Trading software is basically a program or an application that is meant to assist you in buying and selling financial assets such as stocks, futures, forex, options, and so on.

The trading software includes simple and complex automated trading platforms and systems provided by brokers, such as simple charting and technical analysis programs. Trading software has become a ‘must have’ for all traders, regardless of experience, thanks to increasingly easier-to-use and sophisticated software that harnesses the power of technology.

What Is Trading Software And Why Is It Used

Trading software can perform many tasks that help users trade, analyze markets, reduce risk, and generally improve trading performance. The main reasons traders use specialized software are:

Streamlining trading workflow

Combining all the main trading features – order entry, account administration, news, and research – in one spot, trading software generates an effective workflow. Unlike separate apps and windows, it saves traders time and increases efficiency.

Market analysis

For example, financial software development services provide tools such as charts, technical indicators, pattern recognition scanners, trading strategy backtesting, etc., to help traders look at the dynamics of an asset price and its potential opportunity. It is important information that helps you make informed trading decisions.

Strategy development

Custom trading strategies can be developed, tested, and automated on trading platforms based on historical or real-time data. With capital risk, they will be able to see if a trading idea is viable.

Risk management

With software safety features such as position sizing, stop losses, risk/reward ratio enforcement, and capital preservation, we are better at controlling trading risks and avoiding losses that would have otherwise been avoidable.

Automated trading

Auto-trading algorithms can monitor markets, execute pre-programmed rules, and trade 24/7 faster than humans can. Trading software makes systematic trading possible for discretionary traders.

As per Zion Market Research, global trading software market revenue was valued at around 

$10.5 billion in 2021 and is projected to grow to about 15.2 billion by 2028. Now, let’s examine some popular types of trading software that are used today.

Top 5 Types Of Trading Software

1. Trading platforms

Trading platforms offered by online brokers are built to include tools for market analysis, order execution, account management, automated trading, news, research, and more in a single portal. Trading many asset classes, from stocks and ETFs to futures, forex, and options, can all be accomplished on platforms such as MetaTrader 4/5, NinjaTrader, Thinkorswim, TradeStation, etc.

68% of active traders use trading platforms for their analysis and transactions. Key benefits include:

• Comprehensive functionality covering the entire trading workflow
• Real-time streaming quotes and market data
• Custom indicators, alerts, scripts, and auto-trading options
• Mobile and web access for platform flexibility
• Detailed account reporting and performance metrics

Trading platforms are usually tied to a specific broker, so traders are restricted to what that broker offers. The tools can also seem overwhelming for beginners.

2. Charting software

The charting software focuses on visualizing price data through plots such as candlesticks and bar charts. It also gives you advanced tools like Fibonacci retracements, Gann angles, Elliott Waves, and more technical indicators.

Well-known charting software examples include TradingView, Thinkorswim, MetaStock, NinjaTrader, and MultiCharts. Although they are usually integrated into other platforms, standalone charting tools provide traders with superior customization and flexibility for market analysis.

According to StockCharts.com, chart patterns, trendlines, and technical indicators remain the most used charting techniques for 66-76% of technical traders. Benefits include:

• Highly customizable charts and indicators
• Drawing tools for annotating charts
• Built-in scanning for chart patterns, events, and technical signals
• Sophisticated alert triggering options
• Chart sharing and community options

The charting software’s actual capabilities data lacks trading information, and feeds can be expensive. The advanced tools may also overwhelm newer traders.

3. Trading analytics software

Trading analytics software specializes in backtesting trading strategies, optimizing strategy performance, analyzing probability, and quantifying other trading metrics using historical and/or real-time data. Its main focus is performance analytics and automated strategy improvement.

Well-known examples are QuantConnect, Tradingsim, NinjaTrader Strategy Analyzer, MetaTrader Strategy Tester, etc. The software allows traders to:

• Backtest strategies across any market and time frame
• Get key performance metrics like profit factor, drawdowns, win rate, and risk metrics
• Conduct Monte Carlo simulations and understand probability
• Optimize strategy inputs to improve performance
• Get detailed analytics on trades, profitability, duration, etc.

However, trading analytics software lacks actual trading or charting capabilities. Programming trading systems and interpreting complex quantitative performance reports requires a steep learning curve.

4. Automated trading software

Algorithmic trading software, also referred to as automated trading software, is a platform for strategy coding, backtesting, optimization, and auto-trading of rule-based strategies in live markets.

Well-known platforms are MetaTrader MQL, NinjaTrader NinjaScript, Tradestation EasyLanguage, etc. The software allows traders to:

• Code complex conditional strategies programmatically
• Backtest strategies across historical data
• Conduct robust optimization and stress testing
• Auto-trade the systems live with minimal intervention
• Manage multiple automated strategies simultaneously

However, programming trading systems have a very steep learning curve. Trading still requires monitoring and risk management of automated systems.

5. Mobile trading software

Monitor markets and trade with mobile trading apps on smartphones or tablets while on the go. The biggest benefits are convenience and flexibility.

Custom mobile apps are available from many brokerages tuned to their platform, and there are also third-party apps that give access to account data, charts, news, alerts, etc. Some examples are MetaTrader Mobile 5, Ameritrade Mobile, E*Trade Mobile, and Plus500 Mobile.

Key benefits of mobile trading apps are:

• Monitor positions and markets remotely
• Mobile alerts and notifications
• Quick trade entry and account access
• Customizable watchlists and charts
• Android and iOS support

Complex analysis and order entry are still better on desktop platforms. Limitations in-app features and data compared to full-fledged platforms.

This covers the major categories of trading software available. However, we will briefly highlight some additional types gaining traction. These include:

• Social trading platforms – Allow the following strategies and trades of top performers. Examples include eToro and Darwinex.
• Cryptocurrency trading software – Specializes in digital currency and crypto derivatives trading. Examples are Coinigy and Bitsgap.
• Forex trading software – Tailored for forex and CFD traders. Examples are MetaTrader 4/5 and cTrader.

Now that we have covered the major types of trading software, the next section examines key factors to consider when selecting trading software for a beginner.

How To Select The Best Trading Software As A Beginner

With several trading software options available, it can get confusing for beginners to find and select the right one for their needs. Here are some tips on what to consider:

Trading style and assets traded

To the first criteria, one would first assess their trading style (e.g., day trading, swing trading, positional trading, etc.) and the asset classes traded (e.g., stocks, futures, forex, etc.). Certain software specialize in specific assets and timeframes. This filters options appropriately.

Features needed

The second thing to do is to make a list of what you would like the trading software to have, such as charts, indicators, order entry capability, automation, customizability, ease of use, and so on. The software that must be selected must have the core functionality required.

Costs involved

Software license fees, data feeds, transaction fees, commissions, and hardware costs are all important costs to consider. For newer traders, you should first evaluate free or low-cost options.

Technology factors

It’s also important to assess the Technology compatibility factors like internet speed, computer processing power, operating system, etc., to help you check if the software is able to perform smoothly. Web-based, Windows, Mac, Linux and mobile compatibilities differ across platforms.

Customer support

Checking reviews and evaluating customer support channels is vital because continuous trouble-free usage with adequate training resources will determine long-term trading success. Frequent crashes or lacking support can severely impact strategy execution.

By considering these key aspects, beginners can narrow down their best-suited trading software according to individual needs and constraints. Getting the foundations right is crucial before allocating more funds to upgrading software later.

Conclusion

We covered a lot of ground, looking at various facets of trading software. Let’s recap some key takeaways:

• Trading software offers market analysis and strategy building, risk management and trade automation tools that use the latest technologies.
• There are popular types, such as trading platforms, charting software, analytics software, auto trading software and mobile trading apps.
• Software selection for beginners depends on trading style, assets traded, functionality needs, costs, technology factors and quality of customer support.
• The trading technology market is expected to reach $13.3 billion by 2028, which means that trading software will be a critical component of markets.

Finally, trading software is based on the idea of leveling the playing field for traders, bringing powerful analytics, automation and risk management features that were previously available only to institutional players. When used wisely, trading software provides the critical edge needed to survive in today’s dynamic markets.

The possibilities are limited only by imagination and programming skills. The future looks bright if you can adopt these game-changing technologies, but as trading continues to shift towards automation, the future can be challenging for traders.