In this article I look at the differences between paid, good quality stock market data and free end-of-day stock data.
When designing and building trading systems it is crucial to have reliable and clean end of day stock data. I use Amibroker to chart and back-test trading systems but no matter what platform you use, common sense dictates that you must have good data. If you don’t, you can never be sure if your system is telling you the truth.
Norgate Premium Data is my vendor of choice and a free trial is available for new users. Premium Data can be used with a range of trading programs including Amibroker, TradeStation, MetaStock, Trading Blox, Guppytraders and OmniTrader. Data is available for a number of different markets including stocks, futures and forex.
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Trading in the financial markets is not an easy thing to do but it is something that I decided I would set out to achieve many years ago when just a young man. Besides, finance is a passion of mine and I like nothing better than fiddling with trading systems and scouring various stock charts. Along with music and travel, it’s one of the things that I’m most interested in and it’s been that way since long before I even got a job in the industry.
It’s because of this passion that I decided to put together my own course on stock market trading but this wasn’t an easy decision at first. You see, at first I worried about giving away my knowledge. I worried that if I gave away all my trading systems (and code included) that it would be harmful to me and that people would get all this knowledge for just a tiny cost.
Most courses are not worth a penny
You see, in the past, traders have been extremely secretive about giving away their systems but what I have found is actually the opposite. In fact, I’ve found by giving back to the community I’ve become a much better trader myself. I now have a responsibility to provide students with the right information and that gives me the motivation to learn even more about trading.
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Online education seems to be a rapidly growing movement. Indeed, massive open online courses (or MOOCs) are a brilliant thing as they allow people from all over the world access to high quality education for little or no cost. Here are six free stock market courses for beginners that you can find online:
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Sometimes when creating content for this blog, I like to look at the Google Keyword Tool to get an idea of what people are searching for. It seems that every month a fair amount of people search for the phrase ‘how to trade stocks online free’ or some other variant.
In my view, this is quite amusing since I highly doubt that there is any stock trader who became successful without spending any money first.
An expensive process
Instead, most traders undergo a lengthy process of buying books, software, courses and other products. Many of those products may be useless or even worse, scams. Rarely, they may be very valuable indeed.
And of course, once a trader has spent money on books and what not, there is usually a period of losing money to the market.
In short, learning to trade is a very expensive process. Spending a bit of money in the beginning on some good quality learning tools can actually save you a lot of money in the long run.
Nevertheless, this is the age of the Internet, and information has never been so easily obtainable. Learning how to trade stocks online, for free, is not easy but it is not necessarily impossible. So here are some ways to get started:
Learn how to trade stocks online free
Get the basics right
First of all, if you are a complete beginner I would suggest heading over to a site like Investopedia or Baby Pips as they have a large amount of content for beginners.
I would also suggest you learn about trading costs before you do anything else. You must know the impact of trading commissions and you must understand the bid/ask spread as this can seriously affect which stocks to trade and how much money can be made. At the very least you want to start trading on a level playing field.
For example, if a stock has a bid/ask spread of 5%, not uncommon in some smaller stocks, then you need to make at least 5% just to break even. On top of that, there are commissions to trade, which can be hard to overcome for smaller sized accounts.
Build a list of free resources and blogs
Next, I’d suggest going through my trading resources page. There’s a tonne of books, links, and blogs on there that are really helpful for beginners that don’t want to spend any money. OK, the books all cost money but why not print off a list and head down to your local library? Chances are good that they will have at least a few.
Or, you could check out one of the many book swapping sites like Read It Swap It. I actually swapped a cookbook once for a Jim Rogers classic 🙂
It’s also a good idea to bookmark some of the sites and blogs that you like. Use a free RSS reader like Digg and you’ll be able to see new content from all your favourite blogs as soon as it appears. Going through free content takes time, but there is no better way if you don’t have any money to spend.
Free courses & communities
Likewise, it’s a good idea to sign up for an account at a learning platform like udemy. True, a lot of the courses on udemy cost money but new courses are often offered free for a short amount of time, in order to gain favourable reviews.
Similarly, sites like Reddit are excellent places to meet other traders without spending a dime. As are other trading forums like the Trade2Win forum.
Utilize Google search
Finally, you should learn to utilize Google search more efficiently. Searching for ‘learn how to trade stocks online free’ for example, probably won’t get you very far. Whereas, searching for ‘profitable trading strategies’ in Google Scholar could yield much more interesting results.
Ever since the release of Flash Boys by Michael Lewis, the interest in algorithmic trading has gone up another notch. But there is good reason for this because algorithms really are taking over the world and taking over Wall Street in particular.
Most people talk of algorithmic trading and automatically think of HFT (High Frequency Trading), however, the two are not always the same and algorithmic trading can occur on much longer time frames if so desired.
How dominant is algorithmic trading?
One interesting fact about algorithmic trading and HFT especially is that not everyone is sure how prevalent it really is in today’s markets.
Some claim that only 50% of trading volume can be attributed to HFT, which would be 20% less than in 2009. Others claim the figure is closer to 75%.
But the really interesting fact is that while 50% – 75% of trading volume can be attributed to algorithmic trading, around 90-95% of all quotes on the market are from algorithms.
In other words, HFT orders are everywhere but those orders don’t always execute.
Why could this be?
The reason for this is that algorithms are constantly working out ways in which to profit from the markets. Some times the algorithms move in above or below the price in order to influence the direction of the market.
This is a game of speed where the quickest algorithm is able to jump in front of all the others and make the trade. If the algorithm gets in first it makes the trade and wins. If it doesn’t, it misses out and some other algo trade makes the profit.
The result of this is that algorithms constantly compete with each other on speed and the businesses in charge of setting the algos up invest heavily in getting lightning quick connections to the exchange, utilising underwater fibre optic cables and that kind of thing.
I recommend taking 20 minutes to watch the following TEDx talk on algorithmic trading. Sean Gourley is a New Zealander who has spent a lot of time figuring out how algorithmic trading works and claims that we don’t really understand many of the things that these algorithms do.
Most interesting in this is Gourley’s discussion of augmented intelligence.
Sean talks about a chess tournament a few years ago where some of the most powerful computers in the world were pitted against some of the best human players.
While the computers were easily capable of beating the grand masters on their own, it was when humans teamed up with ordinary computers, that they were able to defeat the super computers consistently. Indeed, it seems that a reasonable group of players using an average desktop computer were able to defeat the super computers.
This gives rise to the notion that the future for us all is to work in conjunction with the machine in order to rise above the competition.
I suppose we knew this already. But this is more evidence to get creative with the process.
Unsurprisingly, a lot of share market software free downloads are available as free trials for more expensive subscription based products such as charting or back-testing solutions. Some of these may even be white label products.
I’ve come across a handful of decent software downloads in my time and I’ve scoured the Internet looking for the best open source downloads as well as trial products.
Share market software free downloads:
Intelicharts provides free historical and intraday data for over 20 countries, charting software technical indicators and pattern recognition software.
The key feature from Intelicharts is the predictive software. It uses both time series forecasting and neural networks to predict where the market’s going next.
Statmetrics is a free app for stock traders and investors. It needs Java but will run on most systems. The software has lots of charting methods and can get quite deep in terms of quantitative measures.
Stock Spy has a cool idea in that it monitors several stocks at a time utilising RSS. It can then suggest possible buys straight to your computer and also send alerts when it might be time to sell. You can’t rely on Stock Spy (some of the news can be unreliable) but it is a great free tool.
J Stock is a free, open source program that allows you to track your investments with ease. It has charts, technical indicators and data that goes back around 10 years.
You can set up watch-lists over several different countries, track your net worth and follow exchange rates too.
NinjaTrader is an award winning trading and charting platform. I’ve never actually used it but I know a lot of people swear by NinjaTrader. The software can be download for free but for the more advanced features you will have to pay.
ChartNexus is another stock tracker, portfolio manager and charting application. The share market software free download is quick to install and another good feature is the ability to see how others are trading.
Open-source algo trading platform with a robust architecture that allows quantitative trading systems.
Again, I haven’t used Eclipse Trader yet but it promises level II market/depth so that should be worth exploring. It’s an exchange analysis system with news and quotes.
Another free open-source program, this one allows you to create your own technical indicators and combine more than 100 popular indicators together.
QT Bitcoin Trader
If you are into bitcoins, this free software can be downloaded and connects to some of the main bitcoin exchanges.
More share market software free download resources:
As you can see, a lot of the best free stock market software is open source. Take a look here for more financial open source software from Sourceforge and see this forum post too.
And to see an extensive list of my favourite tools and books make sure to check out the resources page.
All the best.
There are over 8000 stocks listed in the US and nearly 4000 on the NYSE alone. With so many to choose from, it’s essential to have a method to whittle them down into smaller numbers. Here are my 4 best stock screeners, all of which are freely available on the web:
Best stock screeners:
1 – Finviz.com
Finviz stands for financial visualisations as it provides a number of visual representations of stock market data including candlestick charts, technical formations and heat maps. It’s probably my favourite stock screener because it’s so easy to use yet incredibly powerful. As you can see from the screenshot below, there are loads of metrics you can use to narrow down your search including fundamentals and technical indicators.
However, my favourite thing about Finviz is that if you sign up as a free member you can create your own custom stock screens and these can then be quickly exported to Excel for further analysis.
2 – Zacks
The Zacks screener is also very powerful and one of the best stock screeners on the web. It differs from Finviz in that it doesn’t carry many technical indicators but it makes up for it by providing a wealth of fundamentral metrics including dividend history and balance sheet information. It also provides broker recommendations and the Zacks stock rankings.
There’s also an option to run your stock screens over past data which could be a very handy tool although it does require signing up for a free trial.
3 – Yahoo!
The Yahoo stock screener is pretty old but it’s still a good one. It pulls data straight from it’s finance pages and can therefore be used to find stocks incredibly quickly. Although it doesn’t contain as many metrics as Zacks or Finvix, the best thing about the Yahoo stock screener is that you can set your values very precisely and therefore find the stocks that meet your exact requirements.
4 – Google Finance
The Google stock screener appears fairly limited at first but once you work out how to add criteria you soon realise it is capable of a whole lot more. I counted around 60 financial metrics and ratios in all which can be easily tuned to give narrow search results. The other benefit is that the screener is being rolled out to other countries too including the UK, Australia, Canada and more. This is particularly useful since most stock screeners around only focus on US markets.
There are plenty others out there on the web but I found these to be the best stock screeners available (freely anyway).
The stock screener from Zignals looks impressive but I was put off by having to download a Microsoft plugin. The screener could be worth a look though since it carries stocks from other countries such as the UK. I have also heard good things about the E*Trade stock screener though it requires signing up first which can take a while.
Investors Chronicle and GuruFocus also have good screeners and I talk about these in my free video series.
My Free Video Course
In my free video course I show a number of tutorials on stock screeners. You can take the course for free here and learn how to use over 20 of my favourite trading tools. The course includes tutorials on the Finviz screener, Google Screener, GuruFocus, Investors Chronicle and Seeking Alpha.
Predicting the direction of forex markets, particularly on a short term basis, is no easy task. For longer durations, however, it is a good idea to see a list of economic indicators as these show the fundamental reasons why currencies move. Technical indicators work too, but they are best combined with the fundamentals.
Below is a table that shows some of the world’s leading economies and their respective economic indicators. For trading forex, you should be particularly interested in four things: growth, interest rates, inflation and the current account balance. Once these factors are analysed, it is then a good idea to look at other measures such as the technical outlook or the Commitment of Traders report. This list of economic indicators also indicates the unemployment rate and debt as a percentage of GDP.
List of economic indicators
Data as of 23 Dec 2013
Typically, growth or output of a country is measured by GDP (gross domestic product). Higher GDP generally translates to a stronger currency since the rise in economic growth in a country usually means a higher demand for its currency.
Countries with higher interest rates will usually see their currencies appreciate while those with lower interest rates will see their currencies fall. This is partly due to the carry trade – where investors borrow money in a low yielding currency (such as the Japanese yen) and park it in a higher yielding currency (such as the Australian dollar).
Inflation is another big factor in forex markets. High inflation in a country means that its products are more expensive compared to elsewhere. This leads to less demand for its products and therefore less demand for its currency. The reverse is true for low inflation. High inflation invites higher interest rates from central banks as they seek to control it. Thus, high inflation can result in a stronger currency in the short term but a weaker one in the long term. Again, the reverse is the case for low inflation.
Current account balance
A current account deficit occurs when a country imports more than it exports while a surplus occurs when it exports more. While there are other influences, such as if the imports are mostly financial transactions, as a general rule, countries with current account deficits will see their currency depreciate over time while those with current account surpluses will see their currency appreciate.
Current account deficit’s more than -5% are often considered to be unsustainable and are a sign of potential turmoil. Many currency crises have started when a country’s account deficit grows larger than -5%.
For a full up to date list of economic indicators take a look at Trading Economics and see how many countries have a deficit more than -5%. These countries should definitely be avoided – I will be looking at these in a future article.
The COT report or commitment of traders report is provided by the Commodity Futures Trading Commission (CFTC) and is an excellent tool for forex and commodity traders to analyse what other participants are doing in the market. The COT report is published using data from Chicago and New York futures exchanges every Friday at 14.30 EST and is split between three groups; Commercial traders (typically hedgers), non-commercial traders (such as hedge funds and speculators) and non-reportable traders (such as retail traders).
Why use the COT report?
The COT report provides a way to see what the big players are doing in each market. By doing so, we can find extremes in open position data and identify possible reversal points.
For example, let’s say that the COT report shows the majority of traders in a market are holding long positions. If the majority of traders are already long and the market has gone up, it’s unlikely that there are many bulls left. That means when short traders enter the market it’s likely to drop.
Commercial vs Non-commercial
Another way to spot reversals using the COT report is to watch when positions data between the commercial traders and non-commercial traders diverge.
Commercial traders are typically big market players that use the market to hedge. A big gold company for example will enter the market to hedge their business exposure against gold. While non-commercial players such as hedge funds will buy or sell outright positions looking to profit from directional moves.
Commercial traders tend to trade differently to non-commercial traders. They usually become more bearish at market tops and bullish near market bottoms. Non-commercial traders on the other hand like to buy into trends. They are therefore shown to be at their most bullish as the market peaks and most bearish when the market hits at bottom.
At times when commercial traders are predominantly long and non-commercial traders massively short, or vice versa, there is strong divergence, an indication that it is probably a good time to buy or sell the market.
Finding the COT report
You can find the COT report by going to the CFTC website and downloading it every Friday. Or, you could jump over to forex broker Oanda, which provides a couple of different tools to measure open position data, including data from the CFTC and their own customers positions.
Take a look at the below tool from Oanda and you can find where traders are predominantly short or long any of the main forex pairs or gold. Notice how when non commercial traders move to one side of the trade, the market often turns around and goes the other way.
Using the COT report is not a foolproof strategy but combined with other analysis can help you make some good money in the forex markets.
Edit: I don’t know why but sometimes the below tool fails to load. If that is the case head over to oanda.com and you can find it there.