Everything run by human psychology is bound to be beset with complexities beyond idiom, especially when money is involved. ~ Every brainchild of human thought seems to be inevitably fraught with complications, especially when money is mixed in. It pains one to visualize the inner workings of something like the stock market, especially now that the world is besieged by global economic and financial recession. ~ Now that the world is undergoing financial and economic recession, it would be even more difficult to imagine the complex, shifting gears of something like the stock market. Many known companies have already fallen to the tempest of crisis, and many more are poised to tumble. ~ Many companies are struggling to be rid of the vise grip of the crisis that has already claimed many others, not just any companies, but known ones. With such influential organizations rising and falling, stock traders need all the help they can get trying to make sense of stock market figures that might some might even try their luck in automated trading via stock software. ~ Some stock traders might even just bank their chances on stock software with all the big league companies going up and down, affecting stock market figures, and making their already risky trade a notch riskier to be in. Global forex trading~Forex investing~Forex markets online are easier to navigate with the help of software.
The World Wide Web spawns as many useful things as it does subterfuges, and taking advantage of a computer’s forte of data gathering and analysis, stock software are today common tools in a trader’s repertoire. ~ Putting a computer’s excellent data gathering and analysis skills to use, stock software is one of the more useful things that had come out of the mesh of the World Wide Web that has today become commonplace. Such software range from simple observational systems that collect and organize data to analysis programs that analyze the collected figures to decision making software that forecasts trends in the market and buys and sells accordingly based on the gathered and analyzed data. ~ These software come in a variety of ranges: from observational systems designed to gather and organize data to analytic software that analyzes stock market information to actual AI traders that do the decision making as well. One of the most common types of software is stock charting software~financial charting software~forex charting software. The data observation and gathering plus the analysis parts make such stock trading software virtual assistants to stock traders and are quite accurate and useful. ~ There are many uses to the data gathering and analysis parts of such software. But the decision making software is rather dubious. ~ But the part where it makes its own decision is doubtful.
While it is true that a computer program is the best suited to analyze such figures as stock market data, and also quite suited to perform according to a predefined set of principles like using technical or fundamental analysis, the stock market-like any other man-made and man-run complexity, can at times be drastically irrational. ~ It may be true that a computer is the best machine to analyze such twisted data as stock market figures and also best suited for performing the analysis based on a predefined principle or theorem like fundamental or technical analysis, but it is also true that the stock market can at times be beyond logic. The 1987 stock market crash for example; until now, no probable cause has ever been proven to cause a drop of 22. 6% in the Dow Jones Index. ~ One example of such an irrational instance is the stock market crash of 1987 where the Dow Jones Index dropped 22.6% for no probable reason. None logical, at least. ~ No logical explanation was found. Even if computers were observing the trends before the crash and were making forecasts thereafter they could not have been able to predict such an outlier. ~ Even if today’s computers had been there, they could not have been able to foretell such an event happening. The same is true today, in more minute terms. ~ This is still the case today. Even if trends do occur in Gaussian distribution, no computer can accurately pinpoint an outlier possibility and thus make use of it. ~ No computer can accurately forecast an outlier possibility in a Normal distribution of trends and in so doing take advantage of it. Furthermore, the Efficient Market Hypothesis of Professor Eugene Fama effectively negates a computer’s potential to break the bank, or in this case, beat the market. ~ And then there’s Professor Eugene Fama’s Efficient Market Hypothesis that directly contradicts a computer’s potential to outperform the market. Stating that it is not possible to consistently outperform the market from information from the market, though the hypothesis has its drawbacks and contenders, is sound enough to ring true for the case of a stock software. ~ The hypothesis, stating that it is impossible to consistently outperform a market through information that market has, albeit with contest of its own, is sound enough to apply to stock software.
And of course, a computer can’t account for the psychological aspect of the stock market where overreaction or the opposite can result in over or under pricing. ~ Finally, there is the psychological aspect wherein a computer can’t predict human over or under reaction that can cause over or under pricing. Not even investing books~stock market books~business books can help to predict swings based on the way people are feeling on any given day. All in all, with regards to data, computers and programs are excellent observers and analysts, but all calls are still best left to Homo sapiens. ~ In the end, though computers are undoubtedly excellent in observation and analysis, humans should still have the final say.