New Trading Tools For The Retail Investors
When it comes to investing, the retail investor is the one at a disadvantaged ground as compared to the institutional investors. Institutional investors have the services of PhDs in finance, physics and mathematics to help them develop sophisticated market models that help them make market bets.
Institutional Investors also get access to sophisticated advanced screening, charting and analytical tools that retail investors can only dream of. Retail investors lack the resources to do sophisticated market research as well as don’t know how to scan the market for unusual investing opportunities.
A survey was done by the BusinessWeek.com recently to find out how much this gap between the retail investors and the institutional investors has been reduced over the recent years! BusinessWeek.com reported that websites like Fidelity, Ameritrade and TradeMonster now offer new features to the retail online investors they could only dream of some ten years back. These new features allow advanced strategies like finding stocks that have options with unusually high volume on a given day. Some of these new features even allow retail investors to pretest their trade outcomes.
Most of the online brokers now allow screening tools that let you narrow the universe of over 7,000 stocks, over 1000 Exchange Traded Funds (ETFs) and 1000s of mutual funds to a select few that meets your investing requirements. For example, TradeKing now allows you to construct your own stock screeners based on a number of filters that you choose. Once you have selected your stocks, you can back test the output for a period of 5 years.
Rise In The Popularity Of ETFs In Recent Years
One interesting development that has taken place over the last few years is the rise in popularity of Exchange Traded Funds (ETFs). ETFs provide you with the benefits of both the stocks as well as mutual funds. You can trade them like a stock. They also give you the diversification benefits just like mutual funds but with very low fees. This trend in ETF investing has been encouraged by many online brokers who are now offering lots of ETFs commission free. TD Ameritrade infact offers a list of 101 ETFs that are commission free as long as you hold them for a minimum period of 30 days. TD Ameritrade wants to add even more ETFs to this list in the future.
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