How to Trade Stocks - Active Trading Platforms and Systems

Most online brokers offer some version of an active trader platform. The features are more or less standard but each broker visualizes them differently. You will need to select a trading system first to determine what features to use.

Active Trader Platform

Most online brokers offer some version of one. Some are Internet based, others need to be downloaded. Once you get it, review the platform's many features: live streaming quotes, online order execution, charting, screeners, indicators, news, research, etc. The features are more or less standard but each broker visualizes them differently. Some platforms also come with demos and/or virtual trading where you can paper trade before risking actual money.

You will probably feel overwhelmed, and in any case you will get more than you need. Don't despair. Active trading platforms are designed to accommodate most trading styles and systems. You need to select yours first. That will reduce what you need to about 10% of what your platform has to offer. The most dangerous thing is to mix and match from different systems or jump from one method to the next in search of the "silver bullet."

Trading Systems

There are several good trading systems. None is perfect; none works 100% of the time. Different systems also suit different personalities and lifestyles. Assess yourself, your needs, goals, resources, preferences, and limitations to choose what suits you best.

For example, lower priced stocks move faster in either direction. You can make a lot of money fast, but you can also lose a lot of money fast. To trade low priced stocks, you must watch them throughout the day. Even on the way up they can be subject to wild swings. If you have a day job and can only check your balances occasionally, the swings can give you a heart attack, or at least heartburn.

CANSLIM

One of the most popular systems well suited for both beginners and advanced traders is CANSLIM, created and popularized by William O'Neill. He also sells a daily online newspaper - Investor's Business Daily (IBD) - that offers a wealth of online resources from charting to stock lists to trading education.

Learning a system takes time. The more effort you put into it, the better you will get at it. Just don't expect to become a pro overnight.

Free Online Resources

There is a wealth of free online resources: charting services, news, market data, etc. What you will need depends on the system you choose. It is also important to create redundancy by bookmarking multiple sites in the same categories. You don't want all your information to come from one source in case that site goes down. For example, I use IBD for charts even though my broker offers advanced charting capabilities. If IBD goes down during trading hours (which it almost never does, but still), I can switch to my broker's.