What to look for in a charting package

A serious charting package needs to do four jobs, and it's worth checking each one before you buy. In MetaStock they map to its four major tools:

• Build your own indicators. Customise the indicators that ship with the software, or create your own from scratch. In MetaStock this is the Indicator Builder, driven by the formula language.
• Scan the market. Filter, sort and rank a large amount of market data in one sweep. This is MetaStock's Explorer, and it is arguably the most powerful of the four: once an exploration is set up it takes only minutes to run, so you no longer have to examine thousands of charts individually each night. The software does it for you.
• Test before you trade. Check a trading system's profit potential against historical data before risking money on it. That's the System Tester.
• Automate your signals. From pre-packaged Experts to programming your own automatic buy and sell signals, that's the Expert Advisor.

With that level of customisability, whichever tool you're in, the potential is limited only by your imagination. The surprise is how few owners ever use it: most people who own MetaStock never get near its full potential, which is exactly why the free formula language course on this site exists.

Why a charting package at all: technical vs fundamental

It helps to understand what kind of analysis this software is built for. There are two main streams of thought when analysing potential securities to trade.

Fundamental analysis attempts to measure a security's intrinsic value: profits and forecast profits, price/earnings ratios, the outlook for the industry, the key people in senior management, and so on. Fundamental analysts assume all of that data will eventually be reflected in the share price, and in an ideal, efficient market it would be. Markets are never quite so predictable.

Technical analysis, by contrast, is the study of prices. Like many technical analysts, we assume the fundamental and economic influences are already priced into the security, so one need only monitor the price action. That is where a charting package earns its keep, and it's the approach the tools above are built around. What you do with the signals it generates is then a question of money management.

The honest recommendation

This site is a MetaStock affiliate, so weigh the recommendation accordingly, but the facts stand on their own: MetaStock is known worldwide, it covers all four jobs above in one package, and the depth of analysis it allows is extraordinary. If you believe the maxim "you get what you pay for", MetaStock is no exception: it isn't the cheapest option, it's the powerful one. The current version is MetaStock 20; there's a full review here, and you can try it free for 30 days and test the four tools against your own workflow before paying anything.