Stock Market software?

[Komodo]

hey do any of u guys know about the stock markets if so checkout this site and tell me what u think www.mx-t.com

 

[Bible_Belt]

I was a broker and trader for five years.

Stay away from that software crap. Brokers are heavily regulated, but software vendors are not. It is a sleazy business. Trading is difficult. Traders exploit inefficiencies, and we have the most efficient market in the world. Even when a method works, the market can quickly change to make that method obsolete. If a method really did work, it would be worth too much money to sell.

If you want to day trade stocks, you need $25,000. You can day trade e-mini futures with 2-3 grand, or you can trade stocks and hold for a few days at a time. interactivebrokers.com is highly regarded as a broker and elitetrader.com is the biggest trading forum. There are also good forums on siliconinvestor.com; Alan Farley has some good free articles at hardrightedge.com; don't ever pay for a stock-picking service. Also, read "Reminiscences of a Stock Operator." It is an old book that every trader should read.

 

[cave dweller]

programs...........

Komodo,

IMO those programs are a waste of money.

No one can tell you what a stock will do tomorrow or next month unless he/she has some 'inside' info.

my 2 cents

cave dweller

 

[sifer]

Re: programs...........

Originally posted by cave dweller
Komodo,

IMO those programs are a waste of money.

No one can tell you what a stock will do tomorrow or next month unless he/she has some 'inside' info.

my 2 cents

cave dweller

I heard that the "inside" info is illegal, is this true?

I'm not a stock investor (RE here) so I don't know anything about it.

 

[Bible_Belt]

"inside" info is illegal, is this true?

If you have it, trading upon it before it hits the news is illegal. Conspiracy theories are dangerous to traders, because it makes you think the market is rigged against you and you start excusing all of your mistakes. That being said, by the time good news hits the newswire, and I mean the $500-$1500 per month services that professionals use, the stock has already moved. The art of trading from an individual standpoint is being able to see large orders hit the market before other people do and jump along for the ride as the stock moves. From the institutional standpoint, they are trying to execute giant orders without being seen, and that is their art form. Tape reading is what the author of the Reminiscences book was doing with a paper ticker tape in the 1920's, and it is what many good traders are still doing today over the Internet. The art of it has not changed much. Trading is like a chess match, and it is so difficult because you are playing against the best and the brightest people in the world who have tremendous resources at their disposal.

 

[sifer]

Ooooh..

 

[al77]

Originally posted by Bible_Belt

From the institutional standpoint, they are trying to execute giant orders without being seen, and that is their art form.

So I assume those institutional investors have some advatanges: better (faster?) news, better deals.. Is that right?
If it is, than I am surprised how poorly in general they are doing if we consider performance of most (if not all) mutual funds. How come?

 

[Bible_Belt]

So I assume those institutional investors have some advatanges: better (faster?) news, better deals.. Is that right?

If it is, than I am surprised how poorly in general they are doing if we consider performance of most (if not all) mutual funds. How come?

It is more order flow than investing. Mutual fund managers change fund holdings frequently. When they do so, large volumes of stock, often millions of shares, must be bought or sold. They can't show a large order without moving the market, so they hire a trader to execute it in small pieces over time. It's his job to not get noticed, or else other traders will drive up the price of the stock as they buy in anticipation of it going up from the big order.

Brokerage houses in general have continued to show profits even when markets declined. Underwriting helps, as it is a way of creating paper wealth for the firm that did not previously exist. Revenue from order flow helps, too.

 

[cinephile]

Those programs do not help at all. If somebody had found a consistent way to make $$$ out of the financial markets, they would definately not be selling it.

The best way to learn is to actively read and engange in trading. Dependeng on your laptitude andr personality, it can take a while before you get any good at it. I would recomend going to www.elitetrader.com for an idea what is involved in becoming a decent trader. Much like here, there are a lot of opinions and little hard facts, but at least it will point you in the right direction.

 

[Nocturnal]

My dad spent some time playing with this one, http://www.tradecision.com/neural_networks_software.htm?PHPSESSID=387d015bdfc36f05f106bf43e8c6c9e3, and he ended up devising a system that would give him a decent return. In the end though, he worked out something much better on his own.

 

[sifer]

Originally posted by cinephile
Those programs do not help at all. If somebody had found a consistent way to make $$$ out of the financial markets, they would definately not be selling it.

Why not? I thought stocks work like this, in basic, the more people that buy a stock, the more the value goes up, the more the value goes up, the higher price your stock goes up. That's when you sell and your profit comes in from there, yes?

 

[Double]

http://www.elitetrader.com/tr/index.cfm?s=17&t=73&p=5

 

[Bible_Belt]

"Tradestation" is a software package used by many individual traders. It does not pick stocks, but it helps a traders screen stocks of interest and execute orders automatically. But the trader still has to tell Tradestation what to do. The kinds of software to avoid are the ones that claim to pick out winning stocks for you.

Two major difficulties in trading are commissions and slippage. Slippage is when you can't get your order executed at the price you want because the market is moving too quickly. These two turn break-even trades into a net losers. It's hard to appreciate the difficulty of trading if you have not experienced seeing your money disappear at light speed.

 

[al77]

Originally posted by Bible_Belt


Two major difficulties in trading are commissions and slippage.

Only if you day trade. Most people who are not professional traders do not do that. So they don't care much about slippage.

And now there are many sites that are practically commision free.
For example the one I have seen asks for $15 per month with unlimited trades.

 

[Bible_Belt]

Typical slippage on 1000 shares sent through an on-line broker is usually .25 to .375. You don't buy until it trades lower or sell until it trades higher enough for them to make a guaranteed profit. That's $250-$375 that they make executing your 1000-share order away from the market. It would be $25-37 for 100 shares. All of the on-line brokers do this, and that is why it became such a booming business. That $5 Ameritrade commission starts to not look so cheap when you see what they are skimming from you. For a while in the late 90's Brown and Company was offering zero commission trades. The actual commission itself is not where the brokerages make most of their money.

 

[cinephile]

For Silfer

It is more complicated than that. Yes, in the long term, 5+ years, it essentially works the way you desribed, but only for certain companies ( Large Blue Chips). But we can see with the example of GM, that this does not always work.

The basic rule of all investing is that if you want to have more returns, you have to engage in more risk. Software can only approximate the level of risk in trading, and sometimes not very accurately. The big hedge funds that have millions to spend of this stuff have to constantly update their programs to meet the need of the ever changing international financial markets.

I'm not saying it can't be beat. There are enough people who do it. It is just very dificult and takes a grest deal of disicipline.

 

[cave dweller]

check it out

Hey,

Want to invest in stocks?

Check out the Motley Fool web site.

at

fool.com

cave dweller

 

[Upper]

Typical slippage on 1000 shares sent through an on-line broker is usually .25 to .375. You don't buy until it trades lower or sell until it trades higher enough for them to make a guaranteed profit. That's $250-$375 that they make executing your 1000-share order away from the market. It would be $25-37 for 100 shares. All of the on-line brokers do this, and that is why it became such a booming business. That $5 Ameritrade commission starts to not look so cheap when you see what they are skimming from you. For a while in the late 90's Brown and Company was offering zero commission trades. The actual commission itself is not where the brokerages make most of their money.

Hmm interesting, so how do I handle this slippage from brokers?

 

[Bible_Belt]

You need a direct access broker like interactivebrokers.com that gives you direct access to the nyse and the ECNs. Ameritrade and E-trade are not for serious traders. It takes a little more effort on your part, but learning how to use the electronic systems is worth your time. Also, as you become a better trader, entry points get easier as you tend to buy into dips and sell into bounces. Every stock is easy to buy when it is going down but very difficult to get filled as it is rising.

 

[A-Unit]

Re:

A Contrarian Viewpoint.

"Dummy" Systems don't work. Any system that the (m)(a)sses can exploit won't have a long-run efficiency because the peons will ring the profit out of it. Yet, most of the big movements in stocks occur because of institutional, trusts, non-profit, mutual funds, hedge funds, and all other large scale investors. Generally, when you see a trend rising, it's being heavily pushed by the big players. 70%+ of the volume is from big guys, so your 100, or even 1,000 lots won't make many waves, at least after your initial trade.

That said, the markets are not, by ANY means efficient. The Market Efficiency Theory, whose author won a Nobel Prize, assumes ALL players have EQUAL access and use of information, that we are ALL playing on the same field for the same reason. This, to any investor, is not true. Even in RE, where a plot of land might be useful to a Residential Builder who can turn a larger profit on the building of many homes, is different than someone who wants to operate a golf course on the same plot of land. Your purpose for the RE will inevitably dictate the profit and costs. If a family sees a plot of land, they might want a home with a lot of land, but their affordability isn't as high as the builder who wants to put up 2 homes, or who could zone it for condominiums.

Same in the markets, many guys day trade, and just want some volitility, other's are pure shorters, and like to beat a stock down with a bunch of other shorters. Others are long-term holders of positions throughout a trend, like the Market Wizards and Turtle Traders. With everyone having a different position, different expection, and differing levels of "guts", the market moves in very unpredictable patterns.

I've personally used Stock analyzing programs that have given me 100% profits, plus. In such cases, I don't care about slippage. And if my commissions are low, fine. Everyone has to make money to stay in business and provide a service. I set in stop limits and monitor the progress. I monitor both the charts and the fundamentals.

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In terms of "value", Warren Buffet and Benjamin Graham were the first to look at "inherent value." Buffet altered Graham's thoughts and system, which is how he found companies like Coca Cola and the Washington Post, citing that he liked to buy companies similar to a toll bridge with a monopoly. Graham would often buy companies that were trading at a discount from their book value, dubbed the "cigarette butt approach." Theoretically, you'd buy a company based on assets, since most other numbers were just projections. Graham did good, Buffet's done extraordinary. However, Buffet's beginnings were different. He bought Berkshire Hathaway, a mill in New England, siphoned off the cash flow into other companies until he had to sell because textiles were failing. Stories were told that his future was shaped through failure, but he was a man who rarely failed. Sure he missed some investments opportunities, but few who deny that they wouldn't take his 50 billion portfolio, much of which will go to charity.

Value has implied AND explicit, meaning, people value things differently. Assuming a company was "cheap" and nobody was buying it, yet it was highly profitable, you could gobble shares up until you control a large % of it, and do near what you please with the company, just as Buffet did. This rarely, if ever happens, because people PUSH a stock higher, either based on the prospect of solid dividends, as MSFT issued $3 a share, the highest ever for a tech company, or they reinvest BACK into the company providing the company can earn MORE through their business than giving it back to the investors.

There's alot of different VALUES to a business. IBD would examine Sales and Profit Growth, Accountants would examine book value, assets, debt to liabilities, etc. Traders don't care, they play the movement. Certainly you can't fudge sales growth, entirely, they might apportion a sale differently to different quarters to keep it moving, but eventually such funky accounting will tank the stock in coming quarters. This happened when Conglomerates of the 70's and 80's found they could push their stock through the roof by gobbling up other, smaller companies, even if it meant by companies OUTSIDE their realm of expertise. GE did this, though would often buy within their realm of understanding. Even Philip Morris, tobacco manufacturer, bought outside their main line through consumer staples and products.

If Institutional was so much better than an individual, such as you or more, then nobody would buy anything BUT institutional money. Sure they Doctors, and Hoards of Traders, and those guys are PERSONALLY wealthy, but when you consider there's MORE mutual funds than stocks, then you realize MOST funds will be just average, while they jocky for first place. Sometimes a fund will hit 5 stars on morningstar, and then be a dog in a few years. If a fund sticks to its objectives, it will go through up and down periods, but it's when funds TRY to be the winner ALL the time that they get killed. Why? Because, if a fund is supposed to ONLY do international stocks, there's a time to come when international stocks will tank. The fund doesn't want that, so it might deviate from its objectives to keep ratings high, cash flowing in, compensation high, and investors happy. In effect, your international mutual fund becomes a blend fund of whatever is hot at the moment. Such deviation is the norm, not the exception. Funds already allow a 5-10% leeway in what they buy, not to mention whatever cash position they need to reedem shares, which may be 1% to 15%, depending on the status of the market.

Mutual funds and institutions also don't take a FULL position as fast. They have to bite in small bites, though they do get volume discounts as they go. One expense NO included in the cost of mutual funds are TRADING costs, since they don't know or record them, the actual dollars are unknown. They average about 1.50% ON top of their regular expenses, as its a function of how much turnover they have.

I don't have experience as of now beyond stocks and ETF's, but if you're persistent, you can make money and find something that works for you. Expensive systems are attractive, but any broker online or cheap free site can provide something better than an entry chart. You can read IBD books, Graham, buffet, Market Wizards, Jesse Livermore books to get a FEEL of what's happening. Much of the crap on TV has no link to reality or what happens in the markets. They use it as justification AFTER the fact, since most people don't have such advanced info. I say because there's a lot of little guys too, and there's a greater advantage to being "the little guy."

-You can buy small companies that larger institutions can't.
-Your buys or sells don't take long.
-Your buys or sells won't trigger swings in the market.
-You can ride the trend of larger players.

Once you get bigger, then it's great, but big still isn't a $100,000 account, or even $1,000,000, when you're talking about companies that buy or sell in 10's of millions of shares PER DAY. That doesn't shake much up UNLESS you buy a low volume stock.

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My purposes for holding vary. Normally I have asset-purposes. As of now, my brokerage account is to learn more, to get results, and to save for a home or townhouse in the near future (1-2 years) since it is expected that a real estate correction is coming due in New England. A glut of homes yet to be complete, problems with sales already, high prices that are pushing people to move south and bank the profits, and retirees seeking warmer climates have people thinking twice about BUYING now. Many people have taken to fixing their existing place up now. Average homes in my area top out over $300,000, a "decent home", one you'd find in texas, florida, the midwest of 2000+ square feet would top out over $400,000 or more. And given that jobs aren't bursting through the cracks, in fact alot of people are losing jobs, its signaling a A HOLD or CASH AMASS situation. This I've heard from Commerical Builders with 25 years experience, many market cycles, and the know how to do it.

Anyways.

That's my 2 cents.

There are definately systems out there, but they require a "base" of knowledge and understanding about charts and fundamentals to make it happen. They're not for Dummies who just want quick bucks. Just like I'm sure R/E systems can be SIMPLE, but not EASY, and could appear to make big dough, but won't until you immerse yourself.



A-Unit