Trading System

In order to choose an online trading system to day trade and/or swing trade, several prerequisites will have to be satisfied first.

1. Fees and commissions: Are they expensive or cheap? Are partial fills pro-rated? If your order was to buy 500 shares and you get only a fill for 100 shares, is the commission just calculated on 100 shares or do you get charged for a 500 share lot?
2. After-hours trading and before the opening: Is your trading system capable of handling trades between 4:00am to 8:00pm EDT or are they just for the regular 9:30am to 4:00pm time frame? When companies report earnings after the close, are you able to buy or sell after 4:00pm EDT? Or when there is a volatile non-farm payroll number at 8:30am, could you place stop loss orders on your positions before the number is released?
3. Different type of orders: What kind of orders can you enter? Do you have a vast selection of order entry limits with your trading system? Can you put in "trailing stops" like one that will change into a market order if the position drops $0.50 cents off the daily high? Let's say a stock is moving up but doesn't pull back that much. Any trader could put in a fixed stop but may have to change it every 30 minutes. But a good platform will allow you to sell it at a fixed amount below the daily high. Other handy order limits such as MOC, (market on close), or OCO (order cancels other), are readily used by the swing trader. On strong days, stocks tend to close at the high of the day so MOC orders are necessary. And let's say that you have analyzed three buy candidates but only have enough money for one. Well, all three orders could be entered designated as OCO so when you get the first fill, the other two are automatically canceled. Swing trading requires all this and more! A lot of times when we enter a buy position, we attach two OCO sell "limit" orders, one being a higher price to take a profit, and another one below our fill as a stop loss. After all, the trader should know beforehand what his target is and what he is willing to risk for each particular trade. These limits vary immensely from each online trading system so please, study these limitations thoroughly.
4. Exchanges: Could you select the exchange you want the order directed? Some traders know that a market order on the NYSE is more efficient than on the Boston Exchange. But with some firms, since it is their floor traders who are working that stock post at a regional exchange, your market order may get directed there.
5. Margin: Is the margin calculated online with real-time? Or does the company calculate it overnight and let you know the next day? The last thing you want to know when you open the computer the next morning is that you are way under margined because you bought too much and have to immediately sell out.
6. Time and Sales and Level II: These are tools swing traders use to verify trades or see how deep the bid or ask is. Level II lets the trader analyze the liquidity of stocks traded on the NASDAQ exchange and shows pending orders behind the Level I quote.