How to Use Stock Price Alerts to Improve Your Investing Strategy

In theory, you could watch the prices of all stocks you own (and those you want to buy) by staring at your brokerage app all day. However, that's impractical for most people who aren’t die-hard traders, not to mention exhausting. 

Fortunately, many platforms offer stock alerts that keep you updated should anything important related to the stock's underlying price change. This way, you can stay informed without the need to constantly monitor your trading account.

What Types of Stock Price Alerts Are There?

Stock market alerts keep you apprised of factors that relate to the value of securities in your portfolio. 

Common types of market alerts include:

Price trigger alerts

These tell you if a stock value goes above or below a certain price point. Alerts may also tell you if the price changes by more than a certain percentage.

Economic news alerts

Alerts can contain economic news likely to affect the prices of securities, such as central banks changing interest rates or changes in inflation rates. 

Company news alerts

You can get stock notifications about individual companies. For instance, alerts can be set up to tell you when a company is going to release its quarterly performance results or when analysts “buy”, “hold”, or “sell” ratings change. 

Technical patterns alerts

Traders sometimes set up alerts to tell them about the specific short-term price movement of a stock, such as when it exhibits a head and shoulders pattern. 

Portfolio alerts

Lastly, platforms may send you alerts if there are material changes to your portfolio, such as changes in the overall value or trends during the last quarter.

How to Set Up Stock Alerts

How you set up stock alerts depends on the trading platform of your choice. Each offers slightly different tools.

Robinhood

Robinhood offers stock price alerts and notifications about securities, including those you do not own. To set alerts on Robinhood, go to the Account tab >> Settings >> Notifications & Messages. Then tap Push Notifications. 

Robinhood provides notifications when options go in and out of the money, price movements, gain and loss movements, dividend updates, and options expiration reminders.

Fidelity

Fidelity lets you set up alerts on both its mobile app and desktop version. Messages can arrive as push notifications, emails, and text messages. You can set alerts for stocks, options, ETFs, and mutual funds.

To set alerts on Fidelity, go to the Action menu and then Set Alert. Fidelity will then let you set various types of price alerts, including basic price movement, the percentage change in price since close, 52-week high or low, and exponential moving averages. Account alerts are also available, including account balances, positions, trade notifications, options assignments, corporate actions, and investment ideas. 

Vanguard

Vanguard sends email alerts to brokerage clients who are registered users. To request alerts, simply tell Vanguard which alerts you would like. Alerts include news headlines related to your investments, price and volume information about specific securities, daily closing price summary, performance summaries for the week, month, or year, or various market updates. You can also get account-specific alerts. 

Stock Alarm

The Stock Alarm app is not a brokerage platform. Instead, it’s a tool that day traders can use to set various conditions for alarms from live stock price movements. Alerts are available by email, phone, text, and push notification, with custom sounds available for each alert type. Stock Alarm continually scans publicly-available market data and then issues alerts when the specified conditions are met. 

How to Benefit From Stock Notifications

Stock market alerts are valuable because they provide you with up-to-the-minute information about trading conditions as soon as the news breaks. They’re extremely helpful for following financial news and letting you spot opportunities to buy and sell. 

When you trade with alerts, you gain an advantage over other market participants. If you are the first to receive news, you can react to it quickly, finding better trades than you would have otherwise. 

There are several alert types that might help you: 

• 52-week high/low: If you notice that a stock has reached a 52-week high, it could be a sign that it has momentum and that it will go higher in the coming months. Likewise, if it hits a 52-week low, it could suggest that the company is in a bear market and the price may dip further, which means you should sell. 
• Exponential moving average: Exponential moving averages show you whether the stock is above its average defined over a certain number of preceding days, usually 50, 100, or 200. If the stock rises above its moving average, it suggests that it has either turned a corner or its performance is accelerating. Likewise, if it dips below, it can signal a good time to buy (if you are bullish) or sell (if you are bearish)
• Percentage change since close: Lastly, you might want to keep tabs on how much a security changes since the previous day’s close. For instance, events that occur after trading hours could impact the 4.

Are Stock Price Alerts Always a Good Idea?

Stock price alerts are valuable for investors and traders because they provide up-to-date information that allows them to make more informed trades. They’re particularly valuable for traders who want to avoid missing buying and selling opportunities. 

However, there are some reasons why free stock alerts might not be such a good idea. For instance, constantly receiving alerts during market volatility may encourage excessive selling and making decisions based on your emotions, not the underlying financial realities of the securities that you hold. 

Furthermore, long-term “buy and hold” investors are unlikely to find market alerts very helpful. While they can be useful for reacting to short-term volatility, they don’t always tell you a great deal about the long-term fundamentals driving the price of a particular stock or security. 

Lastly, stock price alerts don’t tell you why the price of a particular stock is moving. Sure, it can be going up and down, but there’s no context or analysis telling you the factors driving it. In the past, for instance, stock prices have collapsed because of computer glitches – hardly a compelling reason to sell. To make good trading decisions, you still need information about the underlying asset.

The Bottom Line

Stock alerts are a powerful tool for traders who want to stay up to date about the latest developments in the securities they trade. However, they may have limited value for long-term “buy and hold investors” looking for payoffs over five-, ten-, and twenty-year horizons.