Computerized Technical Analysis

Computers were a novelty at the time I wrote Trading for a Living. My first computer for technical analysis was an Apple 2E desktop with a boxy modem and two floppy drives. Each held a 300 KB diskette: one for the analytic program (Computrac, the first program for technical analysis) and the other for market data. When the first hard drives came out, I had a choice of buying a 2-, 5- or 10-MB (not gigabyte!) drive. Ten megabytes seemed too huge for anyone to ever need, so I sprang for a 5-MB hard drive. How technology has changed!

A trader without a computer is like a man traveling on a bicycle. His legs grow strong and he sees a lot of scenery, but his progress is slow. When you travel on business and want to get to the point fast, you get a car.

Today, very few people trade without computers. Our machines help track and analyze more markets in greater depth. They liberate us from the routine updating of charts, freeing up time for thinking. Computers allow us to use more complex indicators and spot more opportunities. Trading is an information game. A computer helps you process more information. On the minus side, with computers we lose a physical feel for price moves that comes from pencil and paper charting.

21. Computers in Trading

Computerized technical analysis is more objective than classical charting. You can argue whether support or resistance is present—but there can be no argument about an indicator's direction. Of course, ...

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