Stock technical analysis software

There"s many ways to do TA, but don"t let it be the main focus on your investing. Empirically, fundamental investing is better than TA. The people I know that are professionals at investing (i.e. fund managers from my b-school), look at the present value of cash flows of the company first to determine if its a good stock, and then they use TA to determine an entry point. TA should never be the main focus of your investing.

There are empirical studies out there on investing on fundamentals, as well as TA. Before you ask, I just moved to a new house, and I"m not digging through boxes and boxes of stuff to find my lecture notes. With investing, rather than take info from some anon person on message boards (most of the stuff posted on investing at FOH is bunk), do your own research to come to a determination. There"s probably three or four posters on this board even qualified to talk about this stuff in an intelligent manner.

You need gobs of historical data and the more granular the better. Think of TA as poor man"s quant analysis. I"m with Lyrical just go with fundamentals. I would personally screen the universe of stocks down to a few reasonable options and from there start building some models to explain their movements (ROE model can be used to explain changes in many of the ratios, and help highlight accounting issues), then start looking at discounted cash flows. After that you still have optimal portfolio weightings to worry about (minimizing your volatility for a given return). With all that going on I think it"s safe to say you can disregard TA for a while.

I wonder if I make the community of 4?

prescient63 said:

I wonder if I make the community of 4?

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Yup.

Hi

Disregarding TA is probably the most idiotic move any stock trader or investor could possibly make.

Lyrical said:

There"s many ways to do TA, but don"t let it be the main focus on your investing. Empirically, fundamental investing is better than TA. The people I know that are professionals at investing (i.e. fund managers from my b-school), look at the present value of cash flows of the company first to determine if its a good stock, and then they use TA to determine an entry point. TA should never be the main focus of your investing.

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That"s basicaly it, if you concerns are short term, TA is important. If you"re investing for several years TA isn"t that important. Obviously TA is a lot more important if you do dozens of trades a day than, like most private investor, if you do a couple of trades per month as a long term investment.

The next book you read:

Amazon.com: The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) (9780060555665): Benjamin Graham, Jason Zweig, Warren E. Buffett: Books: Reviews, Prices & more

Tuco said:

Thanks for the advice gentlemen. After I finish the book I"m reading I plan to focus on some other stuff, but after that I"ll probably read a book on securities analysis.

I"ll let you guys know if I find any software solutions that fit what I"m looking for.

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I guess if you are absolutely set on TA you could grab an account at MB trading. Pretty sure you can get free real time values through a practice account and i think metatrader has it"s own scripting engine to let you build your own indicators.

I"d say any amateur that thinks they can consistently get better results from personally doing active management rather than by just passively investing in a nice low cost fund are nuts.

Most professional investors fail to consistently beat their benchmarks, and the quality and speed of the information/research they have access to is miles ahead of you as a private investor. You"re playing against the odds.

It"s a great hobby, though. Treat it as such. Play it safe and it generally won"t lose you more than you would spend on other hobbies, and you might catch a lucky break and end up making bank. It"s also a fantastic way to improve your awareness of personal finances, motivate you to save, and to keep up to date on important issues.



With that out of the way, prescient and Lyrical"s advice in this thread is good.

Blah blah academic bullshit. It"s not hard to beat index averages by doing a little homework. Those statistics are compiled by PhD"s who scurried into academia after being failures at Wall Street. They make up shit like the efficiency frontier to feel superior about their failures. Trust me, I know: I live it every day (MS Finance & CFA 1 almost complete).

Fact: The larger the sums of money you are working with, the harder it is to attain outsized results. The list of available financial instruments with viable liquidity to make a certain % return begins evaporating once you start entering into the millions.

Find some good companies at cheap or reasonable valuations, put your money into them, and wait. You WILL get superior results.

Here"s a few stocks I 500% guarantee exceed their benchmarks over the next 5 years (on both a risk adjusted and total return basis). I"m not saying you should own them (although I would, and do), but at least study their characteristics:

Ford (F) - Trades at 5 times trailing earnings, has amazing earnings growth, has the best management in the United States. Has pulled off a miracle, and an equivalent valuation of it against the GM IPO puts the fair price at $30/share.
Goldman Sachs (GS) - Best financial company in the United States. The VERY best and brightest, pulls off a 20% ROE like clockwork but is priced at less than 1.5x book.
Hyundai Motor (005380:KS - you have to have an international broker to touch it, but you can still find financial statements and study what they"re doing/valuations) - Best profit margins in the business, market share is growing at the fastest rate any automaker has seen since Japan entered the US market in the 70s. 3x US market share in less than a decade.
KKR Financial (KFN) - Personal favorite. Difficult to understand their financials, but they"re trading very cheap for what they are. Mainly only held by institutional investors, less predictable day-to-day movements as a result, but a long term solid company still stuck at a discounted price from the crash.

Every single one of these will have doubled by 2015. Some will have doubled by the end of 2011. The S&P won"t. And academics will, 4 years later, tell you that a fund composed of these 5 stocks and nothing else are outliers, not statistically significant, and were impossible to predict in 2010.

Now you may begin the requisite demeaning of my credentials and attacking of my thesis.

For every self-proclaimed genius claiming he can beat the market blindfolded, there"s a fund manager that was allowed to put his money where his mouth was over a number of years and failed to beat benchmarks.

I don"t believe you can"t beat benchmarks. It"s been my job to do so. I just believe it"s hard as fucking fuck to do and most professionals fail, despite having far better tools and information than ordinary investors. Thus private investors shouldn"t expect to actually make money off actively investing, they should treat it as a fun, educational and free/cheap (if you play safe) hobby with a potential lottery win.

And no, the vast majority of fund managers aren"t limited by their size. You could accumulate millions of dollars worth of GS or F per day without affecting the price significantly.

Elerion said:

For every self-proclaimed genius claiming he can beat the market blindfolded, there"s a fund manager that was allowed to put his money where his mouth was over a number of years and failed to beat benchmarks.

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Gonna have to agree with you there. Everyone brags about beating the market, but no one wants to show you their portfolios.

Lyrical said:

Gonna have to agree with you there. Everyone brags about beating the market, but no one wants to show you their portfolios.

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My fake portfolio kills the market, and it"s all buy and hold. I"ve been trading this fake portfolio since mid 2006. I need a life.

Alpha 9.78%
Beta .27
Rsquared .35

Honestly though my timing is pretty killer hahaha.

Edit: Fuck Energizer, I overweighted or i guess optimally (risk return adjusted) weighted it in my portfolio the day before it dropped off the goddamn map. I need to dump that dog.

Edit 2: While I"m thinking about it, I"ve been thumbing through the Handbook of Portfolio Mathematics - Formulas for Optimal Allocation and Leverage and I think that is a pretty solid book. You"re going to need a little stats knowledge to read it though. Don"t let that scare you though it isn"t really quant heavy. If you can handle correlation, covariance, and z-scores I think you would be fine, and the author seems to walk you through many of the examples but I pretty much just skipped to the sections I was interested in.

Tuco said:

I signed up for MB Trading and they"re going to call me about opening an account or whatever, but I"m betting that"s going to be a dead end. Unless I"m missing something, Metatrader seems focused on Forex, and I"m more interested in stocks at the NYSE. It seems like Metatrader is just a front end to data, so maybe there"s a way to convert an exchange"s stock data into something it eats... It"s not open source so it"s really not what I want.

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Sorry about the metatrader thing I totally forgot. What you can do though is get the MB Navigator and link it to Ninja Trader. Though this has been problematic for me as it won"t build charts, but it may be because I"ve been playing with version 7.0 which is beta. The other option is that MB Trading has a fix API and their own API for entering trades if you want to do it all programatically. The same goes for Interactive brokers but I don"t think they will give you quotes unless you have an active account.

I know this sounds like a plug for MB Trading, but they are the only source I"ve found where they don"t shut off your feed after 30 days of playing with it which is nice. Additionally, since I"m doing the MBA thing and I don"t have access to all the fun institutional shit (ie direct ticker plant feeds & massive databases) anymore so I take what I can get.

I"m working on learning me some Matlab right now so that I can execute a currency pairs trading strategy, well maybe execute a currency pairs trading strategy. I"ll have to see if I can come up with anything profitable through backtesting, and then test on a simulated account + allow for slippage which is a real bitch in forex.

QuantFinanceJobs.org - Quantitative Finance Jobs in New York, London, Chicago

Lot"s of options and derivatives stuff there, but it"s probably good to see the algos. There a quite a few lists floating around with code. I know this is a finmath one for R and I"m sure just about any other language.