Whether a novice or advanced stock trader, investors should review the benefits of a stock analysis tool to assist in the security selection process. Software analysis tools take the emotion out of investing by presenting data to guide investors toward winning stocks.
When trading, investors must always remember that trading with the trend is easier than trading against the trend. To select a winning security remember the following steps:
Scan the Market
Most of the stock analysis tools listed on Top Ten Reviews have scanning tools. Scanners help investors identify the best securities to select when trading with the trend. eSignal s Advanced Get has a great scanning tool that helps investors identify these candidates. Use the scanning tool within the trading platform to identify securities that are in an uptrend or a downtrend. With Advanced Get identifying the trend is as simple as selecting an interval and then choosing the option of Buying with the Trend. Other software analysis tools may require a different set of instructions. The scanning tool will filter stocks according to this pre-determined set of parameters defined by investors. Once the trend is identified, then move to the next step.
Chart the Results
Use the results of the scan to determine the risk/reward of each stock presented. Most software analysis tools listed in the Top Ten Reviews have charts that will provide investors with buy/sell signals. These signals alert the investor when software analysis tools recommend entering the market. The buying entry point will generally be selected when the market is in a downward trend. Some software analysis tools have indicators to indicate a downward trend. Advanced Get uses a solid black line above the area of the stochastic chart. Others use different indicators. An appropriate risk/reward scenario will increase investor s chances of selecting a winner rather than a loser.
Identify an Entry Point into the Market
Once the security is selected, identify the entry price in the market. Investors may choose to watch the market and then enter or place a conditional order to purchase or sell a number of shares when the stock reaches a certain price. Most of the software analysis tools listed on the Top Ten Reviews list have an option to set conditional orders or automatic orders. The entry point will be generally selected when the market is in a downward trend and the security is oversold. Linear regression tools should be used to indicate the latest trend.
While in the Candle Stick chart view, draw a line just above the last bar on the linear regression line. Exit points will be determined by drawing a line just below the last bar. Investors should exit the market before this particular point. Any point between the entry point into the market and the highest point along the trend will indicate areas to post a profit.
Test the Strategy
Back Testing tools, can be used to test the strategy to determine how the trade will have played out on historical data. Other simulation tools, will allow investors to simulate how the trade will play out in real time.
Make the Trade
Once the conditional order is met, the trade will be executed and hopefully, investors will realize a profit.
For more information on how to maximize the potential earnings of your investments, be sure to visit our stock analysis software review site.