There are a variety of online trading tools at an investor's disposal. The most well known online trading tools are online brokerage firms that permit users to invest on their own without the assistance of a broker to make the trades. Other online trading tools include various types of charting software that allow the investor to track moving averages and other patterns in stocks; these are most commonly used by those who engage in pattern trading. Finally, there are various tools that allow an investor to track his investments, receive news on those investments and monitor different stocks and investment values.
Online brokerage firms are the most important of the online trading tools. Through these tools, it is possible to place purchase orders for stocks, mutual funds and other various types of investments. Many of these brokerage firms permit the investor to use advanced tools, such as stop losses and limit orders to buy or sell a stock so the process of buying and selling becomes more automated and so profits can be locked in and losses controlled. It is also possible to purchase options, such as puts or calls, using many of these online tools.
Other important tools include charting software. These pieces of software allow the investor to enter a symbol for a stock or a series of stocks. The software will then generate a chart for the time period the user has requested, so the user can easily see how a stock is moving, whether its average opening and closing prices are trending upward or downward, and whether any patterns emerge with the stock itself or with the stock in relation to financial indexes such as the Dow Jones industrial average.
There are also numerous tools that permit an investor to track and follow stocks. Many of these tools are offered for free, even if the individual is not using any type of investing service. A user can create a portfolio and when the user visits his portfolio, he can see links to up-to-date news about the stocks he has invested in, such as the earnings reports or the comments of financial analysts about the stock.
Both online brokerage firms and free portfolio websites also allow a user to check the prices of stocks. Most brokerage firms will permit users to check the stock prices in real time, while free services often have a delay of up to 15 minutes in reporting the latest prices. Checking quotes is one of the most important features of online trading tools.