Purpose

• The fundamental purpose of stock and futures trading software is to facilitate the connection between the client and the broker. Prior to the computer revolution, investors made human contact with their brokers, usually by phone, whenever they wanted to buy or sell stock. Today, software provides this role and the investor initiates transactions in a computer program. While initially this was the only demand on the software, today's programs now compete with each other in the areas such as charting features and stock market analysis.
  
  

Simulation

• Many brokers provide access to simulation accounts through their software platforms. This is an important benefit to software-based trading, as it allows anyone to engage the stock market in the exact same manner as they would with real trading capital, but in an entirely risk-free environment. Thus, stock and futures trading software serves as not just a trading platform but also an education tool where novice traders can practice their strategies without losing money.
  
  

Automated Trading

• Some stock and futures trading programs provide automated trading features. This lets the client program the software with a specific strategy and then walk away, leaving the program unattended to trade independently. This style of trading was previously limited to a few professionals with exclusive access to such technology. Now, anyone can open a brokerage account with firms offering these features. A successful automated trading strategy lets traders work on other projects while they earn money from the markets.
  
  

Backtesting

• One of the most important steps any investor takes in the creation of her trading strategy is "backtesting," which is the process of applying your methods to past stock market activity to see how the techniques would have played out. A strategy that backtests well may continue to earn money in the future. Backtesting can be a challenging and highly mathematical process. But some trading software offers backtesting features to facilitate this critical component of responsible investing.
  
  

Risks

• While stock and futures trading software offers many benefits, there are also unique risks associated with dependence on any computer program for purposes of investing. If either your Internet connection or computer have a problem, you are unable to quickly exit a market position. Also, this easy access to the financial markets can be a problem for those who do not understand how the markets work. These traders can ultimately lose a considerable sum of money since there is no human buffer to advise or stop their trading habits.