Trading Software and Books Reviews

Trading Solutions Review

Newcomer Level

TradingSolutions claims to be a very powerful software package that will allow the user to perform detailed analysis on a whole range of financial data in order to determine optimum times for buying and selling in that market. Shares, commodities, options, foreign exchange and indices can all be analysed using TradingSolutions software. It does this by combining traditional technical analysis with state-of-the-art artificial intelligence technologies including neural networks and genetic algorithms.

As I see it, TradingSolutions is a very expensive (up to $US5,000 for the top package) black box trading system. The promotional material claims: “…more than just a black box, TradingSolutions is a sophisticated trading tool built on a powerful neural network engine. (Neural networks) can predict future stock prices and optimal trading strategies.” This is classic black box stuff, with the user expected to follow blindly the many trading signals and commentary generated for each stock. In one 12-month period two trades per month were generated for a particular stock.

A study conducted at Deakin University in Victoria compared neural networks with exponential moving averages and linear regression in their ability to predict stock index prices. It concluded: “…It appears that linear regression and exponential moving averages better account for relationships between index values on successive days.”

Having said all that, the charting and technical indicator part of TradingSolutions seems perfectly adequate, with more than 250 indicators and functions built in, and the software offers the ability to modify these or customise new indicators.

Data can be imported in either text or Metastock format, and wannabe day-traders can also use streaming real-time data. Once data is imported, it is handled quite well, and the lists of stocks can be customised into groups such as those that are trading well, or those that have just given a signal. Data can be viewed in either spreadsheet or chart format, with charts being either basic close price only, bar charts (OHLC), or candlestick. A nifty tool is the signal analysis tool, which basically back-tests a particular strategy to see how it would have performed over a given time period.

As a straight charting package it is overpriced, and there are better options around. As a black box trading system I would leave it well alone.

Colin Simpson is an active investor and has been trading shares for two years.

Intermediate Level

The download time was a little longer than I expected. It took about four hours (using a dial-up connection) but it was a simple process.

Once the software was downloaded it was a matter of getting to grips with the more than 250 built-in formulas and technical indicators the system offers. You can also create your own formulas. The software uses ‘neural networks’ – a system that ‘learns’ from patterns of historic data to let you know the optimal time to buy and sell in the future.

TradingSolutions has the potential to pull in real-time data to scan for opportunities, as well as end-of-day. At present eSignal is the data provider used for the real-time data, but they are looking at incorporating more. (However, eSignal is more than capable of immediate real-time data.) For end-of-day you have the ability to link this software to many other data providers. The software can use any date-based data, so stock, managed funds, futures and foreign exchange data can also be downloaded and studied.

Obviously, with all that information to sort through, it takes a little while to come to grips with what the software can do. The step-by-step tutorials and video help come in handy as you can get visual answers to common questions. There are ‘how-to’ guides, and a free ‘Solution Service’ where you can download daily trading signals from the Internet and receive commentary directly into the portfolio you are trading. From the Solution Service web site, you can go to the library of trading ideas that have been published in the ‘Traders Tips’ section of Technical Analysis of Stocks & Commodities magazine and import them into the software for use.

Once it is set up with the signals you wish the software to look for in your data, this tool is very helpful in doing all the hard work for you and showing you at a glance the points where you should enter and exit a trade successfully.

Lisa Sadgrove is an investment advisor at ABN Amro Morgans Ltd, providing professional advice on equities and options. Lisa privately trades equities, futures and options.

Advanced Level

This review features the TradingSolutions package, version 3.0. A trial version of the software is available from the TradingSolutions web site, which is well presented and easy to navigate, with many click-throughs to the installation file itself – no problems there.

However, the size of the file is daunting even for broadband connections. Weighing in at about 57Mb, this wins a prize for being one of the biggest installation files I have ever downloaded remotely, and believe me I’ve tried a few. You would not contemplate this with a dial-up connection (to be fair, with the price of broadband at home these days you wouldn’t be considering trading if you couldn’t afford a half-decent connection…right?). My PC at home isn’t in peak condition, and it failed to maintain a connection long enough to grab the entire package so I had to use our industrial connection at work; even there it made me nervous. Being based in Sydney I wouldn’t be inclined to request a CD be shipped from Florida for their one-month evaluation. This could be a barrier for some.

Once installed – straightforward – you can appreciate just why this software needs to be so big…there’s an awful lot of number crunching going on in there. Technical analysis is all about statistics and their interpretation. While the usual analyses are reasonably easy to find and draw, the focus of this package is much more on data modelling, through the ability to use pre-defined or custom mathematical analyses; signalling, through the use of rules to inform you of critical price levels and advise what position you should be in according to your model; and prediction, through complex correlation and neural networking algorithms being used to compare and then learn how various instruments interact and consequently how they could behave in the future. The value of this package would seem to be in the combination of more traditional rule-based trading combined with the neural network analysis which has been developed relatively recently with research into artificial intelligence.

There are a lot of degrees of freedom with this package – a lot of potential if you can unlock it. Advanced traders will enjoy the creative freedom the package unlocks once the interface is mastered; it will be quite a learning curve though, as the complexity allowed means there is much to input. This is not a criticism – if you’re going to invest the money you should be prepared to devote the time as well. There is a very user friendly tutorial and free online lessons available. Phone support is during U.S. business hours. Less experienced users will be able to utilise the pre-defined studies until they grow beyond these, at which time there is plenty of room for the package to grow with you. Beginners may be overwhelmed and should probably start with something much more basic.

The time available for testing for this review was shortened by the Easter break so I don’t believe I really delved in deeply enough to see the software in full gear. In summary though, this is a big package for serious punters who will need plenty of time and patience to master it, but who should benefit accordingly by having done so.

Daniel Bernasochi has been professionally involved in the financial markets industry for over seven years. Daniel privately trades ASX equities, and more extensively the FX markets in recent years.

TradingSolutions Response

TradingSolutions is a comprehensive financial analysis software package that helps you make better trading decisions by combining traditional technical analysis with state-of-the-art artificial intelligence technologies. TradingSolutions supports almost all types of financial data including stocks, futures, options, Forex and many more.

Regarding the comments on supported data providers, TradingSolutions actually supports several data providers including eSignal (real-time), IQFeed (real-time), Prophet and QuotesPlus.

Regarding the perception that TradingSolutions is a “black box trading system”, this could not be any further from the truth. TradingSolutions is a completely open system for financial model development allowing you to customise every aspect of your model. Even the pre-built models we offer through our free Solution Service are open to viewing and can be customised by the user.

Regarding the study claiming that other technologies are better than neural networks, there are many other studies claiming the opposite. For example, a study done at the University of Manitoba in Canada tested the Efficient Market Hypothesis and demonstrated that neural networks outperform statistical and regression techniques in forecasting share prices.

Regarding the cost of TradingSolutions being $5,000, this price tag is for our TradingSolutions Suite, which is designed for only the most advanced users who have a vast knowledge of neural networks and want to delve more into the specifics of the neural network algorithms. Most of our users purchase TradingSolutions End-of-Day or TradingSolutions Real-Time, which cost $995 and $1995 respectively.

This article was originally published in the Sep/Oct 07 issue of YourTradingEdge magazine (www.YTEmagazine.com). All rights reserved. © Copyright 2009, MarketSource International Pty Ltd.

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