by Daryl Guppy
Updated from an article originally
published in Your Trading Edge, the magazine of the Sydney Futures
Selecting market software is really easy - until you
actually have to make a choice. Then a bewildering array of products all claim to offer
the best. Fighting your way through this maze is the first task confronting the private
trader, and first choices are not always the best.
Market software falls into five broad categories. In order
of complexity, these include:
- Indicator and Systems Development
- Portfolio Management
Each software package has specific strengths. No single
package will meet all your needs. Deciding the most appropriate for you depends on how you
want to track market and price activity as each category concentrates on a different
aspect. Having chosen your focus, personal preference decides if you are more comfortable
with a DOS based program, Windows style software, or something that looks, feels, and is
fully Microsoft Office compatible.
I have not included data supply software because each of
these programs is designed to read a database of information that has been built and
maintained quite independently of the market software. Essentially multiple charting
programs are able to read a single common database providing the data format is
compatible. With a single database there are no problems running Guppy Trading Essentials
Charting pak, Ezy Charts, Metastock and SuperCharts or TradeStation.
Charting is the primary requirement for investors and
traders. The software reads the database of price history, and plots the results in a
graphic form. Options usually include a line plot, bar charts, candlestick plots and a
point and figure display. Even basic charting software allows for a moving average and
trend line plots.
Charting is a convenient way to visualise the progress of
price history, and for many investors this is all they want. For traders the chart is a
gateway to analysis.
Guppy Traders Essentials is a good
example of mid-range trading software that combines charting and analysis options. It
includes a toolkit of indicators developed and used by Daryl Guppy including the Guppy
Multiple Moving Average, the count back line, automatic Darvas boxes, parabolic trends and
others. All the standard indicator choices are offered, ranging from MACD and
stochastic, to Gann and Fibonacci projections. For many traders this style of package
offers enough features for successful trading. This Handi-van approach keeps many
businesses operating on a day to day basis. This software is constructed so users can add
new modules as their skill and interest develop.
Ezy Chart is also a good example of
mid-range trading software that combines charting and analysis options. Over 40 indicator
choices are offered.
For others, as their trading skills develop, they want to
delve deeper into analysis to include speed searches of the database for stocks meeting
specific conditions. Mid-range software meets this need with added modules, such as the GTE
Analytics tool box and Ezy Analyser. High range software
such as Metastock bundles this in single powerful package.
Here the user gets over 100 indicators, multiple windows
and full Microsoft Office compatibility. It also includes a powerful indicator builder and
a useful systems testing capacity. The Explorer function facilitates database searches
looking for matches against a range of conditions, and against any of the indicator
results. This software is a significant step beyond the mid range offerings, but it comes
at a cost in complexity. For some this is like buying a 10-tonne flatbed truck when a
simple Handi-van will meet all their needs.
Believe it or not, eventually 100 indicators is not
enough. Traders want to fiddle, developing variations on trading ideas, or building new
indicators, and use the charting capacity of the program to plot the results.. This
capacity is found in high range and top end software. Metastock does offer this, but
stumbles across the limitations of its programming language.
Here SuperCharts shine. The built in
programming tools are very powerful. Those who want to push the boundaries even further
look to its stablemate, TradeStation. This is systems development and
testing at its best. Many users swear by SuperCharts, and many users swear at it. Its
charting and analysis functions are less intuitive to use than Metastock and many users
find this a disadvantage on a daily basis. This is the fully equipped semi-trailer and it
demands a high level of skill to operate the system to achieve optimum results.
The more you read the more analysis and indicator
development sounds like hard work. Some software lets you take a shortcut. Like OmniTrader these programs are designed to implement a specific trading strategy or system. They do
come equipped with good charting, but mainly so they can display the results of their
preferred approach. All their analysis tools and indicators are skewed towards a single
trading strategy, be it based on Gann, Elliott Wave, or market cycles. These are powerful
tools for exploring dedicated trading approaches, but they do lock you into a particular
Success, or even failure, demands a paper trail. Portfolio
management software completes the circle. Some, like Ezy Analyser, include trading alerts,
but most concentrate on good record keeping. Most of them graph the portfolio process and
a few permit simple line charting of individual stocks. Their functions are so different
from charting and analysis that this is usually stand-alone software, or an additional
module for a charting package.
So why not simply go out and buy the most powerful market
Each has its strengths and careful selection will match
individual program strengths with your areas of interest, often at a more reasonable cost.
Some traders, like myself, end up with several different programs, using each for its
I use Guppy Traders Essentials for
its speed and automatic plotting of the Countback Line entry and stop loss signals. I use
Metastock as a workhorse for detailed analysis and indicator development. Multiple open
windows and Microsoft Office compatibility are a plus. I turn to SuperCharts
for systems testing. Portfolio management is handled by
Manager. These are my choices and they fit my needs in the market. Your needs
will be different and if you have a clear idea before you go shopping for software you
will end up with software that will do the required job for many years.
When you buy software you might look for the following.
1) Data compatibility with either the Metastock Format, or
ASCI. You don't want to spend very much time manipulating data into or out of a
proprietary format. It is wise to avoid a data format that locks you into just one data
supplier as they have the power to impose predatory pricing.
2) A good support base of users and a business support
base for the software. One-man bands put out some interesting software, but when they lose
interest, who keeps the product under development?
3) A steady stream of updates that improve the charting
and analysis capabilities in line with developing industry trends. The Guppy Traders
Essentials pak is regularly updated via the net with fast and timely downloads.
4) Personally, I prefer full compatibility with Windows,
and a totally mouse driven interface, unless the software has some compelling advantages.
5) Look for the power to be able to easily explore and
test new trading ideas, even if you end up not using them.
6) Personally, I will buy specialised software that has
one or two features that make the purchase worthwhile, even if the rest of its features
are already included in my existing software.
Trading is a challenge. You need the best tools available,
but tools are no substitute for trading skill. As your skill improves, the cost of new
software becomes less of an issue.
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