Paralysis by analysis is one of the most dangerous traps a trader can fall into. Too often, accepted and reliable indicators conflict with one another. By definition, one signal will be right and the other will fail; the mental capital expended in sorting the process out can undermine confidence in system trading and lead to a complete loss of trading discipline.

Wouldn't it be nice, therefore, if we could simultaneously apply a large number of technical indicators to a given data set and have a computer poll the indicators for a composite signal? OmniTrader 3.5 does exactly that. The Windows-based trading system design and testing package includes over 120 recognized trading methods.

The installation procedure is straightforward, the documentation is clear, the program executes quite quickly, and the whole package is easy (and fun) to use. The software comes with an hour-long video that introduces the product and demonstrates most of its key features.

Telephone (non-toll-free) technical support is available from 9:00 a.m. to 9:00 p.m. CST.

Interface
The user interface and output are complete and generally self-explanatory to anyone who spends his day with toolbars, drop-down menus, side windows and push-button icons. The work and forethought in screen design shows. The user can select various chart types and technical studies to superimpose on them. The recommended trades are illustrated with a variety of tags, each of which is hyperlinked to a text box explaining why the signal was generated. Another set of lines can be generated for trading stops, both protective and profit-taking. An interactive "bomb-sight" tool allows for easy data inspection. Finally, a report writer generates trading histories.

Features
OmniTrader tests various trading systems and presents the user with the most profitable combinations. The software comes with two highly attractive features, a "Trading Game," and a "Lab Mode." The Game is a walk-forward simulator that allows a user to imitate real-time trade idea testing. The Lab allows for a data history to be divided into testing and validation samples. The trading universe, or "focus list," to be tested, as well as the trading strategy universe, can both be edited.

OmniTrader's capabilities are impressive; indeed, it is hard to think of additional features that should be included in a data analysis and testing program.

Futures traders should be aware that while the software is shipped with a futures trading module, the emphasis is on the stock side. Many of the technical indicators, such as up volume/down volume, are for equity traders. Systems designed for equity market analysis do not translate readily to commodities markets for several reasons, most prominently because corporations change over time and commodities do not: John Deere is a different entity than it was 20 years ago, but 5,000 bushels of corn is still 5,000 bushels of corn.

Second, equities exist for the life of the underlying company, while futures have a definite expiration. Third, equities throw off a stream of income, while futures trade at a basis to their underlying commodity that reflects a cost of carry. Finally, equities have several powerful institutional imperatives that back an overall up trend, while commodities have no such underlying biases.

Of course, OmniTrader can generate a whole family of trading models, each designed to accommodate a specific underlying security. Because the OmniTrader Lab makes designing and optimizing systems so easy, and because it is human nature to keep tweaking parameters up to and past the point of perceived perfection, this one-model-per-situation outcome becomes likely. Systems designers should see the danger of "curve-fitting" and the resulting non-robust methods rather immediately.

One final note of caution: The video states several times that the user is "the final filter." In other words, a trader can invest considerable time and effort in backtesting and design, and then override the whole thing on a hunch. How does this encourage discipline and avoid paralysis by analysis?

Summary.
For beginning to intermediate level users, OmniTrader can have tremendous value for those learning how systems interact with the market. A user can see for himself the various strengths and weaknesses of different types of technical systems for different instruments under different market conditions. As such, OmniTrader makes an outstanding teaching and training tool.