There are a plethora of do-it-yourself investors that have spurned the traditional model of using financial advisors to steer their portfolios. Many have successfully profited from stocks. Their secret? The only one that matters in the market: being in the right trade at the right time, over and over again.
In a world of high-speed trading and institutional algorithms dominating the daily market volume, you can't execute a winning market strategy on your own without an assist from technology. Do-it-yourself traders that have had success say that from year to year, their market fortunes may vary, but staying ahead over the long term requires using online tools that give them an edge over many individual investors.
Here's a look at some of the best investing sites—from novel stock valuation forecasting to data visualization and the ability to design your own investment funds.
—By Julie Halpert, special to CNBC.com
Posted 8 February 2015
Bob Siciliano has been doing his own investing since 1987 and regularly day trading since he retired in 1994. He said it's provided him with enough income to live comfortably in retirement. He starts each trading day by heading to the same site: Briefing.com.
Every minute or two, "something is being posted that helps inform your trades and get a feeling for the market," Siciliano said. He said it is the breadth of securities analyzed by Briefing.com that is of most use to him.
Briefing.com provides live market analysis of U.S. and international equities. Among the stock functions: real-time intraday analysis of volatility and how to trade on it, analysis of IPOs and lesser-known growth stocks, and a technical charting tool to identify oversold stocks.
The classic technical charting—oversold, overbought, resistance or breakout level for a stock—isn't enough. Day traders also need to consider more unique approaches to identifying timely stock targets.
Jon Haghayeghi, a Ph.D. student in economics at Claremont College, has used Seasonalysis for the past five years. Seasonalysis was designed to help investors identify seasonal price patterns and covers more than 7,500 stocks. If an investor wants to know which stocks historically rally in March and for how long, they can use the site's stock screener.
Users have the ability to view specific statistics for every pattern—thousands of them—in the database, including entry and exit prices, as well as open and close dates for each year. There is also a ticker profile for every stock in the database. Haghayeghi said he uses Seasonalysis because it's the only company to warehouse a database of seasonal price patterns on every single U.S.-listed company. "No one else has done it," he said.
Every trading site includes charts, but not every site leads with its ability to provide a true picture of the market. Data visualization is quickly becoming ubiquitous as a form of analysis in many industries, and day trading is no exception. A picture can be worth a lot of profits.
John Markman, who runs his own trading firm, uses StockCharts to discover moments of extreme undervaluation and overvaluation in a visual way. "The charts allow you to better see the past direction of the market and help you make better forecasts of what might happen in the future so you can unearth stocks on an upward trajectory," he said.
Finviz, meanwhile, provides sector analysis over different time frames with its charting tools, customizable on intraday, daily, weekly and monthly time frames. Markman called it "the best super simple engine on the Web" when it comes to market analysis.
Markman said no single site does everything for him, but if you already have the feeling that there are too many tools, and tabbing back and forth between them will make you dizzy, you can join the day traders who opt for a one-stop shop to cut down on the trading-technology clutter.
Steven Dahl, who manages a suite of his own market indicators, the TAS Market Profile, has been using online trading and charting platform eSignal for more than 10 years and said he "can't imagine his trading life without it."
He uses the site for a little bit of everything, from market quotes to charts and creation of a custom workspace. In addition, he noted a feature for which he is finding more relevance today: the financial media and social integration features, which allow him to connect to information instantly and engage other global investors sharing similar interests.
Does the life of a day trader seem a little more than you can, or would ever want to, handle? Maybe you have a day job that comes before day trading. This is where the new breed of online investment managers, often called robo-advisors, come in.
Take Chieh Huang, CEO of online retailer Boxed.com. Huang is attempting to recreate online what Costco has done in bricks and mortar. He's taken on a pretty big and successful rival. At the same time, Huang said he is accustomed to doing a little bit of trading and wants to be hands-on with his portfolio, even though he really doesn't have the time. So he is using robo-advisor Betterment. He said easy setup, fast deposits and the ability to invest fractional shares are features he likes.
Betterment allows investors to create a portfolio of index funds and ETFs suited to their risk tolerance, time horizon and tax situation. Fees are also relatively low. The company charges 0.35 percent of assets annually for those with less than $10,000 invested, and that drops off to 0.15 percent for investors with more than $100,000.
Meanwhile, Lois Mayerson, a retired DIY investor, has opted for Motif Investing, which offers as its kicker the ability to create your own investment funds. Most of the robo-advisors offer a suite of ETFs and other index investments that can be used in creating a diversified portfolio. Motif allows greater control and customization.
"I can customize my own types of ETFs to a degree that you can't ordinarily find," Mayerson said. "You can modify them, add to them, change them totally. ... If you go to a normal ETF, you can't do that." She added that the Motif model is a good way for people to have even better control over investments at a reasonable cost, and she is gradually moving more money to the Motif platform.
Whether you're an active day trader or market dabbler, you won't get far without a brokerage account. And those trading costs can add up—especially with tech making it so easy to trade—making the choice of an online broker key to managing expenses.
That's why Siciliano uses Interactive Brokers, which is geared toward sophisticated investors and active traders. Its active trading volume keeps costs low. Customers pay half a penny per share in commissions. Interactive Brokers' best execution technology is also important for rapid-fire traders: It searches for the best prices available across venues and exchanges at the time of order entry and immediately executes the order electronically. Its trading platform can handle stock, options, futures, forex, bonds and funds from around the world in multiple currencies from a single account.
"It's perfect for day traders," Siciliano said. "If you make frequent trades, you can really keep your expenses down with this." He estimated that extensive day trading could add up to $45 in commissions daily. "That's too much money," he said, adding that he pays roughly $5 daily through Interactive Brokers based on his volume of trading.
For less-active DIY investors, there are plenty of choices among discount online brokers that offer a combination of portfolio management, financial tools and education. Over the past year, retail clients placed an average of 427,000 trades per day with TD Ameritrade. In addition to providing online trading, it has an education arm with tips and tools on subjects like trading and the pros and cons of different retirement accounts. There are also portfolio-management tools that allow you to sell and buy with discipline. Tools are free, but the charge per trade is $9.99 (it also offers some commission-free ETF trading).
Scottrade is another online broker that offers trading and portfolio-management tools and currently has more than 3 million investors using the site. It charges $7 per trade.
These mass-market online brokers offer one feature that isn't synonymous in the world of sophisticated trading technology: You can walk into one of their branch offices and get some help. Scottrade has more than 500 branch offices in the U.S., while TD Ameritrade has 126.