One solution to keep informed of important stock price changes, both of stocks in your portfolio or ones you’d like to buy, is to set up stock price alerts from your brokerage or trading app. Get the basics on how to use stock price alerts in your trading strategy. Learn about some common types of alerts you can set up, how to receive these notifications, and how you can use stock alerts to make investment decisions.
Pros and Cons of Using Stock Price Alerts
Stocks alerts are a valuable tool for many investors, especially active traders who don’t want to miss out on buying or selling opportunities. However, they do have some downsides to consider, like the fact that traders using them may make more trades driven by emotions like panic or greed. Here, in more detail, are some pros and cons of using stock price alerts in your trading strategy.
Pros Explained
Provides up-to-date information: Stock price alerts provide you with up-to-date information about your portfolio or stock you’d like to track. Helps you avoid market and limit orders: Because you’re getting real-time information, you can avoid using limit orders, which are orders to buy or sell a stock at a predetermined price or better. A limit order won’t be executed if a stock’s market price doesn’t reach its limit price. Making decisions based on the real-time news you’re getting with stock price alerts instead can help you seize on opportunities at various price points. Can be customizable: Stock price alerts can help you cut through the noise and focus on the companies and events that matter to you. For example, suppose you’re interested in buying Facebook stock, which is trading at $330. If your target price is $315 you could set up alerts to notify you when shares are trading at that price. Or, you could also set up an alert to, say, get notified when Facebook releases its earnings report.
Cons Explained
May encourage panic selling: Especially in times of stock market volatility, you may get a constant stream of alerts that can cause you to sell in a panic or make other emotion-driven decisions. It could also cause you to overtrade, which can eat into your returns because many brokerages charge a fee per trade. Not good for buy-and-hold investors: Price alerts are generally for shorter-term investors. If you’re a long-term buy-and-hold investor, price alerts could distract you from your long-term goals. Context is limited: While stock price alerts can alert you to recent developments, they can lack context. To make the best investment decisions, you’ll need to consider the context behind a stock price’s movement.
What Stock Price Alerts Are Available?
Your options for stock price alerts and other stock alerts will vary based on the platform you’re using, but here are some common options:
Price alerts: Get notified if a stock’s price rises or falls to a certain price point. Percentage change alerts: Receive alerts when a stock’s price changes by a certain percentage. Technical patterns: Notifications are based on technical indicators, such as the simple or exponential moving average. Company news: You can set up alerts so that you’re notified of breaking news, press releases, or earnings reports for companies you’re tracking. Some platforms also offer alerts when analyst ratings change. Market and economic news: Get notifications based on factors like economic indicators, central bank announcements, stocks with the greatest price movements, or stocks trading at their 52-week highs or lows. Portfolio performance: Receive alerts when your portfolio changes in value, or receive regular monitoring alerts about your portfolio’s performance.
Stock Price Alert Options
Many of the best stock market apps for iPhone users and the top Android stock market apps offer free stock price alerts, as do many major brokerages. Here’s some examples of what price alerts some popular investing platforms and other companies offer. (Keep in mind these are just some examples of the many companies that can provide stock alerts.)
Fidelity
You can set up alerts on the Fidelity mobile app or Fidelity.com. Receive alerts as push notifications, text messages, or emails.
Robinhood
The Robinhood app allows you to receive push notifications about price movements for stocks you’re following. You can also use its iOS and Android widgets to receive alerts about stocks on your watchlist.
Stock Alarm
The Stock Alarm app is a monitoring service developed for day traders. You can have up to five active alerts at any given time through the free version, while the paid plans offer unlimited active alerts.
TD Ameritrade
TD Ameritrade’s mobile app lets you set up watchlists and receive notifications on your device for the equities, options, ETFs, and indexes of your choosing.
Vanguard
Vanguard brokerage clients can sign up for email alerts about changes to prices and volume for specific stocks and exchange-traded funds (ETFs).
Yahoo! Finance
Yahoo! Finance allows you to set up notifications for price alerts, breaking news, and earnings reports for free. The paid versions of the service offer enhanced alerts and daily trade ideas.
Using Stock Price Alerts in Your Investment Strategy
Whether you’re a beginning investor or an advanced trader, stock price alerts can be helpful for monitoring financial news. They can help you spot opportunities to buy and sell stocks that you might otherwise miss. You can use stock price alerts in any way that suits your style and strategy. If you tend to invest for the long term, you may not find stock alerts particularly helpful because you’d likely be more focused on business and market fundamentals than on short-term volatility. Alerts will be more helpful if you actively trade stocks based on price movements.
