Detecting faults in technical indicator computations for financial market analysis

Many financial trading and charting software packages provide users with technical indicators to analyze and predict price movements in financial markets. Any computation fault in technical indicator may lead to wrong trading decisions and cause substantial financial losses. Testing is a major software engineering activity to detect computation faults in software. However, there are two problems in testing technical indicators in these software packages. Firstly, the indicator values are updated with real-time market data that cannot be generated arbitrarily. Secondly, technical indicators are computed based on a large amount of market data. Thus, it is extremely difficult, if not impossible, to derive the expected indicator values to check the correctness of the computed indicator values. In this paper, we address the above problems by proposing a new testing technique to detect faults in computation of technical indicators. We show that the proposed technique is effective in detecting computation faults in faulty technical indicators on the MetaTrader 4 Client Terminal.