Choosing Charting Software

Charting software isn’t just for your computer, either. The Internet has helped to give rise to a multitude of charting choices. There are so many choices, ranging from products for Apple Macintosh computers to the PC, and a variety of web browsers. A few years ago, it was difficult to acquire software that ran on Macs, but that’s not the case anymore. The array of choices are good but can be very confusing, especially for the first-time buyer.

The best place to begin is to understand what kind of trader you are and your trading style. This is key information when determining what kind of charting software you will need.

Technical trader: Market technicians love charts, and they can have many different charts open constantly on their computers looking for patterns. If you are a technical trader, the chart is your best friend and key to your trading success. A profitable charting program will allow you to not only have many technical tools from which to choose, but it will also allow you to manipulate the chart. You will want a program that allows you to make the chart easier to read, allowing different colors as well as different sizes. You should consider multiple monitors so you can analyze multiple charts quickly.

Self-directed trader: This is where the choices really matter. If you are self-directed, you need to find the right software for your needs. Trading directly from your chart can be important to someone who trades during market hours. It’s not as important to the trader who only needs end-of-day (EOD) data. You may want to have it linked to your brokerage account so it can automatically show you how your portfolio is performing. You will want to be able to backtest your system or trading plan to see how it is faring.

Computer-based or online? The debate between computer-based software and online charting software is no longer an easy one to answer. Modern computers are faster, and the programs offered online are robust and good in their own right. Obviously, the online software cannot compare to the many features offered by software on your computer’s hard drive. Online charts have many of the same features offered by charting software meant for a computer. For many, this is an excellent alternative.

There are a few things to be wary of, one of which is the datafeed required. Because the software is online, the datastream may be delayed slightly. This can pose a problem during a very volatile market when prices are moving quickly. You will need an Internet connection, of course. Not many online charting programs allow you to save the charts for later use. If you are interested in backtesting your trading strategy, you will have to use a hard drive-based program. While online charts have come a long way, they still cannot compare to the charting programs installed on your computer. If you are a self-directed trader or investor and need to view charts but have no need to trade from them directly, online charts can be an excellent solution.

Both have their drawbacks, of course. Both can be taxing on your current system’s resource, since charting programs can slow a computer down. The ones offered online are usually rendered in Flash or Java programs, which can tax your system as well. They will be slower to use than a program on your hard drive. Knowing the type of trader you are will help narrow the choice. Far more important is the idea that a trader, no matter how advanced, can use both. You can easily have your charting program do the backtesting while using an online chart to test out some other trading ideas.

No matter your level of trading experience, charting software can be useful. The wealth of choice is astounding and can even be confusing, especially for a trader who has never bought charting software before. It is important to understand what kind of trader you are first and narrow your search based on that criterion. Of course, price will play a significant role in your software choice as well.

If, on the other hand, you only want or can use a computer-centered program, you still have options. Some software makers allow you to try out their charting software for 30 days free or for a small fee before you make a decision.

Installing and uninstalling all the various choices of charting software can be time consuming. Talk to fellow traders and self-directed investors to help narrow your choices.