| Traders have a couple of choices when it comes to | | | | Alerts are useful. A simple alert could be a buy or sell |
| technical analysis software: either use what the | | | | arrow on the chart. More elaborate alerts are |
| brokerage offers, or purchase a software package. | | | | configured to go to an email account or a hand-held |
| One way to decide which choice may be best is to | | | | device. It just depends on the level of "contact" you |
| think about the features necessary to implement | | | | need or want if away from your computer for the |
| your trading system. Here are a few ideas -- | | | | day. |
| Charting is the primary feature in all technical analysis | | | | Indicators are something with which you don't need |
| packages and is a very basic function. The software | | | | to concern yourself. Most software comes loaded |
| allows the user to plot charts in a variety of ways: | | | | with bunches of indicators -- many more than you |
| candlesticks, bars, and lines. It should also allow you | | | | need or likely want. What is nice is the ability to |
| to draw trend lines and horizontal lines for support | | | | customize indicators. For example, a custom indicator |
| and resistance. It's a nice bonus if you can write on | | | | could be a weighted Relative Strength Index (RSI), |
| your charts -- it helps to keep a few notes about | | | | or coloring rising price in one color and declining price, |
| reasons for the entry, stop, etc. | | | | another. |
| Back testing is very useful to test the viability of | | | | Another feature, that is now more common, is the |
| your trading system. You'll need to understand the | | | | ability to overlay multiple indicators in the same pane. |
| formula language the system uses in order to write | | | | This is very useful especially if you have a system |
| the code to test your trading system. Some formula | | | | dependent on multiple indicator criteria. For instance, |
| language can be quite difficult. See if it's possible to | | | | it's nice to display a 7 period, 14 period, and 40 period |
| download a manual from the vendor and read | | | | RSI in one pane. Displaying the moving average of |
| through the section on writing formula code. It's even | | | | the RSI is another example of a multiple indicator |
| a good idea to ask the sales person if technical | | | | overlay. |
| support can help with this function. | | | | A good, clean, timely, data feed is critical. You get |
| Optimization isn't so important, but is usually included | | | | what you pay for with data. Free data is often |
| if the software offers back testing. Optimization is | | | | error-ridden, late, or unreliable. Purchasing data |
| fine-tuning your trading strategy to find the best | | | | separate from the software program can be |
| settings for the strategy's rules. This could be an | | | | expensive. Try and find a bundle of software and |
| entire discussion by itself. | | | | data. If it meets your needs it will save some serious |
| It seems to me that traders trade and formula | | | | coin. |
| writers code software. In other words, you don't | | | | Much of the software for sale, but not all, has a |
| need to worry about optimization. If you thoroughly | | | | broker interface. This allows order entry directly from |
| back test your strategy it will be apparent if your | | | | the program. It's not a necessity, but more of a |
| strategy is sound, or not. Test over many years, | | | | personal preference. |
| during up and down years, and during sideways | | | | As you see, there are lots of options to discover as |
| markets. If you can be honest with yourself you'll | | | | you shop for software to handle your trading needs. |
| know if you have a good system. Optimization can | | | | It's nice to be able to "kick the tires" before |
| lead to curve-fitting that can lead to unrealistic | | | | purchasing. When you find a package that you like, |
| expectations. | | | | see if a fully functioning trial is an option. If not, a |
| A scanner is a great feature to have. It should allow | | | | money back guarantee will let you take the software |
| the creation of a multitude of scans that can be | | | | through its paces before you commit your cash. |
| saved, retrieved and executed with ease. | | | | |