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Manual
versus Automated Analysis
With the massive gains in the power of
computers over the past decade, it was only a matter of time before programmers directed
their talents at writing programs designed to sift through the many thousands of stocks on
the markets electronically in search of the next winning company.
Most of these programs written to date focus on applying technical
analysis criteria to the markets. For example, MetaStock can run a scan entire the entire
NASDAQ and NYSE markets looking for, say all stocks between 30 and 40 dollars, with an RSI
greater than 70, the 50 day moving average above the 200 day average, plus increasing
volume. With a modern computer, this scan will take only minutes to sift through the
entire list to find suitable candidates.
Whilst MetaStock will automatically scan the markets, the
Trader still needs to think up and 'program' their searches into MetaStock. As such, the
criteria for the scan is 100% known. MetaStock is designed for traders that like
building their own systems and as such, allows unlimited flexibility for the trader.
There are many other computer programs being sold today that
do not make known their analysis methodologies. These are generally termed 'Black Box'
programs, as the user has no control or knowledge of the analysis process. These programs
tend to be sold at high purchase prices and tempt with promised high returns. They are
also not able to be adjusted in any way to match either the Investor's Trading style or
market conditions. Buyer Beware with these programs!
In between these two extremes lie products like
OmniTrader. OmniTrader applies technical
analysis criteria automatically, however, is still allows the Trader to modify any of the
systems to suit their personal trading style.
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Software Platform
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