V15:7 (323-328): Computers and Market Analysis by Gregory L. Morris

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.

by Gregory L. Morris

Computers have drastically changed market analysis simply by making almost all analysis techniques available to any-one 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 ][ 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.