17/10/2000 - 21:00

Share trading software ‘not a crystal ball’

By Noel Dyson

17/10/2000 - 21:00

IF IT seems too good to be true, it probably is. That is the message to people who believe share trading software will make them a quick fortune.

Most of these products rely on technical analysis or charting tech-niques that give the user insight into what is happening in the market.

However, they are not crystal balls and the trader still has to make the decision.

Due to many complaints, the Australian Securities and Invest-ments Commission has targeted share trading software promoters who make misleading claims.

Securities Institute of Australia principal technical analysis lecturer Colin Nicholson said the software systems would not predict the future.

“Technical analysis doesn’t provide a key to the market – there is no secret,” Mr Nicholson said.

“The reality is it’s not easy to make money on the market – it takes about five to 10 years to learn the game.”

He said technical analysis gave investors an indication to what traders were feeling.

“If supply and demand are in equilibrium, the price will just jump around. If buyers outweigh sellers, you’ll see prices moving up,” he said.

“If you know how much a company is worth and how many shares it has in the marketplace, you can theoretically work out what the share value should be.”

“However, the stock exchange is a secondary market. Prices can be driven by things other than value.”

ASIC Office of Consumer Protection director Peter Kell said consumers should beware of promoters who:

* Promised high returns over a short period;

* Did not disclose the potential losses and risks of actively trading shares or futures;

* Claim the program will make the user a successful trader;

* Provide examples of large profits made by investors in the past as a result of using the program; or

* Overseas promoters or vendors who promote trading software for sale.

Share trading software ‘not a crystal ball’

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