In Search of Software for Technical Analysis
Stein, Jon, Futures (Cedar Falls, IA)
In search of software for technical analysis Futures traders who have discovered the chartling and analytics arena have essentially three alternatives for getting the input they need to make a trading decision:
* Price quotes from some source and a pencil, paper and ruler.
* Price-quoting services that combine current prices with a variety of charting and analytical capabilities.
* Third-party vendors who provide software packages that can turn price data from other sources into charts or analytical studies on the trader's personal computer.
Purists, if any are left, who remain content with their scraps of gridlined paper at one time had a good argument when they could dismiss computer-driven graphics for their lack of precision. But computer screen imaging has come a long way, and the laser printer has made pencil-and-ruler hard copies almost extinct.
The sexy graphics and real-time sizzle of quote systems are a very tempting alternative to PC-based software. These speedy animals quickly flash from one market or graph to another.
However, you might refrain from going with a quote vendor, citing reasons such as the cost or lack of need for real-time analysis. Typical minimum costs of $350-$500 a month, not counting installation fees, might seem rather steep to new or more casual traders. In contrast, third-party software involves a one-time cost.
Third-party analytics software can be separated into two categories: that functioning on daily high, low, open and close data only and that requiring real-time input. Packages catering to once-a-day data entry usually are cheaper, as you might expect, and run about $100-$400, depending on the analyses they can perform.
Factors beyond price
Steve Notis, a software reveiwer and president of Byte Research, points out that cost isn't the only factor in deciding between real-time and daily-only data systems.
"Daily-only ones are much cheaper but are directed toward a different kind of trader -- the non-professional with a longer-term perspective," Notis says.
Ray Green, president of Technicom Inc., a Fort Lauderdale, Fla., vendor of Spectrum Graphix, asserts that the cost shouldn't be a factor in any case.
"To trade futures, you have to have some bucks to begin with. I doubt people buy third-party software rather than real-time quote services because they cannot afford it," he says.
The message is simple: Why worry about having a real-time data feed when your trading scope spans several day or weeks?
The table on pages 40-41 provides details of a number of programs from third-party vendors that perform technical analysis on daily-only or real-time data. It does not include all categories of software such as basic charting packages or balckbox systems nor on-line price-quoting services that provide analysis as part of a package. Those are subjects for separate articles.
Out of the universe of daily databased packages, Notis prefers those produced by the larger vendors.
Equis International offers two systems: Metastock, which caters to futures and stock investors, and Technician 5.0, an analysis package for any market with high-low-close. According to Notis, the graphics of Technical are well above the industry standard. Like many systems, both products offer the user "exogenous" indictors -- that is, studies based on more than just price -- and data can be accessed from one of six different vendors.
Many traders consider the New Orleans-based CompuTrac to be the industry benchmark. The first vendor to provide computer-based technical analysis of markets, CompuTrac now offers a package that includes charting, analysis, profitability testing, optimization and study creating. These features typically have been presented as a package, but CompuTrac, like mainframe system vendors, now allows customers to pick which modules they want. …