Forecasting, meteorological or financial, needs massive amounts of data. For decades some financial analysts have drawn charts of price movements in an attempt to find patterns. Analysts try to detect when prices are breaking out of a range that is drawn on the chart. This is called "technical analysis" or "chartism." Traditional chartism is slow and crude. It drastically over simplifies what is a highly complex, dynamic and fast-moving process and so was regarded with contempt by many analysts. Computerized pattern recognition, on the other hand, is immensely more detailed and sophisticated. Computers can detect patterns that humans cannot detect.
Chartists usually studied charts that showed the end-of-day closing prices. Computers drew lines on such charts and tried to indicate when a price trend was breaking out of an established pattern. This was crude and the results were not too impressive. However, computers can analyze all the data they can get. When applied to forecasting, they need to see every price movement, not just end-of-day prices. They need tick-by-tick details of every change in quoted price and the volume and price of every trade. Such data can be collected from the stock-market feeds of Reuters, Knight-Ridder and Telerate. Quoted prices of major currencies can change 20 times a minute or more. The US dollar/deutschmark rate, for example, can change 18,000 times in a single day.
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