You need to select a software package that not only will help you making trading decisions, but one that will be a pleasure to work with. Avoid spending thousands of dollars on large sophisticated analysis packages and instead focus on getting
yourself a charting package with basic scanning functions that will allow you to search the entire market and highlight a shortlist of potential trading opportunities.
5 Steps to Selecting the Correct Software Package:
1. Must be easy and fun to use. Unless you day trade, avoid packages that offer hundreds of indicators, multiple analysis screens and live feeds that paralyze you with information overload. Look for a package that's quick and easy to navigate and simple to use. With experience, you should be able to flick through the charts and have your analysis completed for each stock in seconds. Keep it simple, and trading will be simple.
2. Must have a high quality data feed. It is of utmost importance that you only use the most accurate up-to-date data in your software. So make sure that the vendor you choose is well established with a good reputation in the industry and can guarantee data integrity to a high degree. Cheap or free data can often be inaccurate or poorly formatted so always, always pay for your data.
3. Must have functions to quickly scan a market for opportunities. The ideal package should let you scan the entire market in minutes for changes in a stock's behavior using numerous filters such as find all stocks between $5 and $20 that traded over 50 million shares last week and made a new 30day high today on a Volume increase of 10 times that of the previous day.
The above scan would for example allow you to shortlist only those stocks that are rising under strong accumulation. A very healthy sign common in all winning stocks. Your software may have such scans already built in else it should allow you to easily program them.
4. Must clearly display a large chart for each stock together with indicators. A big chart displayed across the entire screen in bar or candlestick form is what you want to look for when selecting software. Your software must also display the daily Volume and On-Balance Volume indicators to show whether buyers or sellers are in control of the stock ? this is most important! Your package should also display simple & exponential moving averages with periods you can set manually, to smooth the data. MACD, Bollinger Bands and the Average True Range (ATR) indicators are also good to have. You do not need
to worry about other indicators to trade profitably.
5. Must not cost more than a thousand dollars and ongoing costs must be minimal. That should be the absolute maximum amount to pay someone for their software. The only thing you should be paying the vendor for after you've bought your software is the ongoing data feed. And that's it. If there are membership subscription fees, software upgrade fees and other ongoing costs, look elsewhere.
