5 tools to bolster your trading strategy in 2023
If you’re serious about trading, you’ll want to know about these.
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In the world of finance, traders need a robust arsenal.
And as with every craft, success in trading doesn't hinge solely on raw talent or luck. It's a blend of a keen strategy, insight and the right set of tools.
Luckily, with tech playing such a vital role in our modern age, traders have a buffet of digital instruments to choose from. In fact, today we have an advantage our grandparents might have only dreamed of.
But what’s the secret sauce? Which tools, when combined, give traders the leading edge?
Here we’ll take a look at some of the must-have digital tools that can give you the upper hand in the trading world in 2023.
1. Technical analysis software
Much like an experienced sailor reads the waves, traders use technical analysis (TA) software to read the market.
It’s not just about stats on a screen, it’s about unveiling a narrative.
At its core, TA software translates the complex numerical data of the market into visual formats, such as charts and graphs. These visuals can help pinpoint patterns, like the bullish 'Golden Cross' or the bearish 'Death Cross', which hint at upcoming market movements.
While it’s far from an exact science, signals like these can give traders clues on when to buy or sell an asset and whether a security, currency, commodity or market is under or overvalued.
There are plenty of technical analysis tools available online, but it can make your life easier if your TA software is integrated with your trading platform.
Take eToro, for instance, where you can access and craft your analysis charts and indicators using renowned TA software TradingView before making your trade. This integration streamlines the trading process, merging analysis and execution.
2. Economic calendars
Every trader knows the sting of being caught off-guard by an unexpected economic announcement.
An economic calendar is the remedy, acting as a trader's schedule of global financial events.
The calendar lists out crucial events, from central bank meetings to GDP releases, providing traders with a heads-up on potential market-moving events.
For example, say you notice an upcoming announcement from OPEC about oil production rates. Recalling how previous announcements have triggered price volatility, you might adjust your trading strategy accordingly, and safeguard your investments.
It can be especially useful for your economic calendar to be integrated with your trading platform. This way, you can set simultaneous economic and price alerts from the same spot alongside your trade orders and executions.
3. Risk management tools
Risks and rewards are two sides of the trading coin. But wise traders know the importance of minimising the former while maximising the latter.
That's where risk management tools come into play.
These tools allow traders to set parameters to limit potential losses. Features like 'stop-loss' orders ensure that if a trade starts going south, it's automatically halted before inflicting too much damage.
Risk management is also about having an investment strategy that matches your investment goals and risk profile.
There are tools that can help you keep track of your portfolio, alert you to price changes in assets you hold and offer news alerts about companies or assets you’re tracking. These are all valuable features that can assist in meeting your investment goals and preventing losses.
4. Algorithmic and automated trading tools
In the rapidly fluctuating world of stocks, currencies, and commodities, timing is everything.
Algorithmic trading tools automate trade execution, ensuring you're not a second late to seize an opportunity.
Think of it like setting up a series of dominoes. You align everything based on specific scenarios, and when one domino falls (i.e. a trigger event in the market), the rest follow in rapid succession.
These types of tools operate on pre-set conditions or algorithms. It can execute trades at lightning speed, far surpassing manual capabilities, and it can be tailored to a trader's specific strategy.
For instance, imagine you notice the GBP/USD forex pair tends to spike after positive UK employment reports. Instead of waiting and watching, you could create a set of rules to buy GBP/USD once employment numbers exceed expectations.
A simpler example of this is to set limit orders to execute your trades. Depending on the platform you’re using, you can set a limit order to buy or sell a stock once the price reaches a certain level.
Another tool that incorporates automation is one-click trading. This option provides traders an edge in fast-paced markets by allowing instant trade execution with a single click.
It’s partly automated because you pre-set your one-click order instructions. For example, on eToro, you can set the amount you want to trade, how much leverage and any limit order instructions. This eliminates the usual multiple-step confirmation process, which means you can lock in the desired price promptly.
By automating some or all of the trade process, traders can capitalise on fast moving opportunities more effectively, ensuring they don't miss out due to delays.
5. Social trading & community platforms
Trading once was a solitary endeavor. Not anymore. Modern traders have vast networks and communities to lean on, share insights with and learn from.
Social platforms such as Reddit can offer discussion boards, strategy sharing and even options to replicate the trading activities of seasoned professionals.
Some trading platforms such as eToro even offer their own social forums integrated within the app. So you can browse investment ideas from other traders before executing on trades.
Then there are social trading features, such as copy trading, where you can copy the trades made by other advanced traders. On eToro for example, you can copy the portfolios of top traders on the app based on their strategies and holdings. Or if you’re a top trader yourself, you can earn rewards when users follow you.
Trading is as intricate as it is exciting.
But where fortunes can be made or lost in a heartbeat, trading tools can be the difference between a mere guess and a well-informed decision. Armed with these, traders are poised not just to navigate but truly master the vast ocean of financial markets.
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