Wayne Thorp will speak at the 2015 AAII Investor Conference this fall; go to www.aaii.com/conference for more details.
Generally speaking, security analysis falls into two broad categories: fundamental analysis and technical analysis. Fundamental analysis involves analyzing the characteristics of a company in order to estimate its value. This includes analyzing a company’s financial statements and health, its management and competitive advantages, and its competitors and markets. By contrast, technical analysis ignores the “value” of a company or commodity and instead focuses exclusively on price and volume activity. In its purest form, technical analysis assumes that all the fundamental factors of a company are reflected in the price of its stock. Technical analysis studies the market supply and demand in an attempt to identify where prices will go in the future.
While most of our readers are more focused on fundamental analysis when making investment decisions, it is rare to find an investor who doesn’t at least consult a price chart before buying or selling a stock, mutual fund or commodity. Those who are more involved in technical analysis probably make use of technical indicators, which are mathematical manipulations of price and/or volume data to help identify momentum, changes in trend or overbought/oversold conditions. Taken to the “extreme,” technicians employ technical trading systems that generate buy and sell signals based on price or indicator values or movements.
For the more casual user of technical analysis, there are a number of Web-based services at your disposal. This comparison focuses on what we consider to be the top three sites for typical technical analysis and charting. These sites focus primarily on stocks, mutual funds and ETFs (exchange-traded funds) and offer what we consider to be the best combination of charting options, technical indicators and educational resources. Compared to other areas of investing, the available online resources for technical analysis are rather extensive. For this reason, we putt together an expanded comparison grid of additional top-tier services.
Online services offer a significant amount of convenience: There is no software to install, and, typically, there is no consideration needed regarding your computer’s operating system. However, Web-based investment analysis tools, in general, do not offer the power or flexibility that you find with their software-based counterparts. Therefore, one of the first questions to ask is whether your analysis needs will take you along a software or online route for technical analysis and charting tools.
The most striking difference between technical analysis websites and software is in the level of features each has to offer: Software-based technical analysis applications largely dwarf the Web-based services in terms of their features and functionality. Most of the services discussed in this comparison offer the basic technical analysis features—mainly, charting and the ability to overlay technical indicators and drawing tools. However, you will find the libraries of technical indicators online often less robust than what you would find with technical analysis software, although the gap has been narrowing over the years.
Beyond carrying a larger array of technical indicators, some of the more advanced technical analysis programs on the market today allow users to create and save their own technical indicators. This is a feature generally lacking in the online services highlighted here as well as in the expanded comparison grid.
At the highest end of the technical analysis software spectrum, you will find programs offering trading systems, something not found with any of the Web-based services highlighted here or in the expanded comparison grid. A trading system is an indicator or set of indicators used to identify buy and sell points for a security; users can also backtest these systems to gauge their historical profitability. Furthermore, most of these same programs allow you to create and backtest your own technical trading systems.
While there is a distinct difference in the level and complexity of offerings found online versus in software-based technical analysis and charting services, it does not necessarily follow that software rules supreme. Web-based services do hold some distinct advantages over software, mainly in the area of the delivery and pricing of data. When looking for a technical analysis program, there are typically two decisions to make: The first and most obvious is choosing the program itself; the second, often overlooked, is selecting a data vendor. Online services, on the other hand, usually offer end-of-day data at no cost. Therefore, you can begin your analysis without having to download data or subscribe to a historical data service.
Software-based technical analysis can carry a price tag ranging from $100 for a “low-end” end-of-day program to over $1,000 for a high-end, real-time program. The additional cost of data can range from $15 per month for historical end-of-day data to over $100 per month and higher for real-time data delivery (excluding exchange fees). Among our top picks of online choices, only StockCharts.com has fee-based subscription options.
The question then becomes: Which route should you go?
If you are new to technical analysis, or are only looking for simple charting and analysis on an end-of-day basis, a Web-based service is probably your best choice. For technical analysis neophytes, there are enough good-quality Web-based services available to avoid making the financial commitment to software and data. In addition, some sites—such as StockCharts.com—offer an extensive collection of educational content to expand your knowledge of technical analysis.
Except for the most “hard-core” technicians, the top websites probably offer everything an investor needs in terms of chart types and indicator library.
In the end, if you have no desire to create your own indicators or create and backtest technical trading systems, a Web-based service should suffice. On the other hand, if you want robust technical analysis capabilities, including custom indicators and trading systems, chances are that only a software-based application would satisfy your needs. To learn more about software-based technical analysis tools, see the comparison in the First Quarter 2012 issue of Computerized Investing.
When it comes to software, your choice of either the Windows or Mac operating system (OS) will impact the options available to you. For the most part, websites are “OS neutral,” meaning you can access and use a site whether you are on a Windows or Mac OS system. We visited each of our top picks, as well as the services in the expanded comparison grid, using Windows 7 and Mac OS X 10.5 and found no significant differences in functionality between these operating systems.
What will probably be of greater concern is your choice of Web browser, which can also affect your ability to get the most from certain websites. Many sites are optimized for Microsoft’s Internet Explorer Web browser. While other browsers will allow you to view most of these websites, there are some exceptions. We visited each of the sites in this comparison using some of today’s popular Web browsers—Chrome 23, Internet Explorer 9, Mozilla FireFox 17 and Safari 6. Within the individual write-ups of our top picks below, we note any differences in experience we had. The expanded comparison grid also notes any browser requirements provided by the respective sites.
The comparison grid examines the features and functions found with a typical Web-based technical analysis service. Keep in mind that websites frequently undergo changes, so it is always a good idea to confirm pricing and functionality before subscribing.
Most of our readers track indexes, stocks, mutual funds or ETFs; each of our top picks offers U.S. and international coverage of stocks and indexes, as well as U.S. exchange-traded funds, mutual funds and closed-end funds.
In addition, FreeStockCharts.com and BigCharts.com follow currencies.
Technical analysis can be performed on an end-of-day, delayed intraday or real-time basis.
End-of-day charts require, at most, five pieces of data for each trading day—the opening, high, low and closing price for the day along with the total trading volume for the day. This data can also be used to plot charts covering long periods, such as weeks, months or years. All of our top picks offer data on an end-of-day basis.
Delayed intraday charts plot data during the course of the trading day using time increments of one minute, five minutes, 15 minutes or longer, but the most recent price information is delayed (usually by 15 or 20 minutes). Only those securities priced throughout the trading day have intraday data available (mutual funds are typically priced once a day after the market closes and, therefore, do not have intraday pricing). The delay allows the site to avoid paying exchange fees for real-time data. Again, all of our top picks offer charting on an intraday basis.
Real-time data is the timeliest data available and represents an attempt to capture the latest price at which a security has traded. Services can chart real-time data in one of two ways. The first is “static” real-time data, meaning you must manually refresh the chart to capture the latest price. The other is streaming data, where the chart automatically updates as new price data becomes available (data can also be streamed on a delayed basis). FreeStockCharts.com offers streaming, real-time charts. However, the real-time quotes are based on trades placed through BATS, an exchange founded in 2005 that currently does about 10% of the trading volume in the U.S (ranking it third behind the New York Stock Exchange and NASDAQ). The data in FreeStockCharts.com that is less than 15 minutes old only consists of the trades reported by BATS trading. All data more than 15 minutes old is complete data from all the exchanges. This allows FreeStockCharts.com to offer real-time streaming charts to investors who are not professionals.
StockCharts.com also offers BATS real-time data to subscription levels Extra and below. Extra RT and Pro subscribers receive “real” real-time data. However, the site does not offer streaming charts at any level.
BigCharts.com offers only delayed intraday charts.
One advantage Web-based technical analysis and charting services have over software is that there is no need to accumulate a historical database in order to plot securities. However, this does put you at the mercy of the individual service as to how much historical data is offered.
The amount of historical data provided by the services discussed in this article varies greatly. Users of StockCharts.com free charts have access to only three years of data, while BigCharts.com provides over 30 years of index and stock data on their charts (provided the security has been trading that long).
More and more, people are looking for free sources of price and volume data for use in spreadsheets and other programs. One way to obtain this data is by exporting it from an online source. Exporting formats may include Excel spreadsheet, ASCII text format and XML (Extensible Markup Language).
Among our top picks, only FreeStockCharts.com offers true data exporting. StockCharts.com offers two months of data to free users and two years’ data to subscribers. However, the data is in a tabular format that you need to copy and then paste into a spreadsheet or into a text document.
Technical analysis primarily deals with the graphical representation of price and volume data, so most of your analysis will revolve around a price chart. The most common types of charts are line, bar and candlestick charts; all of our top picks offer these chart types.
Point & figure charts are based on price movement that does not take time into consideration. StockCharts.com is the only top pick offering these unique charts. For an overview of point & figure charts, see the Technically Speaking column in the Second Quarter 2010 issue of Computerized Investing.
Depending on the service, you might choose among a variety of time periods to chart a security—for example, one year, five years or 10 years. For an even greater level of flexibility, you may also be able to specify the exact period you wish to appear on a chart.
All of our top picks allow users to specify the charted time period.
When viewing price data on a chart, two types of scales can be used—linear and log. Most of the charts you see are probably on a linear scale, where there is an equal distance between price points—the space between $1 and $2 is the same as the space between $100 and $101.
With log scaling, there is an equal amount of space between equal percent changes in price. In other words, the space between $1 and $2 is the same as the distance between $500 and $1,000, since in both cases the percentage change is 100%. Log scales are especially useful when viewing data over a long historical period.
All three of our top picks offer log scaling for their charts.
The ability to specify and save certain settings is an extremely useful feature found with more and more online charting services. All of our top picks allow users to specify such information as the time period, periodicity (daily, weekly, etc.), chart type as well as any applied indicators (StockCharts.com only offers this at its premium levels).
The website saves your choices so you can view charts with the same settings on subsequent visits. All you need to do is choose a security, and the “template” automatically displays the chart for you in the desired manner.
A technical indicator is the mathematical manipulation of price or volume displayed in a graphical manner, such as a 50-day moving average or stochastics.
The number and type of indicators provided are important factors to consider when deciding upon a Web-based charting service. Beyond merely the number of indicators a site provides, you should make sure that any service you are considering includes the type of indicators important to your analysis. Taking a moment to consider your needs will be helpful in assessing the number of indicators you will require from a service.
Beyond accessing a set of predefined indicators, the ability to modify indicators to fit your individual trading needs is a useful feature. Modifications allow you to adjust factors, such as the number of time periods used in a calculation. For example, 50-day and 200-day moving averages are two of the most commonly used indicators. However, depending on your trading style, the behavior of the underlying security you are analyzing, or market conditions, you may want to vary the period length. Our three top picks allow you to modify all of the indicators in their respective libraries. Even BigCharts.com finally gives this functionality to users with its redesigned Interactive Charts.
Many users of technical analysis follow more than one indicator. They track the behavior of multiple indicators in conjunction with one another to make buy and sell decisions. For this reason, it is convenient to have the ability to plot multiple indicators on the same screen. This may entail either plotting indicators on the same price chart, or having them plotted in their own “window” below the primary price chart. All of our top picks allow you to plot multiple indicators.
In the comparison grid here and in the expanded grid, we give links to the listing of indicators each site provides.
One of the main functions of technical analysis is to identify trends in price and volume in the hopes of forecasting future price movement. Trendlines, which are lines used to connect two or more points on a chart, are a useful tool to this end.
Many sites go beyond static Web display pages to load actual programs within your browser that can manipulate data. Adobe Flash, Sun’s Java and Microsoft’s Silverlight are the most popular Web-distributed programming languages. Flash, Java and Silverlight technology have enabled charts to become more interactive—for example, by allowing users to draw their own trendlines on charts. Each of our top picks offers interactive chart features that include user-drawn trendlines.
Some investors seek out securities exhibiting specific technical behavior—price above or below a 50-day or 200-day moving average, overbought or oversold price in terms of various indicator values or a price chart that exhibits a certain pattern such as a double-bottom. Among the top sites, BigCharts.com and StockCharts.com offer predefined or “canned” scanning or screening based on price movement, indicator values and/or chart patterns. The filters range from basic predefined scans looking for stocks reaching new highs or new lows or those making the largest percentage moves for the day to stocks with charts exhibiting common candlestick or point & figure patterns. FreeStockCharts.com and StockCharts.com premium subscriptions offer custom searches or screens.
In order to allow you to share your charts with others, some services allow you to email charts or links to charts.
All three of our top picks deliver charts via email or allow you to email links to a given chart.
The biggest mistake an individual can make is to try to use technical analysis to make investment decisions without fully understanding it.
The quality and amount of technical analysis educational material available at the top websites varies greatly. StockCharts.com offers some of the most comprehensive educational resources, all of which are free.
BigCharts.com was one of the first sites devoted to stock charting and has been one of the stalwarts in this category for many years. This free site blends together free charting, a library of key technical indicators, market and company news, historical quotes and industry analysis.
For all of its attributes, the site had become a little out-of-date, remaining much the same as it had been when it was first launched. But it seems that the site’s parent, Dow Jones & Company, decided to spend a little money on the site, sprucing it up a bit since our last comparison two years ago. While the functionality has remained intact, long-time users of the site have probably noticed a drop in the depth of data the service offers, especially when wanting to plot longer periods of time on a chart.
With quick charts, you enter a ticker symbol and specify the time frame to generate a chart. Quick charts do not support the plotting of multiple securities simultaneously, and the indicators and studies automatically drawn with the chart are those saved in the chart settings.
The advanced charts provide additional features. You have the option of selecting a predefined time period or specifying your own custom time period. Intraday data is available in one-, five-, 15- and 60-minute increments; daily, weekly, monthly, quarterly and yearly frequencies are also offered. With each chart, you can select from a library of over 30 technical indicators and studies—including stochastics, relative strength index (, Bollinger bands and the MACD (moving average convergence/divergence). Perhaps the only negative with the entire site is that you can only modify the parameters of technical indicators with the Interactive Charts. Users can only alter the time periods of moving averages displayed on their charts.
There are also seven options for chart type, including open, high, low, close; high, low, close; candlesticks; and bar charts. The site appears to have switched data vendors, now using SIX Financial Information for its historical price data. The amount of historical data has been scaled back a bit, with data for equities going back to 1993, mutual funds to 1997, indexes to 2000 and currencies to 2008. Once you have made your setting choices, you can save them for future use.
With the site’s redesigned interactive Java charts, you can plot a variety of time frames, although you do not have the ability to plot a custom time frame as you do with the advanced charts. You have the same collection of indicators from which to choose, but now you are able to modify the indicator parameters. Another useful feature of the Java charts is the ability to draw custom trendlines.
For historical quotes, you specify a ticker and date and BigCharts.com provides the open, high, low and closing price, as well as the volume for that date. However, you cannot view data for a range of dates or export historical data.
BigCharts.com has the ability to deliver custom charts to you via email on a daily or weekly basis, or when viewing a chart through your browser. Both options require that the recipient of the charts have HTML-enabled email software.
The site also offers 12 BigReport “scans” that identify U.S. and Canadian stocks with the largest percentage changes in price or volume, as well as the most active stocks and those reaching 52-week highs or lows.
For beginner and intermediate technicians looking for a no-frills charting website, BigChart.com’s solid collection of free charting capabilities makes it an excellent choice.
The FreeStockCharts.com is from Worden Brothers, the company behind the TC2000 technical analysis and charting software. As its name suggests, the service is free. Premium subscriptions to TC2000.com offer greater functionality.
The site stands out for offering totally free streaming “real-time” charts of indexes, stocks and ETFs, without exchange fees. It does this by providing real-time data from the BATS exchange. Any data that is less than 15 minutes old comes from BATS, while data older than 15 minutes is filled in using complete exchange data. It is worth noting that the “real-time” data being displayed on the charts may differ from what you would see elsewhere, especially for stocks that are not actively traded. Furthermore, you may choose to display volume activity either for trades placed with BATS only or using an approximate total volume.
For charting purposes, FreeStockCharts.com offers the standard line, bar and candlestick charts. You can plot charts on an intraday basis as well as on a daily, weekly, monthly, quarterly and annual basis. The site boasts one of the larger indicator libraries among online providers: There are over 65 technical indicators, all of which you can customize to suit your needs. You can also draw your own trendlines.
Registered users can create chart layouts and save them for future use. A layout consists of the underlying symbol and any desired indicators. Once you save a layout, you can access your pre-configured charts from any computer.
There are also built-in watchlists covering indexes, industries and ETFs. For example, you can click on the NASDAQ 100 Component Stock watchlist to see all of the stocks that make up this index. Users can also create and save their own watchlists.
The site offers free technical screening, but only for stocks in the S&P 400 and 600 indexes as well as those in the Dow Jones industrial, transportation and utility averages.
Finally, the site offers streaming, real-time news items.
While free streaming real-time charts are an attractive feature, the impressive collection of technical indicators, watchlists and real-time news are what make FreeStockCharts.com an Editor’s Choice.
StockCharts.com is our third Editor’s Choice for top technical analysis websites. In our opinion, it the “best of the best” among all online technical analysis and charting services. It offers robust charting and scanning capabilities, as well as a rich collection of technical analysis educational content. The site offers free content as well as fee-based subscriptions ranging from $14.95 to $49.95 per month.
For charting, StockCharts.com offers one of the best collections of charts available on the Internet. The site features line, bar and candlestick charting, as well as three options for point & figure charting. In point & figure charts, the site automatically displays pattern alerts. The site offers over 50 technical indicators and line studies. Non-subscribers can only plot three indicators at a time, while premium users can plot six to 10 indicators on a single chart, depending on their subscription level. Subscribers and non-subscribers alike can modify the parameters of the technical indicators as well as dictate the time frame charted. Subscribers can save charts to a favorites list for future analysis and save their chart settings. The site’s free charting service displays data on either a daily or a weekly basis. However, only three years of historical data is available to non-subscribers. A subscription is required to chart intraday data; real-time charting, albeit not streaming, is available starting at $37.90 per month. The real-time charts refresh every 15 seconds (every five seconds with a Pro subscription). True real-time data is available for U.S. and Canadian stocks. However, even if you are not an Extra RT or Pro subscriber, you still get “real-time” data courtesy of the BATS exchange.
StockCharts.com offers a collection of stock scans that allows users to apply technical formulas to a stock universe to receive a listing of stocks that meet those criteria. Non-subscribers can run predefined scans on an end-of-day basis based upon technical indicators as well as candlestick and point & figure patterns. The site screens stocks traded on the NASDAQ, NYSE, Amex and Canadian exchanges. Mutual fund scans are available as well.
For $14.95 per month, Basic subscribers are given the limited ability to create but not save their own scans and can only view up to 10 results per scan. Basic, Extra and Pro members have over 130 technical fields at their disposal when creating their own scans. There are two scanning modules. The Standard Scan Workbench is the more intuitive of the two, as users build their scans by selecting criteria from dropdown menus. The Advanced Scan Workbench offers tremendous control—the user can basically program anything they can dream up—but this level of flexibility makes it more intimidating and more difficult to grasp. Free users can access a collection of 80 predefined scans covering technical indicators as well as candlestick and point & figure chart patterns.
The Pro level is a new subscription plan that StockCharts rolled out in August. This subscription is for “power” users and offers such features as more rapid chart refreshes (five seconds versus 15 seconds), 50 predefined technical alerts (versus five) and more. Probably the most unique aspect of the Pro subscription is the user-defined index. Now, you can upload a data set in spreadsheet format (or enter the data by hand) and you can chart and analyze the data. For example, you would be able to upload AAII’s historical investor sentiment data, which we offer as a downloadable spreadsheet on AAII.com, to the site and chart its results since its inception.
If you want to learn more about technical analysis, extensive educational content is available in the ChartSchool section of the website. Articles cover the basics of investing and technical analysis, as well as trading strategies and how to use technical indicators. A discussion of charts explains the common patterns that appear on charts and how to interpret them.
While StockCharts.com offers some of the more robust collections of charts types, indicators, and technical screening and scanning capabilities, it also separates itself from its competitors with its collection of free educational content. Anyone looking to learn more about charting and technical analysis would be well served to visit this site.