5 Free Due Diligence Tools Every Trader Needs

Tools to build conviction on your long-term trades

Published on Oct 01, 2020

blog writer
TopStonks Team

5 Free Tools to get your Due Diligence Done 

Due Diligence: a comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential.

So you’ve got a hot stock tip. You’ve heard whispers that a certain not-to-be-named equity is about to EXPLODE. The threads on Stocktwits and Wallstreetbets are feverish. You take the bait and buy the stock.

For most traders the story ends there. They’ll hold their position until they get spooked by an unexpected price move. Sweating over their keyboards, they’ll panic and sell for a loss; or get out too early, before the big move. This doesn’t have to be you. 

Using the tools below as a guide, you’ll have a better understanding of what you’re trading and you’ll conduct better trades, making more money as a result.

What is due diligence? 

Due diligence is research you do on a particular equity before taking a position. It can be a shallow, or deep dive into a variety of metrics relating to the stock. This can be anything from the fundamentals of the underlying business, to the macro market conditions, to the social sentiment surrounding the stock. The gathering of this information paints a picture for the trader that collectively is referred to as due diligence, or DD in r/wallstreetbets parlance.

Why conduct due diligence?

DD gives you the foundation you need to value a particular stock. When the stock moves, your DD will give you some sense of how far that move can potentially go and you can use this understanding to trade with conviction. With solid DD comes the confidence to buy a dip and the wisdom to take profits.

This sounds complicated and time consuming

Yeah, but it doesn’t have to be. There are a slew of tools available that can help you do DD quickly and easily. You can get a high level view or a granular understanding in just minutes. We think the list below will help you do just that. Here are our favorites:

Trading View: FREE+

Whether you’re trading currencies, commodities, bonds, ETFs, or stocks, Trading View will give you the tools you need to see the stock chart and key data. The chart shows where a stonk has been and where it is going, and some people called technical analysts believe that there are repeatable patterns that can predict the future trajectory of the stock price. 

Benzinga: FREE+

Benzinga is our go-to place for stock news and ideas. Information on the site is very well organized- you can follow news around specific events, securities, sectors, or just peruse for new ideas. There’s also an investor education section where you can learn from the experts. And if you get really serious about trading, you can upgrade to their dashboard for news and alerts.  

Finviz: FREE+ 

The Finviz stock screening platform is a useful tool for identifying stonks that fit your trading or investing criteria. Think people are going to be flocking back to casinos earlier than expected? Run a screen to identify the casino stocks that trade over a certain amount. Reading Ben Graham’s Classic: “The Intelligent Investor?” Search for value stocks by sorting for low Price to Earnings and Book Value ratios, and relatively high dividend yields.   

Seeking Alpha: FREE+ 

Seeking Alpha has a whole suite of fantastic features but our favorite free feature is their company financials section where we can see the last 5 years of financial performance, a general business overview, SEC filings, and a slew of performance ratios. And while most analysis is behind the paywall, there is still a lot of useful analysis available to free users. 

Topstonks: FREE+

Topstonks combs the dungeons of the stock market chat world to figure out what the most aggressive, unorthodox traders are doing. These are the notorious r/wallstreetbets kids who make crazy bets on Robinhood and similar platforms. Everything they do is against the grain of traditional wall street. They view the market as a casino and “free” trade platforms like Robinhood got them a seat at the $5 hand Blackjack table. Say what you want about their YOLO style, the stonks they’ve jumped on- like Tesla (TSLA), Draft Kings (DKNG), and Virgin Galactic (SPCE)- have blown away the market.    

WeBull: FREE

While Robinhood was certainly the trendsetter on no-fee trading, most online trading platforms now offer commission-free trading. One that we particularly like is WeBull. Here is a good analysis of WeBull versus Robinhood.  

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