The use of a trading and analysis software application is an extremely important part of an investor’s daily activity. This is especially true when the trader has just entered the market and does not yet have the tones of experience. The application affects the user’s performance by giving them insights into and assistance with planning and realizing the trading strategy. Furthermore, the proper platform helps the user remain current with the latest market news as well as to neutralize so called “market noise” that can result in misleading trading signals. We hope this article addresses what makes a good trading app and what should be included in the trading app in order to be considered “good”.
More often than not, trading applications or mobile apps are built by developers that really have no understanding of a trader’s daily struggle. You have probably seen the large desktop or mobile application containing lots of endless indicators and cluttered user interfaces that look a lot like the pilot’s dashboard in a fighter jet as opposed to a user-friendly web application. The truth is, developers are trying to please everyone by adding as much information as possible to the screen in order to establish the highest possible price. All of these missteps result in empty wallets as well as mental overload. This is a big mistake and an even bigger mistake occurs when developers try to assist non-professional users with obtaining better performance.
First, users need to obtain data from the stock market. There are two types of data – delayed and real-time. Delayed data is crucial if the user is an intra-day trader who uses the mobile app for trading. This is why it is extremely important to have a minimal delay in resaving market data. It is interesting that such a popular and modern algorithm trade requires no more than 50 ms of roundtrip time for a request to be sent from the originating trading terminal to a destination exchange. Exchanges like the New York Stock Exchange (NYSE) charge companies thousands of dollars each month for placement of their servers as close to the exchanges as possible in order to boost the transaction speeds. This is not the case for the average Joe who uses his iPhone application for stock screening and portfolio management. An up to 15-minute delay can provide a sufficient amount of time for a trader using a long and swing trading strategy to gain a representative picture of the market.
Identifying new ideas within the market is a difficult task. It involves one person searching through news feeds while a second person uses the technical data. It is most inconvenient in cases where developers push the users to utilize various web sites, news magazines and other informational sources, which are usually either paid or full of distractive ads. This is not a good idea if developers are trying to concentrate on their work and desire to save users’ money. There has to be an appropriate tool. Traditionally, in order to search a web service or application, users would enter their preference data. Upon completion, the system would provide the user with a list of tickers that they would need to open in order to determine whether or not it was interesting equity for investing purposes or not. To summarize, it eats a significant amount of precious time and requires an uninterrupted internet connection.
A perfect example of how to easily manage a search is by using a tinder-like stock screener. That way, when you enter your preference data you would already see the quotes containing the necessary information about the company in an organized way. Users would have a carefully visualized graph with trends and additional information chosen by real traders that have a maximum value for the decision-making process.
In order to manage your stocks more efficiently, there has to be a convenient and informative portfolio management tool. Such a tool should include all of the necessary data concerning ticker performance and your total portfolio. The key is in understanding how effective the user is. Portfolio indicators should clearly set forth a daily and total gain in addition to showing market value, cash, dividends and costs, which can seriously affect your general performance. There is a strong need to visualize structure for non-professional users in order to show them what weight each stock has and provide them with signals should one stock pull down the entire portfolio.
Obviously, when we address a portfolio’s stock performance it is also necessary to show the price change in real dollars and percentages. The best way is to show a stock’s trend is to look at it on 3 different sets of graphs: a 1-day graph, a 3-month graph and a 1-year graph. Professional traders strongly recommend an emphasis be placed on these time-period graphs because they provide the primary insight into where the stock is going and what general trend it is following. Of cause, the basics, i.e. a 52-week High, Low, Yield, Price Earnings Ratio (P/E Ratio), Price-to-Book Ratio (P/B Ratio) and Expected Surprise Prediction (ESP) are the most important items so the appropriate amount of emphasis should be placed on all of these indicators.
Another substantial part of an analysis is the watchlist. The perfect application should guide the user’s thought cycle toward searching, watching, planning, testing and then trading. Users want to identify potential trade setups before the actual trade but a good watchlist not only lists the stocks, it also includes detailed information about the sentiment. Sentiment function has to be realized as simply as possible with just the delivery of the main function plan and controlled user decision-making. A great many traders lost their savings because of a lack of planning and self-control. We’ve written about the importance of self-control and planning as well as how harmful it can be if users do not plan their trades. A perfect watchlist allows a user to reduce the amount of noise and place the focus back onto the top picks.
Screener apps usually focus their attention on charts and current prices while ignoring the user’s trading strategy, which should be tested with the platform. Backtesting is a portfolio that provides the ability to change data as it enters the market and then tests how the data performed using the currently-chosen strategy. In a traditional portfolio, the backtesting would also include all of the necessary indicators and visualized graphs in order to provide an intuitive understanding of a user’s trades.
The creation of a good trading and analysis app is a huge challenge. Apps primarily have two extremes. They are either far too complicated and expensive, containing a significant amount of sophisticated indicators or they are too simple, resulting in the push for users to use a combination of various applications and services instead. The goal of a perfect application is not to show the statistical information simply for the sake of the statistics, but rather to guide users through the process that helps them improve their performance.