Stock trading in the UK is a great way to make money; however, it’s not always easy. There are many aspects to stock trading, and without proper preparation and knowledge, one can fail in this endeavour. However, with the proper tools and resources in place, you’re well on your way to making it big time!
Like any trade, stocks require tools and resources to be successful. The start of the year is a great time to take inventory of what you’re using, which ones are beneficial to you and which ones can stay in storage for now.
Here’s our list of the top ten essentials every trader should own. But don’t worry, we tried hard to keep things practical (and cheap).
Table of Contents
1) Stop-Loss orders
A stop-loss order helps protect investors when they feel threatened by loss or wish to mitigate potential damage by selling their shares at an undesirable price point. Stop losses must be set at the time of order entry and are usually placed below the current market price. For example, if you purchase a share at £10 but want to ensure that you don’t lose more than £5 per share, you could set a stop loss at £7.
2) Limit Orders
Limit orders are similar to stopping losses in that they help investors mitigate risk by setting parameters around the sale of their shares. Limit orders, however, are used to specify the maximum amount that an investor is willing to pay for a given stock. This can be useful when scooping up shares at a discount or selling them off for a higher price.
3) Trading Platforms
A trading platform is simply a software application that allows investors to view real-time prices and trade securities. Trading platforms can be used for stocks, options, futures and Forex. Some popular trading platforms in the UK include City Index, IG Markets and Saxo capital markets
4) Stock Analysts
While not essential, understanding what stock analysts are saying about a specific company can provide valuable insights for traders. Paid services like Reuters offer comprehensive analysis, but many websites offer free opinions and recommendations.
5) Financial newspapers/magazines
Again, not essential, but keeping up with financial news can give traders a heads up on market trends and potential opportunities. Most national newspapers (The Guardian, The Times, The Telegraph) offer online subscriptions that include access to their archives. Alternatively, several financial magazines and journals can be subscribed to (Moneyweek, The Economist).
One of the most versatile pieces of software an investor can have, spreadsheets can be used for everything from tracking stock prices and calculating profits/losses to creating simple trading strategies. Microsoft Excel is one of the most popular spreadsheet applications to use, but several good alternatives are available for free (OpenOffice, LibreOffice).
7) Market data
Investors need access to market data to make informed decisions about which stocks to trade. This information includes real-time prices, volume and order book data. Several providers offer market data subscriptions, both paid and free.
Charts are a visual representation of price and volume data over a specific technic. They can be used to identify trends, support/resistance levels and other trading opportunities. Most charting software is free to use, but some providers ( like TradingView) offer more features and tools.
Investors should always have access to the right tools for the job. From basic calculators that help determine potential profits/losses to more advanced options like Elliott wave or Fibonacci tools, having a good selection on hand will come in handy again and again.
Another paid-for service, Datafeed providers, can provide real-time market data without required manual intervention. Several providers exist offering different features at varying costs, so it’s essential to find one that offers what you need at a price point you’re comfortable with.