A Perspective on Technical Analysis: An Interview with Chartnexus 3 comments

DanielXX's intro: Although my emphasis in my blogs has been on fundamentals analysis, I always believe that there are many ways to skin a cat. Recently I touched base with Mr Nicolas Li of FiNEX Solutions, a local charting software company, and had an informal e-mail interview with him on technical analysis. FiNEX provides the free charting software, ChartNexus, which appears to be quite popular on the online forums (I have seen charts from this software quite a number of times). Those interested can check out their ChartNexus website.

(P.S: The questions in bold are from me, the answers are by Nicolas)

1. Would you please tell us more about your company and the founders’ backgrounds?
FiNEX Solutions incorporated in July 2004 is a company that provides financial software solutions to both corporate and retail customers. At FiNEX Solutions, we have developed the popular charting software ChartNexus (http://www.chartnexus.com) that is now being used by a wide range of people from brokers, remisiers to financial bloggers, and of course, individual investors and traders.

The whole idea behind the company started in the year 2000 when myself and a couple of friends decided to design a charting software that we ourselves will find useful in helping us to trade profitably the stock market. Thus was born ChartNexus.


2. The age-old debate: what is the usefulness of TA (technical analysis) compared to FA (fundamental analysis) ? How may one integrate the two approaches?
Technical analysis (TA) is as important as fundamental analysis (FA) in the stock picking process. Whilst fundamental analysis aids an investor to select the company he wants to invest in, technical analysis helps to look for the best time of entry. Hence both analyses complement each other.


3. Is TA more suitable for the intra-day trader, or is it also applicable for the long-term buy-and-hold investor as well?
Investors can use TA for all types of investment horizons. For longer time frames, investors should look at weekly or monthly charts while shorter-term investors should look at daily charts. For those traders who trade intraday, then analysis on 10- or 30-mins charts should be done. However it should be noted that the longer the time frame, the more accurate the analysis is.


4. What are, in your opinion, the most important and effective indicators in TA, for the individual who works in the day and has time to monitor up to five indicators at the end of the trading day?
Selecting a set of indicators to use depend very much on the individual investor as each investor will have different risk appetite, stock/sector preference and trading strategy. However it is important to incorporate volume indicators in the set of indicators used. Investors tend to discount the importance of volume with respect to price.


5. Any good must-read TA books to recommend the rookie looking to explore TA further?
Two must-read TA books are Technical Analysis Explained by Martin J. Pring and Technical Analysis of the Financial Markets by John J. Murphy. These two books explain the basics of TA in a simple and interesting way.


6. What would be a suitable capital base, in your opinion, for one to go into full-time trading ?
One has to be very careful when going into full-time trading. One must ask: “Am I financially stable to forego a stable salary and be subjected to the risks of the markets?” If the answer to the above question is positive, then the capital required is proportional to the returns that are required to sustain one’s lifestyle.


7. What is the advantage of ChartNexus over other free charting software (e.g. Commerceasia and Yahoo! Finance), and proprietary software like Metastock?
ChartNexus has been designed for the individual investor. Hence we have emphasized greatly on the graphical user interface and navigability of the software to make its use as intuitive as possible. Features such as zooming by mouse action and auto-download of market data have been very well received by our users as demonstrated by the numerous positive feedback we have received since the launch of ChartNexus.

As ChartNexus is a software that runs on the local machine, we can incorporate a lot more features as compared to a web-based charting tool. We have features like XPertTrader which is a screening and backtesting software that enables the investors to create and test their very own trading systems. Such features cannot reside on a web-based charting tool as they are resource-intensive.


8. What are your company plans for the future?
Our aim is to make ChartNexus the best charting software in the market. Hence all our efforts are focused towards that aim. Look out for powerful yet user-friendly features in coming versions.


9. Any further investing/trading advice for readers?
Always have a trading strategy when going into the market. Spend a lot of time to decide which stock and when to buy it and spend equally lots of time on when to exit from that stock.


Thanks to Nicolas and his Chartnexus team for their time!