A visual tool to support technical analysis of stock market data

ABSTRACT

A stock market investor relies on two schools of analysis of market behavior to determine a trading strategy: Technical Analysis and Fundamental Analysis. Fundamental Analysis is based on the study of the fundamental data of a company and more directed to long-term investments, not taking into account small short-term price oscillations. On the other hand, Technical Analysis is mostly used for mid and short-term investments and is based on the study of past price behavior through the use of statistical tools and price history charts, taking into consideration the hypothesis that prices form patterns and reflect all the relevant information about a company and about the psychology of other investors. The application of Technical Analysis requires a computational system capable of displaying price history charts and providing tools to be used with them. This paper presents a prototype for a portable, extensible and easy-to-use tool for desktop/laptop and handheld computers that provides the investor with techniques for the visualization of stock market data. Classical visualization techniques and tools, such as Line, Bar, Candlestick and Point and Figure Charts, as well as extra tools, such as candlestick pattern recognition, are available as built-in functions, but new tools and visualizations can be easily added. The software was built with the .NET and .NET Compact frameworks and utilizes XML to store the data set.

REFERENCES

• 1: Equis International. http://www.equis.com (12/23/2005)
• 2: Tradestation® Securities. http://www.tradestation.com (12/23/2005).
• 3: Botelho, F. Technical Analysis and Operational Strategy (In Portuguese: Análise Técnica e Estratégia Operacional). Enfoque Informações Financeiras Ltda., São Paulo, 1997.
• 4: MetaQuotes Software Corp. http://www.tradestation.com (12/23/2005)
• 5: Elder, A. Trading for a Living. John Wiley & Sons, Inc, 1993.
• 6: Investopedia.com. http://www.investopedia.com (12/23/2005).

INDEX TERMS

Primary Classification:
  J. Computer Applications
  J.1 ADMINISTRATIVE DATA PROCESSING
      Subjects: Financial (e.g., EFTS)

General Terms:
Design, Experimentation, Human Factors

Keywords:
information visualization, stock market, technical analysis