Midweek Money: Surfing the secrets of the money trade

The Web is a mine of information for amateur investors.
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The Independent Culture
IF YOU'RE an amateur investor, then you are working at a disadvantage. To begin with, the professional investors have up-to-the-minute information on the movement of share prices. Secondly, they have advisers helping in their decision-making about what the market is going to do. Finally, they have other investors working around them, and can share in the great City grapevine about what is moving and why.

So how can a personal investor ever hope to make a profit? The solution is to level the playing field as much as possible, and one of the best ways to achieve this is with your PC. From the Internet, you can get up- to-date financial information, with packages offering you suggestions on how the market or individual prices might move, and you can take part in newsgroups and share dealing clubs to get feedback from like-minded personal investors.

Newsgroups can be particularly good for giving you a sense of community; typically, you'll get messages posted along the lines of: "Anyone in here been watching company So-and So recently? If so, can you explain the price rise over the past three months?" After which you'll usually get a few messages offering suggestions. You don't have to wade in and post lots of messages; just lurk quietly for a while and you'll learn quite a lot - if nothing else you'll soon discover who seems to know what they're talking about.

Newsgroups and share-dealing clubs are fine in their way, but they are essentially collections of other amateurs, and you will probably want to see more professional information. By choosing the source of your price data carefully, you might well be able to get data such as AFX news. This is a round-up of all the regulatory news, and you can read about rights issues, mergers and acquisitions, and company financial results. Some offer information, such as Hemmington Scott reports; most will have information about securities that are moving, and up-to-date stories about financial happenings.

Some price feeds, such as Market Eye, will show you the risers and fallers arranged by index, so you can see what's moving in the FTSE 100 or 250, SEAQ, Gilts, or fixed interest securities. Most of the services offering price and analysis information let you set stop-loss limits on securities, so that if the security you're interested in moves outside a certain price band, an alarm warns you.

In addition to your price feed, the Internet bristles with sites offering general or specific financial information. Some, such as the Bloomberg site, have an open area where you can read news stories, see the current state of the market index, and look up a security value. Bloomberg also has a subscribers-only area for subscribers to the Bloomberg Money magazine. Reuters also has an open area in its website, with a financial news ticker, market indices, and access to back issues of the Reuters magazine.

You will also find useful analysis and predictions in the open areas of sites such as ESI, and PC-Quote Europe. Background information can be found in sites such as IMRO (www.imro.co.uk), and the Treasury (www.hm- treasury.gov.uk).

While the general information might be useful, you shouldn't ignore the analysis options of your chosen portfolio management package. Typically, you can look at the movement of your securities against the market index and short-term indicators, add trend lines, and look at volatility. You should also be able to view fundamentals data, such as yield and P/E ratios.

There are more specialised packages which go much further. One of the best is AIQ Trading Expert, giving you a technical analysis of the state of the market, alongside an integrated portfolio manager. Developed in the United States by distilling the knowledge of professional Wall Street traders, Trading Expert is popular with many professional traders, and in the US, professional traders have won the "trader of the year" award by following its advice. The way Trading Expert works is by using artificial intelligence techniques to look at the way the market and shares within the market have moved, and comparing those to past patterns. Around 400 rules are tried out on a security, then a report is prepared showing you which rules have been applied, and what the rules suggest might happen.

Trading Expert also has a trial mode. You come up with an investment strategy, then try it out using historical data to see whether it would have worked. Having weeded out the loss-making ideas, you can then have Trading Expert look through the stocks and shares available, and show you the ones that fit your strategy.

Using a combination of the sources covered here, it is possible to get a pretty rounded picture. Although you will probably never know as much as the professionals, you should know enough to decide what to buy, what to sell, and when to do it.

Trading Expert: Trendline, 01707 661 717