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6 Tools for Stock Trading and Analysis

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Stock trading generally is considered to be a short-term approach to investing. Successful stock traders can make outsize profits, but there is a lot of risk involved as well. Taking advantage of tools designed to help traders analyze potential investments can minimize risk and provide an edge in earning profits.

Here is a look at six common types of trading and analysis tools that a shrewd investor may want at their disposal to guide them in their trading decisions.

Analytical tools for stock trading

1. Research sites

Traders often turn to research to help them make buying and selling decisions. Research encompasses the analysis of data, whether quantitative or qualitative, to help drive informed decisions about future events in the markets.

There are a number of online resources that provide detailed research and analysis for an audience of traders and investors:

  • Morningstar is full of analytical tools for stocks, mutual funds and exchange-traded funds (ETFs). For individual stocks, the site offers a number of tools and analysis, including analyst reports for many stocks, robust charting tools, a rating system for stocks and the calculation of a stock’s moat (which is a ranking of the company’s competitive advantage over rivals or the lack thereof).Some of the tools are free, while others might come as part of Morningstar’s subscription service. Beyond its main site, the company offers a wide array of products and tools that are geared toward both financial professionals and individual investors and go well beyond individual stock research.
  • Zacks Investment Research offers a number of tools for individual stock analysis, including a robust screening tool that allows investors to screen for stocks meeting a variety of criteria, research from in-house analysts, proprietary rankings for stocks, and a full set of earnings releases and screens.Many of the tools from Zacks are free to use, although some, such as its earnings surprise prediction (ESP) filter, require a premium subscription.
  • Many brokerage firms also offer robust analytical tools to research stocks. Schwab, Fidelity, TD Ameritrade and Vanguard all offer research and data on a variety of stocks at various levels. Some of the tools might require you to have an account or at least register on the site.

2. Charting

Charting is a way to look at trends in a stock’s price over periods of time. That might be as short as a day or a few weeks for active traders or as long as years or decades. The best charts allow investors to compare the price of a stock over time against market indexes like the S&P 500, the Dow Jones Industrial Average and others.

Additionally, many of the better charting tools allow investors to track stocks against moving averages of their prices over periods of time. The 50-day and 200-day moving averages are popular technical analysis tools. If the price of a stock is trending above or below its moving average, it might be a buy or sell signal for traders.

Many brokers offer charting tools to customers to help them analyze and track movements in securities.

A number of financial sites offer free charting as well:

  • Yahoo Finance is known for its robust charts. Additionally, the site allows investors to link to their portfolios at brokers and custodians to access the other tools on the site, which include screening tools for stocks and other types of investments. It also offers a robust news feed from a variety of financial sites on a range of market-moving topics.
  • BigCharts is a site owned by MarketWatch that offers a variety of charting tools with filters for a large number of indicators, styles and performance comparisons to indexes.
  • Finviz offers charting in a number of styles, such as line, candlestick and OHLC. Users that subscribe to the Elite product can gain access to real-time pricing on intraday, daily, weekly and monthly time frames. Those with Elite also can use advanced charting features that include overlays, drawing tools and performance comparison charts.

Trading tools

3. Margin loans

Margin loans allow you to borrow against securities already owned in your portfolio. The money can be used for any number of purposes, including to finance the purchase of additional stocks for your portfolio, whether those stocks are part of a short-term trading strategy or a longer-term holding.

Margin loans offer flexibility, but the interest rates on margin loans often are higher than the interest rates on other personal loans. You certainly would not want to have a margin loan outstanding for a long period of time.

There are risks to borrowing against your portfolio. If the value of the securities that were borrowed against decline in value, you could be forced to liquidate some holdings to cover a margin call on your outstanding loan.

4. Advanced order types

You probably will want to choose a broker that offers a variety of order types from which to execute trades. All brokers generally offer the basics, such as a market order, a stop order, a stop limit order and other order types.

Depending on your holding period and trading objectives, you might need more advanced orders, such as:

  • Trailing stop orders that move up in price when the stock gains in value
  • Conditional orders that allow you to set a condition that triggers a sale of the stock (conditions can be based upon the movement of the stock held, options or market benchmarks)
  • Short selling, which allows traders to profit on downward moves in a stock

5. Robust trading platforms

Using a robust trading platform — like those offered by a number of major brokerage firms, such as TD Ameritrade and Fidelity — can pay off for investors. These platforms go beyond the basics of allowing traders to buy and sell shares; they offer tools that allow traders to take it to the next level in terms of analysis and the ease of making trades.

TD Ameritrade offers four versions of its online trading platform, including:

  • Its basic online platform
  • Thinkorswim, which is its most advanced platform geared toward “serious traders,” according to the TD Ameritrade site
  • Two versions of its trading platform via mobile

TD Ameritrade offers trading accessibility on a 24/5 basis, meaning trades can be placed on a 24-hour basis Monday through Friday. It also offers 60 days of commission-free trades and a bonus of up to $600 for new accounts that meet certain conditions as of the date of publishing.

Fidelity offers a platform that touts a number of features as well, including:

  • Streaming market data
  • Advanced trading tools and order types
  • Portfolio management tools

Whether you use TD Ameritrade, Fidelity or another brokerage, it is best to look for a trading platform that meets your needs as a trader. Whether this entails research, the ability to simulate trades, advanced order types or other tools, choose the broker that comes closest to offering what you need as a trader.

6. Trading simulators

Trading simulation tools allow investors to review the impact of trades or other investment decisions in a virtual environment before executing the trades with real money.

There are a number of stock simulators available, including several at major financial sites:

Several major brokerage firms also offer simulation tools that traders can use to test their ideas, including:

For brokerage firms, offering a robust trade simulation tool serves a dual purpose. It’s a way to help educate traders, and it offers a means for the broker to show off its capabilities.

Bottom line

Becoming a successful stock trader is hard work. These six tools and others can give you an edge when you analyze potential investments and attempt to minimize risks.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Roger Wohlner |

Roger Wohlner is a writer at MagnifyMoney. You can email Roger here

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Should You Pay Off Debt or Save Your Money?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

You have a regular source of income, you’re paying your bills on time and you have some extra dollars left over each month. What should you do with that extra cash?

If you don’t have debt (lucky you!), then the choice is simple — save or invest as much as possible. If you have debt, however, the choice can be a bit murkier: Should you pay off your debt first or save? Here are some things to consider when asking yourself that question.

Three times that saving your money might be smarter

1. If you don’t have an emergency savings fund

Just when you’re cruising along, life can throw some unexpected and expensive curves your way. A sudden job loss, medical bills or car repairs can pop up out of the blue, and if you don’t have the funds to pay for them, you can end up seriously in the red. To cover unexpected costs, some may resort to high-interest credit cards and loans. Those kinds of moves can dig you into a financial hole that can take years to pay your way out of.

Saving up a healthy emergency fund can protect you in instances like these. How much should you save? Experts generally suggest that you should save an amount equal to between three and six months of living expenses. Depending on your individual circumstances, however, you may need more than that. (Check out this article to figure out how much to save and where to keep it.)

2. Your employer offers matching retirement contributions

If you’re fortunate enough to work for a company that offers a retirement plan with matching contributions, then consider making that method of saving a priority.

For example, if your employer offers to match your contributions dollar-for-dollar up to 6% of your salary in a 401(k) plan, then contribute at least that much, if possible. The money can then grow in a tax-free or tax-deferred 401(k) until you withdraw it in retirement — all that compound interest can really add up over the years. If you don’t contribute up to that amount, you’re leaving free money on the table.

Note, however, that If you need to withdraw these funds early (before the age of 59 and a half and before the account is five years old) there will be penalties to pay. That makes this a better tool for long-term savings rather than for the short-term or as an emergency savings fund.

3. Your debt has a very low interest rate

Debt gets a bad rap — often for good reason — but in some cases, carrying your low-interest debt and investing or saving your funds instead may be more beneficial. For example, the current fixed interest rate for direct subsidized and unsubsidized student loans is 5.05%, and the average 30-year fixed mortgage rate is about 4.3%. The stock market, on the other hand, has gone up an average of 10% a year since 1926.

Beyond comparing interest rates, however, you also need to assess how much risk you’re willing to take and how much access to your savings that you’ll need. Of course, there are no guarantees that your investments will perform well, and paying down debt comes with zero risk. Savings accounts are a less risky saving option, but the average interest rate is often less than 1 or 2%. Other options, such as individual retirement accounts (IRAs), have restrictions on how the funds can be used outside of retirement.

Four times debt repayment may be more beneficial

1. You have high-interest debt

It’s hard to get ahead of high-interest debt, because compound interest is working against you. Credit card interest rates, for example, average between 15 and 20% — an amount which adds up quickly. If you make the minimum payment, you may not even be making a dent in the principal amount owed, and you can spend years just paying interest. Calculators like this one can help you figure out just how much interest you’ll pay and how long it will take to pay off.

If you have high-interest debt, make sure you explore all the options for paying it down, including consolidating your debt and researching balance transfer cards.

2. Your debt doesn’t offer any benefits

Though your debt is costing you in interest, you might find that some loans may offer useful perks. For example, federal student loans may offer tax benefits and even loan forgiveness programs for eligible borrowers. Similarly, there are tax write-offs for mortgages and in many cases, the money you invest in a home will pay off down the line when you sell your property.

On the other hand, the debt on the credit card you maxed out to pay for that trip to Cabo comes with no benefits — just a bunch of interest. High-interest debt with no benefits should be at the top of your pay-off priority list.

3. You want to raise your credit score

While there are many factors that go into determining your credit score, the amount of debt you carry is an important component. If you plan to buy a home or secure a loan in the near future, take a look at your debt-to-income ratio (DTI), which many lenders consider before approving you for a loan. If your DTI is high, you may want to consider paying off some debt before applying for that new loan, which may result in lower interest rates for you later.

4. Your debt stresses you out

Debt can take an emotional and physical toll on people, ranging from depression to insomnia and more. When it feels like a black cloud hanging over your head and it’s affecting your life in negative ways, it may be in your best interest to prioritize paying debt off first.

Should you pay off debt or save?

Of course, saving vs. paying off debt early doesn’t have to be an either/or situation — ideally, you can do both at the same time. If, however, a choice must be made between the two, there are many factors to consider. As with most financial moves, there are no cut-and-dry rules, and the best one for you will depend on your individual circumstances.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Julie Ryan Evans
Julie Ryan Evans |

Julie Ryan Evans is a writer at MagnifyMoney. You can email Julie here

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Investing

How to Make Money in Stocks

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Putting money in the market is well-worn financial advice for a reason: Investing in stocks is one of the best steps you can take toward building wealth.But how, exactly, is that wealth built? How is money earned by purchasing stock market holdings, and what can you do to maximize the gains you make from your own portfolio?

How to make money in stocks: 5 best practices

The way the stock market works — and works for you — is as simple as a high school economics class. It’s all about supply and demand, and the way those factors affect value.

Investors purchase market assets like stocks (shares of companies), which increase in value when the company does well. As the company in question makes financial progress, more investors want a piece of the action, and they’re willing to pay more for an individual share.

That means that the share you paid for has now increased in price, thanks to higher demand — which in turn means you can earn something when it comes time to sell it. (Of course, it’s also possible for stocks and other market holdings to decrease in value, which is why there’s no such thing as a risk-free investment.)

Along with the profit you can make by selling stocks, you can also earn shareholder dividends, or portions of the company’s earnings. Cash dividends are usually paid on a quarterly basis, but you might also earn dividends in the form of additional shares of stock.

Micro-mechanics of how stocks earn money aside, you likely won’t see serious growth without heeding some basic market principles and best practices. Here’s how to ensure your portfolio will do as much work for you as possible.

1. Take advantage of time

Although it’s possible to make money on the stock market in the short term, the real earning potential comes from the compound interest you earn on long-term holdings. As your assets increase in value, the total amount of money in your account grows, making room for even more capital gains. That’s how stock market earnings increase over time exponentially.

But in order to best take advantage of that exponential growth, you need to start building your portfolio as early as possible. Ideally, you’ll want to start investing as soon as you’re earning an income — perhaps by taking advantage of a company-sponsored 401(k) plan.

To see exactly how much time can affect your nest egg, let’s look at an example. Say you stashed $1,000 in your retirement account at age 20, with plans to hang up your working hat at age 70. Even if you put nothing else into the account, you’d have over $18,000 to look forward to after 50 years of growth, assuming a relatively modest 6% interest rate. But if you waited until you were 60 to make that initial deposit, you’d earn less than $800 through compound interest — which is why it’s so much harder to save for retirement if you don’t start early. Plus, all that extra cash comes at no additional effort on your part. It just requires time — so go ahead and get started!

2. Continue to invest regularly

Time is an important component of your overall portfolio growth. But even decades of compounding returns can only do so much if you don’t continue to save.

Let’s go back to our retirement example above. Only this time, instead of making a $1,000 deposit and forgetting about it, let’s say you contributed $1,000 a year — which comes out to less than $20 per week.

If you started making those annual contributions at age 20, you’d have saved about $325,000 by the time you celebrated your 70th birthday. Even if you waited until 60 to start saving, you’d wind up with about $15,000 — a far cry from the measly $1,800 you’d take out if you only made the initial deposit.

Making regular contributions doesn’t have to take much effort; you can easily automate the process through your 401(k) or brokerage account, depositing a set amount each week or pay period.

3. Set it and forget it — mostly

If you’re looking to see healthy returns on your stock market investments, just remember — you’re playing the long game.

For one thing, short-term trading lacks the tax benefits you can glean from holding onto your investments for longer. If you sell a stock before owning it for a full year, you’ll pay a higher tax rate than you would on long-term capital gains — that is, stocks you’ve held for more than a year.

While there are certain situations that do call for taking a look at your holdings, for the most part, even serious market dips reverse themselves in time. In fact, these bearish blips are regular, expected events, according to Malik S. Lee, CFP® and founder of Atlanta-based Felton & Peel Wealth Management.

So-called market corrections are healthy, he said. “It shows that the market is alive and well.” And even taking major recessions into account, the market’s performance has had an overall upward trend over the past hundred years.

4. Maintain a diverse portfolio

All investing carries risk; it’s possible for some of the companies you invest in to underperform or even fold entirely. But if you diversify your portfolio, you’ll be safeguarded against losing all of your assets when investments don’t go as planned.

By ensuring you’re invested in many different types of securities, you’ll be better prepared to weather stock market corrections. It’s unlikely that all industries and companies will suffer equally or succeed at the same level, so you can hedge your bets by buying some of everything.

5. Consider hiring professional help

Although the internet makes it relatively easy to create a well-researched DIY stock portfolio, if you’re still hesitant to put your money in the market, hiring an investment advisor can help. Even though the use of a professional can’t mitigate all risk of losses, you might feel more comfortable knowing you have an expert in your corner.

How the stock market can grow your wealth

Given the right combination of time, contribution regularity and a little bit of luck, the stock market has the potential to turn even a modest savings into an appreciable nest egg.

Ready to get started investing for yourself? Check out the following MagnifyMoney articles:

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Jamie Cattanach
Jamie Cattanach |

Jamie Cattanach is a writer at MagnifyMoney. You can email Jamie here

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