6 Tips in Choosing Your Best Stock Charting Package

 

When you are a new trader and starting out trading, you need to learn, understand and experiment with different charting techniques, chart patterns, and trading strategies. This will involve reading up on, and researching different stocks, trading approaches, strategies and systems. As you review training material, or take a trading course or research stocks on the web, you will come across stock charts that are marked up with different lines, text and other shapes in different colours and styles. You can identify some chart patterns only by drawing lines or shapes and marking up the charts. These annotations and notes on the charts make the patterns really stand out and provide valuable insight that can help you make buy and sell decisions. This may seem to be a lengthy or daunting task and you may wonder how you can also create such beautiful and insightful charts.

Good chart software should also allow you to draw and annotate the charts to validate and verify your trading strategy. It is very useful to draw lines, channels, fans, arcs, and time zones and to make notes on the chart. Most patterns can be identified visually and these annotations and notes ensure they are being identified correctly. These annotations also act as a record of your analysis and hypotheses for future reference. Good charting software actually makes annotating and drawing on charts very easy. Therefore, one of the important factors to consider when shopping for a charting tool for a trader is the support for the common drawing and annotation tools. Charts are the primary tool of market analysis. When you are selecting a charting package, you need to ensure that it provides the right set of tools to help you analyse effectively.

So what are some of the drawing tools you need in great stock charting tool that will help you get better insight? Some of the important drawing and annotation tools that a charting package should offer are:

1. Lines

The charting software you select should support horizontal, vertical and trend lines. Lines are essential for almost all types of studies and analyses including basic analysis such as identifying support and resistance levels and recognizing trends. Now you could be using lines multiple times on a chart while annotating. Therefore, good support for different styles, weights, and colours is very helpful to mark up the charts effectively.

2. Shapes

Good charting software should support other basic shapes such as ellipses and rectangles. Ellipses and rectangles are useful to highlight specific price action or any interesting development on a specific chart. Using these shapes, you can make a particular price action pattern stand out on the chart.

3. Symbols

You may also want to mark various signals using specific symbols for Buy, Sell, Exit long, Exit short. A good symbol library along with the ability to load your own images as symbols is very helpful.

4. Text annotation

The chart software should also allow you to type any text on the chart. Text annotation combined with symbols is very useful for recording notes, signals, and ideas on the chart. This capability is invaluable when you want to share your ideas with your mates or colleagues or the trading community.

5. Line studies

In addition to basic tools, good charting software should provide the pre-built support for the common types of line studies. These studies include Standard Error channels, Gann Fans, Speed lines, quadrant lines, Raff Regression, and Tirone levels. These studies will help you to analyse potential movement and price action. Rather than draw lines manually for these studies, the software should allow you to select the level and automatically calculate and draw the appropriate lines for the studies. This helps you save time drawing and focus on analysis.

6. Fibonacci studies

Many analysts and traders use Fibonacci studies as part of their tool set for technical analysis. Followers of Elliot Wave Theory (IGNORE: link to EWT article) use Fibonacci arcs, fans, retracements, and time zones for ascertaining trends, support and resistance levels, and potential direction of price movement.

I recommend that you look for a stock charting tool designed for smart investors who are not full time traders. This should also be a charting tool that won't cost you a fortune, is easy to use and navigate. It should help you analyse stocks and effectively find the right stocks for trading and support all the tools outlined above. It must also provide annotation capability and all the drawing tools discussed above to help the new user get started. Moreover, these tools can be customised to your liking using templates and presets. You must be able to select the colour, weight, style that you are familiar with and use them consistently in all your charts. This capability is very useful to make the chart look like one that you may have seen in a training course or read about from your favourite expert.

What I particularly look for in a good charting software is a fantastic ability to mark up charts to do different analyses and studies quickly. That way, I am able to focus on the analysis of the stock instead of wasting time on manually drawing lines and arcs and shapes.

The automatic calculation and drawing combined with the consistency of templates and presets ensures that I am doing the analysis correctly. I can quickly examine the charts using different studies according to my trading strategies. This improves my decision-making and builds confidence, helping me become more certain about my trade.

A stock charting tool must also offer excellent training videos to help you learn it thoroughly. You can view these videos to quickly and easily learn the software and implement your strategies. The presence of a user community where you can learn a lot from the beautiful stock charts shared by the different users is also desirable. Finally, you must be able to download a free trial version to give it a good test drive. That way, you can go ahead and take it out for a spin to begin your journey for trading success.

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Basics Of Trading Systems

 

It seems that everywhere you look, you see advertisements for software promising accurate buy and sell signals and profits with every trade - all with minimal time and effort. Ads like these can make trading systems look like scams aimed at your pocketbook. Is this stereotype justified? Or can trading systems offer viable methods of trading?

This tutorial addresses these questions and defines what a trading system is, and what it takes to design and implement one. If you are thinking of adopting a trading system, this is the place to learn about the skills and resources you'll need to do it.

The next section starts our study off by defining what trading systems are, outlining their components and discussing their advantages and disadvantages.

So What Is A Trading System?
A trading system is simply a group of specific rules, or parameters, that determine entry and exit points for a given equity. These points, known as signals, are often marked on a chart in real time and prompt the immediate execution of a trade.

Here are some of the most common technical analysis tools used to construct the parameters of trading systems:

• Moving averages (MA)
• Stochastic
• Oscillators
• Relative strength
• Bollinger bands

Often, two or more of these forms of indicators will be combined in the creation of a rule. For example, the MA crossover system uses two moving average parameters, the long-term and the short-term, to create a rule: "buy when the short-term crosses above the long term, and sell when the opposite is true." In other cases, a rule uses only one indicator. For example, a system might have a rule that forbids any buying unless the relative strength is above a certain level. But it is a combination of all these kinds of rules that makes a trading system.

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Elliott Wave In The 21st Century

 

By Matt Blackman with Mike Green

There is a standard joke shared by technical analysts that if you were to put twelve Elliott Wave practitioners in a room, they would fail to reach an agreement on wave count and the direction in which a stock is headed. There is no doubt that the Elliott Wave theory has posed some interpretive challenges, but is such skepticism fair?

Robert Prechter, the undisputed leading expert of Elliott Wave, has made some excellent forecasts using the theory, particularly in the '70s and '80s - he forecasted the horrific crash of 1987. But Prechter's record at the end of the twentieth century has not been stellar. In fact, his book "At The Crest Of The Tidal Wave" (1995), which publicly called for the end of the great bull market in 1995, was nearly five years and many Dow points premature; he was advising clients to exit the market even though the ascent was nowhere near its end.

If even the leading Elliott Wave expert finds Elliott Wave theory and its application so challenging, what hope is there for the rest of us? The high degree of subjectivity involved in using the theory is one reason why it can be so problematic and why it is rare to find agreement among practitioners. This leads to uncertainty, which in trading or investing leads to inaction. This may explain why so many traders opt to trade without Elliott Wave or give up in frustration after using it for a while. But is such an attitude akin to throwing the baby out with the bath water?

In this feature, we hunt down and use Elliott Wave-based programs and products that greatly streamline the process of taking the theory and applying it to trade. Think of these as applications that help bring Elliott Wave into the twenty-first century.

Our goal is to familiarize readers with the new millennium version of Elliott Wave theory. For those who may have rejected the theory out of frustration, this tutorial will demonstrate how new developments in technology have transformed this application, which was developed more than sixty years ago.

First, let's take a look at the history of Prechter's application of Elliott Wave and how it demonstrates both the successes and challenges of the theory.

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