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Are you just starting out as a technical trader? Or are you a veteran who wouldn't mind a refresher course on the basics? Here's a primer for the novice and a reminder for the veteran covering points of interest, including computer hardware, software and data.
Computers have drastically changed market analysis simply by making almost all analysis techniques available to anyone with a computer. Many believe that this could very well be why some tried-and-true methods don't seem to work anymore; computers have made these methods available to all, leading to overuse. Then again, the power of the computer leaves many people wondering what areas of analysis exactly they should focus on. The power of the computer certainly has been responsible for what's referred to as paralysis from analysis! The gap between analysis and action is ever widening. The bottom line? The computer is simply a tool -- albeit a fast and powerful one -- but it is not the Holy Grail. It is not the ultimate solution to the challenges of trading the markets.
Giving careful thought when you choose your tools, however, is still an important step. I'll try to provide you with a working knowledge of computers and the analysis software that drives them. While some sophisticated traders may not agree with me, what I present here results from having been actively involved in computers and analysis software since the late 1970s. I have been programming computers since 1968 and bought my first personal computer in 1979, an Apple II with eight kilobytes of Ram, a black-and-white television for a monitor, and a cassette recorder for storage. While I have tried to eliminate any personal bias, after all these years my attitudes have been shaped by my experiences.
THE CHOICES ARE ENDLESS
A computer and software are essential tools for anyone who is in the markets, as a trader or an analyst. The obvious problem is deciding on what computer and what software. Anyone who's gone to a large computer warehous -- type of store knows that the choices can be almost endless unless you have specific requirements. I'll shed some light on this problem and offer some suggestions on how to go about solving it.Before I continue, I want to address a few issues. For the purposes of this article, it doesn't matter if you're a speculator, an investor or a trader; all regularly inject money into the markets with the intention of coming out with a profit. The time horizons may vary for each, but the bottom line is that each plays the market.
A different, but related, category of individual is the analyst. Analysts are thoroughly involved in the markets, but do not necessarily play the markets; they usually view the activities with a more theoretical bent. It is important that a trader be a good analyst, but not necessarily vice versa. The skills required for each differ. Stocks & Commodities Contributing Editor Tushar Chande commented in a recent article that "trading is analysis in motion"; to be a good trader, you must convert your analysis into something you can use -- you must be able to boil it all down into a simple executable decision.
For the purposes of this article, I will consider speculators, traders, investors and analysts as equals.
ABOUT SOURCES
To purchase a computer, there are three common types of computer dealers:
- Large discount chains have become prevalent. Some specialize in computer equipment, while others offer computer equipment as only part of the merchandise they offer. Some common names are CompUSA, Circuit City, Best Buy and so forth. See the Yellow Pages in your area for your local stores.
- Independent specialty stores are still a good place to buy your computer equipment. Check the business section of your local paper or, again, your Yellow Pages to find them.
- Direct mail order for computer equipment has also become commonplace. Dell, Gateway, Compaq and Austin, to name only a few, can all be purchased through direct mail. Ads for direct mail catalogs can usually found in computer specialty magazines.
Define your analysis needs first, and then choose the appropriate software. A computer and a software product will not make you rich. They are only tools that will assist you in making those profitable investment and
trading decisions.