Tools for the Advanced Trader: Institutional-Based Software Firms and Brokers Are Producing High Level Tools for Advanced Traders but Retail Traders Are Also Benefitting from the Myriad of High Level Trading Tools Being Developed

Article excerpt

In the first part of this two-part series we covered the basic offerings by trading softwares and platforms for retail traders. Of course, not everyone is a beginner and there are plenty of services and tools offered to the more advanced trader, and those more advanced beginning traders. So, here we will delve into some of the more advanced features a few software companies and brokers offer. With the demand for automated algorithms growing in the industry, we focused on that. This is just a sampling, as it's impossible to cover all platforms in this limited space. Traders should do more research to find the platform or software that best suits their own needs.

TRADESTATION

TradeStation (TS) started out as a software company. The founders realized there were three main aspects to a total package trading platform: the front-end, real-time streaming data and execution capabilities. In 2001 TS became a broker, TradeStation Securities, and now has brokerage offerings with the software. "The foundation of the company is the idea that a trader has to have a tested trading strategy: you need to have a trading plan and then follow it," says Janette Perez, vice president of strategic relations at TS.

With TS you can trade equities, options, futures, and forex was recently added. TradeStation 8.3, the latest version, integrates automated forex trading and has additional indicators and strategies for fundamental traders. Also, TS's forex trading is integrated through the Order Bar, Matrix, Market Depth, Macros and Strategy Automation.

One capability more advanced traders are working on is automation. Once they've got a trading strategy that works, they can set up a system that will show the entries and exits, and in some cases, if they can afford it, they can to an Application Programming Interface (API), where they can set the program to run and trade on its own.

An API connection allows the trader to connect their automated trading system to a broker that offers access to an exchange API and the trader's system sends in orders as they are generated by their program and the orders are executed by the brokerage.

TS's Easy Language scripting language needs to be learned for algorithmic trading. When backtesting, TS offers intra-day and end of day testing. End-of-data testing is usually enough if you're only trading once a day, but if you want to trade multiple time frames you would need intra-day data.

As for charting, TS offers an extensive historical data base for charting with order-entry capabilities, and Perez emphasizes charting is only as good as your data. In equities, TS offers more than 15 years of intra-day data and 38 years of end-of-day data; for futures there's more than 23 years of intra-day and 46 years of daily data; and in forex there's more than three years of intraday and 35 of daily.

Another custom feature is that you can create your own indicator. "TS has more than 100 studies, and what makes them unique is that they're not canned, as they are in other softwares," Perez says. With TS's EasyLanguage, users can write their own studies or take the ones included and modify them.

While it costs $100 per month to access the platform, you can use it for free if you open an account with them, and it is extra for the exchange data.

TRADING TECHNOLOGIES

Trading Technologies International Inc. (TT) develops high-performance trading software for institutional traders that include derivatives professionals, including the world's major exchanges, money-center banks, proprietary traders, hedge fund traders, securities brokers, futures commission merchants and other trading institutions.

X_TRADER, TT's flagship order entry product, is a front-end screen for professional derivatives traders, brokers and market makers. It incorporates single-click trade execution, high-speed connection to the world's largest futures exchanges, real-time fill and position details and the patented MD Trader, a patented vertical market depth display. …