If we accept the fact that human emotions and expectations play a role in security pricing, we should also admit that our emotions play a role in our decision making. Many investors try to remove their emotions from their investing by using computers to make decisions for them. The concept of a "HAL," the intelligent computer in the movie 2001, is appealing.
Mechanical trading systems can help us remove our emotions from our decisions. Computer testing is also useful to determine what has happened historically under various conditions and to help us optimize our trading techniques. Yet since we are analyzing a less than logical subject (human emotions and expectations), we must be careful that our mechanical systems don't mislead us into thinking that we are analyzing a logical entity.
That is not to say that computers aren't wonderful technical analysis tools--they are indispensable. In my totally biased opinion, technical analysis software has done more to level the playing field for the average investor than any other non-regulatory event. But as a provider of technical analysis tools, I caution you not to let the software lull you into believing markets are as logical and predictable as the computer you use to analyze them.
