Trading is a financial activity that could easily be described as easy to start but challenging to master. Whether just starting on your journey with stocks and shares, or the owner of an established and growing portfolio, one ingredient of success remains the same, and that is access to the most up-to-date information.
A booming stock portfolio is all about the numbers – even those brand new to the investment method are interested in green tickers and growing their capital. As experience and understanding grow, more information factors into investment decisions. While a trader that is just starting may work with share prices, market caps, and other easily accessible information, there is always much more to explore.
Critically, that information must be up to date and usable. Over three billion trades occur on the NASDAQ alone each day, and keeping a close, manual eye on each of them is impossible. However, every trader should keep an arsenal of tools at hand that helps them to sift through data precisely and accurately in a manner that makes sense for their holdings.
Here, we share three stock research tools that can serve as the cornerstones of an informed investment strategy today and for many years to come.
Stock Screeners
Many people consider charts as the most integral component of their investment strategy, but it is not difficult to argue the importance of stock screeners. Charts are essential, as mentioned below, but they are a great way to present data in a digestible format. Conversely, a stock screener enables traders to dive deeper into the numbers behind those charts while configuring their displays to suit their investment needs.
The key to a successful stock screener is customization. As noted, over 3 billion trades take place every day on US markets alone. A considerable percentage of them are of little importance to the diligent trader. However, patterns and indicators might emerge which meet a trader’s criteria for interest. A stock screener can ensure that the trader in question is made aware of them.
These tools also cut down on the scattergun stock selection approach. Trading tips and professional insights are undoubtedly worthwhile. Still, one potential path to success with stocks is identifying opportunities before other traders, and the general public can do so. Stock screeners enable traders to sort and filter investment opportunities based on their criteria, converting thousands of stocks into a shortlist primed for further research and due diligence.
Newsletters and Aggregators
Informed decisions underpin many successful trading portfolios. Among the many adages used within the trading industry, a commonly repeated mantra suggests buying the rumor and selling the news. While traders do not need to dedicate most of their time to reading financial news to build their portfolio, it is critical to remain on top of the information that matters.
Aggregators and newsletters are essential due to their relevance. In print, on television, and online, news outlets must provide coverage of a broad range of stocks on any given day. Large price swings and senior appointments are a virtual guarantee of TV time and column inches on any given day. However, the stocks in question may be of no relevance to an individual investor. More importantly, once the news reaches the mainstream, its value has diminished considerably.
Newsletters and aggregators aid investors by cutting through the noise in the market to focus on specific stocks, industries, and investment opportunities. In terms of the previous quote, anything that makes it onto TV can be considered news rather than rumors.
Customization is critical once again. Thousands of investment articles are published each day, but it makes sense to find and disseminate the relevant ones to a specific portfolio – preferably before anyone else does.
There are plenty of tools out there that can aid in making this happen. Atom Finance is a software platform that includes a news feed as standard, and it focuses on stories related to a user’s portfolio as standard. Incidentally, it also incorporates a stock screener as standard, reinforcing the fact that while there are multiple essential tools for successful trading, they do not necessarily need to be segregated across various apps.
We now return to online charting platforms. While they are not the untouchable priority that some beginner traders believe, they still play an inescapably important part in stock research.
There is no quicker and easier way to see, at a glance, the past performance of any given stock. However, therein lies the reasoning for prioritizing stock screeners and news aggregators ahead of them. One of the first lessons a budding trader learns is that past performance should not indicate future returns, and experienced traders will be inclined to agree. However, past performance still plays a part in comprehensive investment research when combined with filters and news.
The usefulness of charting software is virtually limitless. Investors can view how a stock performs when directly compared to another investment opportunity or see how previous news affected the stock price. Essentially, past performance is an important consideration but potentially less so than current information that may dictate future performance.
It can be worth looking beyond the default charts provided by major news outlets for technical research. There are dozens of different chart types available to investors, including bar charts, candlestick charts, and point and figure charts, and their relevance will vary depending on investment goals.
By using a dedicated online charting platform, or even downloadable software, investors can configure past information in a manner that proves most valuable and relevant to their individual goals.
When broken down into its most straightforward format, stock investing is all about interpreting numbers and predicting how those numbers will change in the future. Making those predictions without accurate, current information can happen but is often down to luck – which has a habit of running out. As their knowledge and experience grow, new traders will come to appreciate the importance of fresh information as there is too much new data available each day for any individual to handle. The tools outlined above work in conjunction with an investment strategy, aiding traders in cutting through the noise to focus on the information that matters to them and their portfolio.
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