trading software has its own computer language. This allows you to build your own trading systems. For example, TradeStation has EasyLanguage, which is focussed on trading. EasyLanguage is one of the most straightforward I have seen and you can express a trading model in a few lines of code. Some of the other platforms have languages that require a little more background in programming.
Even if the software does not have a language, you’ll want some way of defining new trading systems. Otherwise you will pretty much be limited to what comes with the package.
What data feeds does it use?
You’ll need to find data feeds to keep your trading database up to date if they are not included as part of the deal.
Metastock Pro has a data format that has become very common – it is essentially comma separated values. Make sure that you can readily import the data straight into the system, and take advantage of live data feeds. You don’t want to have to convert the data over before you use it.
Can it talk to other applications and tools?
Ideally, a trading platform should be able to integrate with other tools and addins. You should be able to talk to add in packages easily, including those written in their own language. You should be able to export output from the package to other tools. For example, you may want to do some analysis in Excel from output from your tool.
Can it support automated trading?
Automated trading implies live data feeds, and the ability to setup your own trading alerts, and have the system execute trades.
If it can execute trades, do many brokers support this platform? Does it deal directly only with a particular broker? If so, is the brokerage and execution competitive?
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