Trading and Investing

What Is Stock Analysis Tool: Overview, Types, Benefits & More

An important factor leading to a trader’s success, especially the ones who trade frequently, is the ability to analyse the stocks and research data. The biggest advantage of doing stock analysis is that it eliminates the chances of making emotionally biased decisions.

However, performing stock analysis by taking the old traditional approach can be extremely time-consuming and complicated. And this is where the reliable stock analysis tools come into play.

What Is Stock Analysis Tool

They accelerate your stock analysis process and help you in becoming a better investor. In this article, we will discuss everything about the stock analysis tools, their benefits, uses, and more.

Stock analysis tools are must-haves in every investor’s research toolkit.

What are stock analysis tools?

Stock analysis tool, as the name suggests, is a tool that helps investors in analysing the stocks and companies and select the ones that suit their budget, preferences and investment goals. There are many types of stock analysis tools available out there, including stock screener, charting software, stock simulators, etc.

Different types of tools serve different purposes and help you in becoming a better investor, at the end of the day. Moreover, such tools help in saving your time, efforts and resources by speeding up your stock research and analysis.

Different types of stock analysis tools

As mentioned above, there are numerous types of stock research tools available out there. The ones you should use depend entirely on your investment goals and trading strategies. Below are some of the most common types of stock analysis tool.

Stock screeners

Stock screeners are by far the most popular and perhaps the best stock analysis tools. Due to the ease of use, convenience, and added features they provide, they’ve become the most favourite tools of the investors.

Stock screeners can screen the entire market and provide you with useful trading data such as the average trading volume, prices, market capitalization, chart patterns, etc. Further, you can set your preferred criteria in your selected screener, to find the most valuable stocks matching that preset criteria.

For example, you can set a filter for stocks priced under Rs. 1500 or a particular company type such as petroleum, Green energy, etc.

Once you set your filters, the screener will offer you a list of all the available stocks matching that criteria.

Charting software

Charting software provides you with the performance of your preferred stocks, index or finds over time. Charts can either be in the form of candlesticks or lines. Most investors prefer candlestick charting software to determine the right time to buy or sell the stocks.

Stock simulators

Stock simulators are also known by other names such as dummy trading accounts, paper accounts, etc. These tools allow you to practice your trading strategies and learn how to trade mindfully without using your real money.

Stock simulators are great tools for beginners as they help in learning how stock marketing works, what are the right ways to buy or sell the stocks and so on.

Trading newsletters, ebooks, etc.

Trading newsletters, ebooks as such aren’t exactly the stock analysis software but offer great help when it comes to analysing the stocks. These are specially crafted trading materials that help you in learning ins and outs of the stock market and make better and safe investment decisions.

Moreover, by subscribing to trading newsletters, you can keep yourself updated regarding the upcoming stocks, ipos, corporate events, stock’s performance and so on.

Things to keep in mind while selecting the best stock analysis tool

There are hundreds of stock analysis tools out there but not all of them are made equally. But to get the best results, you need to utilise the most trusted and reliable analysis tools, otherwise the outdated and poorly designed stock analysis tools are of no use.

Below are some factors that you should consider while selecting the best stock analysis tool.

Real-time data

If you’re a frequent investor, then it is extremely important for you to stay up to date. The reason is simple, a stock’s value can change in a matter of seconds, so it is very important to have the most recent information, which is only possible through real-time data support.

Prefer having a stock analysis tool that offers real-time charting and streaming. Further, if you’re looking for a stock simulator, then look for the one that allows you to trade side by side with the real market. This will give you a more practical and accurate experience.

Can be customized

Make sure to get a customizable stock analysis tool. This is because of the fact that every trader or investor is different. Everyone has their own criteria, trading styles, investments goals and budget.

Therefore, you must have a tool that can be customized according to your methods, styles and goals. The good thing is, most reputed brands and companies offer easily customizable tools for their users. All you need to do is find the right ones.

Easy-to-use format

There is absolutely no use in having a super complicated analysis tool that you don’t even understand. So, make sure that the tool you select is easy to understand and use.

Benefits of using stock analysis tools

Stock analysis tools help you invest safely and mindfully.

We have discussed each and everything about the stock analysis tools. Let’s once more throw some light on their top advantages. Having said that, here are the major benefits of having stock analysis tools.

  • Help in saving time, effort and energy.
  • Eliminate chances of emotionally biased decisions.
  • Helps in accelerating the research process.
  • Offer new investment opportunities.
  • Makes you a better investor.
  • Helps in making valuable investment.
  • Helps in bypassing risky stocks, funds and indexes.
  • Aids your stock research and analysis by providing you with real-time data.

There you have it!

Stock analysis tools are must-haves in every investor’s toolkit. If you’re an investor or planning to become one, then get yourself a reliable stock analysis tool of your choice and make the most out of stock marketing. We hope this guide helps you in getting started with the best stock analysis tools.

About the author

Alena Sham