The stock market can sometimes appear like a living organism: it writhes, wiggles, flounders, and soars. Price fluctuations simply cannot be predicted; the market, like all things organic, cannot be reduced to sheer objectivity – there is always something outside rhyme or reason. That’s why hedge funds are constantly changing up their strategies and scrambling for an edge.
Professionals and novices alike note that while one strategy may work smashingly for several months, it will inevitably begin to perform under index – if the stock market has a rhyme or reason, it is simply this: equilibrium will be achieved, one way or another.
Thus, there seems to be no real way to beat the market. The Motley Fool, a stock picking service, has posted fairly consistent returns; recently (2020-2021) they have been +36%, well above the 10.225% S&P average. But this is no surprise considering last year’s general market boom – it feels like everyone and their brother got a piece of the hallowed pie.
But what happens when the market takes a sustained downturn? Even with all their knowledge, investment, and intuition, the folks at stock picking services are sometimes flat out wrong, or even outlandish, with their picks.
The rising popularity of algorithms is a clear indication that we are growing disconcerted with a market that seems outside all rules and bounds. Algorithms, loosely defined, are processes or rules stipulated by vast calculations or order sets. For better or worse, stock analysis platforms such as TrendSpider dispel the human element.
Do algorithmic programs really give investors an edge? It’s something worth investigating. The name alone implies a kind of fine-tuned precision, but is this worth more than old-fashioned, gut intuition? Does it even replace the latter?
The fruits of the market are many, and the tools at your disposal to reap them are nearly as numerous. Let’s take a closer look at a couple of the more popular stock market charting platforms out there.
TrendSpider – Intelligent Webs
TrendSpider is a platform that was designed by traders for traders. With locations the world over, the service has gained a solid reputation since its debut in 2016, billing itself as a fully customizable, automated, algorithmic stock charting platform.
But what’s it really do?
- Charts: TrendSpider does not offer a great number of charts. They are conveniently browser-based, but sadly offer just three bar types. That said, the great thing about TrendSpider’s charts is that they allow for custom overlays – users are able to overlay their charts with useful indicators that can be turned on and off.
- Automated Analysis: considered the platform’s flagship feature, this is an algorithm that builds itself around your stock picking habits. Functioning with the cold, calculated edge only machines can wholly possess, this tool can help you exploit holes and patterns in the market.
- Multi Timeframe Analysis: another “core” feature of TrendSpider, multi timeframe analysis enables the user to add technical indicators and trend lines to a secondary timeframe. This is useful because it allows one to simply refresh a single chart to add the latest market data streaming in.
- Watch Lists: users of TrendSpider can create watch lists that span markets. Lists are organized under a “themed” heading, and TrendSpider’s algorithmic wizardry will analyze all stocks that fall under that heading. What’s more, parameters can be set so that you will get notifications when certain thresholds are reached.
Trade Ideas – New Beginnings
Like TrendSpider, Trade Ideas is a service devoted to intelligence, boasting a combination of time-honored stock scanning methods and cutting-edge machine learning technology. Not for casual users of the faint of heart, Trade Ideas packs a dizzying array of gizmos and features which should appeal to the upper caste of traders.
- Charts: Depending on your subscription level, it is possible to have up to 20 simultaneous charts active. You can also add price alerts and other important notifications to your charts.
- Stock Scans: Stock Scans are used to identify stocks that match a certain criteria or obtain a desired threshold. This takes a lot of the tedium of manual research away, replacing it with a kind of automated leisure.
- Oddsmaker: This handy feature allows subscribers to “back-test” their strategies by running simulations. These “simulations” are quantified visually, and their parameters can be adjusted in real-time. This makes for a great trial-and-error tool because it allows you to develop your investment skills without the real-life risk of losing a small fortune.
The Bottom Line – Machine or Human?
The success of algorithmic stock scanning services makes this question more difficult than ever. While they provide us with features that are simply outside the scope of human knowing, do they really make a difference? Can we throw “feeling” to the wind?
We think charts and indicators are important, but they are not the end all. Numbers can only tell so much of the story; intuitive know-how and gut reactions are still essential parts of the stock game.
An example? Sometimes every number in the world points towards this or that stock succeeding, and then the opposite happens. Nobody can say why, because it is not anchored in any objective reasoning. But you had a hunch; you had done your research, and you felt the ship sinking.
To ensure success, it is, in the end, best to combine both worlds.