Stock Market and Option Trading: What Can a Trading App Help You Track ?
Why Tracking in the Stock Market Matters More than Trading
One thing many new traders fail to realise is that tracking the market is just as important as actually making a trade. There really is no point in having the smartest trading plan in the world if you can't track the performance of the stock, index or price of a currency.
A good trading application can help by giving you all the information you need to make a trade decision right there on one screen instead of having to waste precious time switching between tabs and doing calculations.
What Should be Tracked in the Stock Market?
When it comes to following or tracking in the stock market, there are certain pieces of information that you should keep an eye on if you are either investing in or trading the broader market.
While some might argue that price movement is all that matters, volume is just as telling of a stock's price movement. If you see a stock rising five percent on light volume, that is very different than seeing the same five percent increase on heavy volume. The former indicates weakness and the latter shows strength
It would also be a good idea to set up a watch list within your application so that you aren't wasting time looking up different stocks on Google Finance or Yahoo Finance every time you want to research a potential buy. Setting up price movement alert also helps since you don't need to watch the stock every day; just until it crosses a certain price limit that you set up in your software.
Tracking Stocks Involving Options Trading
When it comes to tracking stocks involving options, there are a few other factors that you need to follow in addition to regular price movements. This includes time decay, implied volatility, open interest and strike price. An options chain inside a trading application is going to be extremely helpful in letting you know what is happening with these four options metrics so that you aren't spending valuable time doing research and calculations manually.
Greeks such as delta, theta and vega also come into play with options trading and a good stock tracking application will allow you to do this without having an additional calculator window open inside of your browser
Why Tracking the Bank Nifty Index is Important
For those who actively trade derivatives in India, chances are pretty good that you've heard of the bank nifty index. As one of the largest and most liquid indices on the National Stock Exchange of India it should come as no surprise that it tends to whipsaw back and forth pretty frequently. This makes it very rewarding to track on a daily basis especially considering how closely it is tied to banking stocks.
Changes in policy made by the Reserve Bank of India as well as general interest rates news tend to have an immediate effect on both individual bank stocks and the overall index itself. Having an application that lets you view this index alongside its component parts can be incredibly useful at understanding what lies ahead for these financial instruments. It also helps some traders who set specific alerts for when this index hits certain levels due its tendency to swing wildly during expiry week
How does this all tie together
While none of these different types of tracking information replaces proper trading strategy it does go towards removing any doubt about what kind of trade decision needs to be made. This is especially true for those investors who hold long term positions or engage in more active forms of options trading since they require less analytical skill but more observational ability than ever before.