The Top Tools and Software for Measuring Trading Performance

Berry Mathew

The Top Tools and Software for Measuring Trading Performance

Investing is a vital step toward financial stability. While it is primarily a route towards earning money, it also helps investors achieve independence and self-determination and acts as a tunnel for providing a legacy for one’s heirs. The choice to invest is, without question, an acknowledgment that this practice comes with specific hazards, as not all money-making opportunities pan out, and many never generate profits. Nevertheless, without incurring risks, there would be no opportunity to grow wealth by snagging higher returns on moves made over time.

In the past, individuals would hand over their funds to certified professionals, brokers, or portfolio managers, letting these pros handle their investments/finances while acting as a single source of info concerning their well-being. However, today, most people take a more hands-on approach to the investing process. That has happened, in large part, thanks to the rise of software that aids in measuring investment performance and the trading process itself.

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Trading can be an isolated activity, especially if one dives deep into the world of software evaluation. Even with all the tools at one’s disposal nowadays, ones that supply up-to-date stats, effective investment assessment lies somewhere between incessant monitoring (which can lead to excessive trading) and yearly analysis. Progress, in terms of investments, gets notched when trades steadily increase in value, maintaining a growing course, which can get identified through various metrics. It is paramount that everyone involved in this activity incorporates instruments that tell them about the health of their portfolio, signaling to them when they should pull out of investments, rebalance, and refocus. The most popular tools from this sphere are stock/portfolio trackers, risk management apparatuses, trading journals, charting software, trading simulators, and back-testing tools. All these get explained below, coupled with clarifications regarding their viability. 

Portfolio Trackers

Portfolio trackers are digital services that permit users to trace the movements of single holdings. These programs allow investors to see how their allocated funds compare to their long-haul goals, giving them an idea of how their portfolio compares to the rest of the market.

The terrific thing about most of these trackers is that many lets investor input manual sets on investments, creating virtual portfolios that permit them to test out particular strategies. In short, these pieces of software are an effective and elementary way to oversee an investment journey, keeping asset allocation practices on the correct path. They are a research and monitoring tool previously exclusive to brokerages, but now anyone with a smartphone device, tablet, or desktop computer can use them.

The best ones, like StockMarketEye, boast a massive pool of investment tickers to draw from and deliver excellent research features. For example, the mentioned one offers a high number of trackable assets, fast load times, and a user-friendly interface through which investors can analyze current holdings, get performance data, such as portfolio percentage, total return, yearly income, and TWRR/IRR, check for diversification, vie the time-weighted rate of return and the money one, plus review their past losses and gains. That is only the tip of the iceberg about the options on hand in StockMarketEye, and many of its competitors, which interested parties can test thanks to a trial version, which gives more than an adequate taste of this software before one goes through with its purchase.

Risk Management Tools

Many veterans of the financial world will say that investing is all about risk management. It is the process of registering, evaluating, and controlling legal, financial, security, and strategic risk to an individual’s or organization’s earnings and capital. These can come under fire from multiple sources, including accidents and natural disasters, legal liabilities, financial uncertainties, and management misjudgments. The impact of any of these can be minor or catastrophic, depending on their scope and ramifications. To minimize their risk, every entity in the financial sector must take precautions to lower unwanted events while maximizing positive ones.

While it is common for investors to base their portfolio success on returns alone, those long in the tooth know that looking at risks and returns together is the proper approach. That is something that gets accomplished through metrics like the Sharpe, Treynor, and Jensen ratios.

For many, the most crucial risk management tool is the risk register. For the uninformed, here is an instrument that collects data about the dangers one expects to see and how to respond when they appear. The steps have already gotten laid out for this, and to keep the project going forward, what is necessary is to maintain the mapped-out course without going over budget. SWOT, standing for strengths, weaknesses, opportunities, and threats, is another established risk-identifying device, usually done on a four-square grid, for easy cross-reference and analysis.

Additional famous risk management tools are the risk-data quality assessment technique, where individuals use collated info for the identified hazards, examining them and checking their quality, accuracy, reliability, and integrity. Naturally, the brainstorming process, involving looking over data of past similar projects and reviewing documentation, should never get undervalued. And the same goes for the probability and impact matrix that helps prioritize risk. They combine impact and probability risk scores, ranking them concerning severity, as a means to understand the risk in the context of the larger project.

Trading Journals

A journal is a record of experiences, reflections, or ideas kept regularly for private use. Thus, trading ones are nothing more than writing down and documenting an investor’s trading past. These journals, not to get confused with magazines/outlets bearing this name, get used for reflecting on previous investments, so they can get better evaluated and yield handy info for navigating the future. Modern portfolio trackers have these journal options on by default. Though, those who do not want to fork over the funds necessary for a yearly tracker subscription can create them manually.

It is vital that anyone embarking on this path be well-organized, meaning structured in their approach to record-keeping. To select a trading strategy that is suitable for them, keep accurate records, and evaluate them periodically. Doing so will ensure the swift identification of weak and strong points in one’s investment style and increase trading consistency. But best of all, a journal keeps investors accountable for their actions.

Spreadsheets are the way to go when creating a journal that lives outside any trading-related app. It should have columns that record info such as the trade date, the underlying asset, position size, etc. According to most, it is wisest to record trades right after finishing placing stop losses and take profits. And following a specified period, it can be a daily, weekly, or monthly timeframe, compile the aggregated data using it to analyze the trades made.

At the bare minimum, a journal must feature the daily loss/profit and a few notes regarding the broader market conditions. Various premium templates exist online that can get simply downloaded and packed with data. That usually gets done in software like Excel and Google Spreadsheets, or these template journals can act as standalone interactive PDFs.

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Charting Software, Back-Testing Tools, and Trading Simulators

Charts, as everyone knows, are methods to display numerical information visually. As the saying goes – a picture is worth a thousand words, so their value can be immense, as they provide oversight of trends and countless other insights at a glance. The goal of any decent chart is to clarify complex concepts quickly and instantly convey its presented information. That is paramount in a field where losing or gaining money can happen at every turn.

To illustrate the importance of charts, a study from TechSmith showed that over 60% of people grasp info better when they get it fed visually. Thus, charts let people compare multiple data sets in image form, making their processing easier. At the moment, the best stock trading software with robust chart functionalities on the market is MetaStock, TradeStation, FinViz, Trading View, and the discussed portfolio manager, StockMarketEye.

For investors unwilling to pay for a charting service, Webull often gets mentioned as the best free mobile app of its kind, doing a similar job to subscription-based services. It is a no-cost, easy-to-use platform with advanced tools and access to cryptocurrencies. Yet, it is not entirely free, as it does charge a $0.55 per contract fee.

Back-testing is something that has different meanings in different spheres. In the financial landscape, it is a term utilized in modeling that refers to testing a predictive model on historical information. It is a type of cross-validation superimposed on previous time intervals. A retrodiction, if you will. Essentially, it aims to check the statistical validity of a trading strategy and quantify the historical expectancy of a trade signal, coming in many forms. Back-testing can use what high-frequency traders implement, use order flow data to automate market making, or go down a simper road and test a few indicators signals with simple stop-loss and profit-taking rules.

Some of the more renowned back-testing software options for traders are Tradewell, PyInvesting, QuantConnect, Trade Ideas, and TrendSpider. The chief aspects to look out for when selecting any pick, whether from the rattle-off ones or others, are market cover, data length, price action, and fundamental info. The main benefits of these tools are they let users know what drawdown they can expect and what market conditions led to underperformance. Their primary con is that, in most cases, real-world outcomes are almost always worse than back-test results.

Lastly, trading simulators are something to keep an eye on if one wishes to prosper in the stock market. Going by online reviews, the top-shelf choices right now are the Thinkorswim by TD Ameritrade, TradeStation, and Moomooo. These allow users to practice risk-free trading with virtual money, producing customizable stock charts that track securities while monitoring commodities like natural gas, oil, and gold. Undoubtedly, Thinkorswim is the current most sophisticated stock market simulator out there. It is a powerful platform backed by insights, education, and a dedicated trade desk that supplies access to elite-level trading tools designed to help even the most inexperienced traders immediately grasp complex trading techniques and approaches.

For those on a tight budget, NinjaTrader is a free simulator that should get considered. It facilitates skill sharpening in a simulated trading environment that boasts live streaming market data.

Parting Thought

It would be super foolish to go into the investment realm not getting equipped with all science and modern technology has to offer. Continuously making smart investment choices is not possible, as that is not the nature of this activity. Like everything else in life, it also carries uncertainties that breed risk. Therefore, everyone indulging in it to create wealth should know how to measure trading performance using whatever tools they can attain at their disposal. The ones introduced in this article are worthy selections and are more or less necessary instruments for spotting critical points where one should pull back on investments or go further in. 

Top software aids like StockMarketEye, Thinkorswim by TD Ameritrade, TrendSpider, and MetaStock, can be substantial game-changers for virtually all investors if they get utilized right. It makes no sense to avoid utilizing unbiased tools that heavily rely on tried-and-tested math models to deliver credible oversight and informational analysis. If one chooses to go against this grain, they are only doing themselves harm and need to look into the mirror when the consequences come. We live in the 21st century and have created mechanisms to make life easier. There is no need to only lean on our instincts and knowledge anymore.

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