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Article Archive For John Sweeney
DownloadNovice Speculator by John Sweeney
Interview: J. Doyne Farmer by John Sweeney
ARTICLE SYNOPSIS ...Interview: J. Doyne Farmer by John Sweeney The number of physicists and engineers who have dented their axes on market prediction is so vast that it led to the derisive term "quant." But who are these guys, and what are they up to? We tracked down one man who made the journey, successfully, from academia to research to trading, then back. We found him holed up in New Mexico, still pushing the boundaries of speculative thought and willing to chat. J. Doyne Farmer studied physics, receiving a bachelor of science degree from Stanford University and a doctorate from the University of California ...
Opening Position by John Sweeney
John C. Bogle Of Vanguard
ARTICLE SYNOPSIS ...John C. Bogle, president of Bogle Financial Markets Research Center, founded The Vanguard Group, Inc., in 1974, after having been associated with a predecessor company since 1951. The Vanguard Group is one of the largest mutual fund organizations in the world, with more than 100 mutual funds with current assets totaling more than $550 billion. In 1975, Bogle founded Vanguard 500 Index Fund, currently the largest fund in the group. It was the first index mutual fund. Bogle is the author of two best-selling investment books. His third book, John Bogle On Investing: The First 50 Years, was publis...
Interview: Investing Champion Mark Cook by John Sweeney
ARTICLE SYNOPSIS ...From Sun Up To Sun Down Interview: Investing Champion Mark Cook by John Sweeney Mark D. Cook first won fame as a trader in 1989 when he finished second in the US Investing Championship. By 1992, he had shifted to options and racked up large three-digit percentage returns en route to winning the championship. Since then, he's turned to the Standard & Poor's 500 index and Nasdaq for daytrading, while keeping the options and stocks for intermediate- and longer-term trading. Nowadays, he's in the market to pay for his Ohio farm and his company's operating expenses, not to mention room and board....
Opening Position by John Sweeney
Opening Position by John Sweeney
Interview: Carol Osler by John Sweeney
ARTICLE SYNOPSIS ...Interview: Carol Osler by John Sweeney Hidden away in the Federal Reserve System are entire departments of economists researching nearly every aspect of US business. In late 2000, we picked up hints of an economist who had actually taken on the definition and measurement of the concepts of technical analysis. Some sleuthing brought up Carol Osler's name. Osler is a senior economist in the Capital Markets Research Function of the Federal Reserve Bank of New York. Her major interest is in explaining short-run exchange rate movements. In particular, she has focused on technical trading strategi...
Opening Position by John Sweeney
Interview: Bob Farrell by John Sweeney
ARTICLE SYNOPSIS ...Interview: Bob Farrell by John Sweeney Probably no one has seen the big picture of technical analysis' growth and increasing legitimacy quite the way that Bob Farrell, a fixture at bellwether brokerage Merrill Lynch for nearly half a century, has. He seemed to be the ideal subject to summarize that growth and the winnowing out of what works and what doesn't. Farrell is senior investment advisor of Merrill Lynch and one of Wall Street's most highly respected stock market analysts. He's seen it all and done most of it, too; he is a many-time First Teamer in the market timing category of Instit...
Interview: Saitta! Kepler! Krauss! by John Sweeney
ARTICLE SYNOPSIS ...When Institutional Investor (II) magazine recently named its All-America Fixed-Income Technical Analysis Team, STOCKS & COMMODITIES Contributing Editor Alex Saitta was in first place. We thought a roundtable interview of the top three would be not only an offbeat interview but insightful for our readers. We put together S&C Interim Editor John Sweeney, Alex Saitta of Salomon Smith Barney, Robert Kepler of Lehman Brothers, and Michael Krauss of Chase Securities for a look at technical analysis in the big leagues. It turned out we'd found a fan of mechanical systems, a momentum player, and a sen...
Opening Position by John Sweeney
Interview: Tom Rietz Of Iowa Electronic Markets by John Sweeney
ARTICLE SYNOPSIS ...Trade The Future(s) Tom Rietz Of Iowa Electronic Markets Iowa Electronic Markets (IEM) are real-money futures markets in which students and professionals trade contracts of everything from US politics to Federal Reserve monetary policy to computer returns. These markets are operated by faculty at the University of Iowa Tippie College of Business as part of its research and teaching mission. Thomas Rietz, Associate Professor of Finance at the University of Iowa, is an Iowa Electronic Markets manager. Rietz uses a combination of theoretical, empirical, and experimental work to research two prim...
Opening Position by John Sweeney
Opening Position by John Sweeney
Interview: Victor B. Niederhoffer by John Sweeney
ARTICLE SYNOPSIS ...Music of the Markets - Victor B. Niederhoffer Trader, speculator, author, and more. The name may be familiar, but there's more to the man than just finance. Victor Niederhoffer has served as advisor to, and investor for, famed investor George Soros and as mentor to Monroe Trout and other financial wizards. More: Niederhoffer is also a five-time US national squash champion. More: Among his publication credits are articles in Liberty and The Wall Street Journal, a cover story in National Review exposing Hillary Clinton's cattle trading as a façade, and his book, The Education Of A Speculator. ...
Opening Position by John Sweeney
Product Review: UNX by John Sweeney
Product Review: The Bollinger Band Trading System by John Sweeney
Product Review: TraderBot.com by John Sweeney
Quick Scan: eSIGNAL by John Sweeney
Product Review: Power Analyzer by John Sweeney
Product Review: BigEasy Investor by John Sweeney
Product Review: Wizetrade With eSignal And PC Quote by John Sweeney
Product Review: TradeStation Pro by John Sweeney
Product Review: TradingExpert by John Sweeney
Quick Scan: Best Test Simulated Trading by John Sweeney
Product Review: Bull's-Eye Broker by John Sweeney
Product Review: Pro Analyst by John Sweeney
Product Review: Technical Ranking System by John Sweeney
Quick Scan: Option Strategist Online Seminar Series by John Sweeney
Product Review: Wealth-Lab.com by John Sweeney
Product Review: @RISK Professional 4.0 by John Sweeney
Quick Scan: Trade Simulator Version 5.0 by John Sweeney
Product Review: Market Dynamics by John Sweeney
Product Review: OptionStar by John Sweeney
Product Review: Aspen Graphics by John Sweeney
Product Review: Stockomatic.com by John Sweeney
Interview: Nassim N. Taleb by John Sweeney
ARTICLE SYNOPSIS ...Interview: Nassim N. Taleb by John Sweeney Nassim Nicholas Taleb is a quantitative trader operating at the intersection of theory and practice. Currently president and head trader at Empirica Capital LLC, a hedge fund operator in Greenwich, CT, and adjunct professor of mathematics at the Courant Institute of New York University (NYU), Taleb has held senior derivative trading positions at Union Bank of Switzerland, CS ? First Boston, BNP ?Paribas, Credit Agricole ? Indosuez, and Bankers Trust; he was also a floor trader on the Chicago Mercantile Exchange. In 1997, Taleb stirred the incredulit...
Interview: Gary B.Smith Of TheStreet.com by John Sweeney
ARTICLE SYNOPSIS ...V.18:10 (80-95):Interview:Gary B.Smith Of TheStreet.com by John Sweeney Trader, author, and TV personality Gary B.Smith trades for a living and has done so since splitting with Sports Illustrated, where he covered pro golf. More prominently, Gary writes about his trading in unusually frank terms for TheStreet.com and appears on Fox News Channel as a market commentator. A prototypical retail trader, a pure technician, and articulate to boot, he was just the sort of person we were looking for in July 12, 2000, when we caught up with him in his trading room in his Maryland home....
Interview: Matthew Andresen Of Island ECN by John Sweeney
ARTICLE SYNOPSIS ...Faster, Cheaper, Better? Matthew Andresen Of Island ECN Matthew Andresen has been serving as president of Island ECN , Inc., since 1998. Since then, Andresen has spearheaded IslandÕs explosive growth and overseen its role in shaping the new electronic marketplace. His strategic mission at Island is to provide all market participants with the ability to execute transactions on a level playing field. That has meant building Island into the first marketplace to provide a free, real-time display of all its orders through the Island BookViewer, software that allows orders received by Island for d...
Interview:Bob And Don Bright Of Bright Trading by John Sweeney
ARTICLE SYNOPSIS ...Tales Of Professional Daytraders Bob And Don Bright Of Bright Trading Bored in retirement from exploiting the Standard & PoorÕs OEX options spreads, Bob Bright got back into trading in 1992 by forming Bright Trading with partner Edward Franco as an off-floor venue for professional traders Ñ that is, licensed traders. Starting from a single office in Chicago, they offered traders top-drawer market access for as little as 5%of their former overhead plus trading costs of less than a penny a share. The concept was a hit: the combination of lower costs and local offices proved irresistible to the...
Interview:Richard McCabe Of Merrill Lynch by John Sweeney
ARTICLE SYNOPSIS ...Richard McCabe Of Merrill Lynch The Technical Tradition Continues Continuing the technical tradition begun by Bob Farrell, Merrill Lynch chief market analyst Richard McCabe has been Mr.Technical Analysis at the world's largest brokerage since 1993, following in Farrell's footsteps. McCabe heads a staff scattered around the world that brings to the company's stock evaluation process the insights into the market's condition that technical analysis offers. A Merrill Lynch loyalist his entire career, McCabe joined Farrell's shop in 1964 and has practiced technical analysis since then. What appro...
Interview: Leo Melamed by John Sweeney
ARTICLE SYNOPSIS ...On The Alliance Of Exchanges Leo Melamed As chief architect of financial futures, Melamed led the US futures industry from 1967 until his retirement from the CME in 1991. During this period, financial futures experienced unparalleled growth and became an established and indispensable tool in financial risk management. Further,in 1987, Melamed introduced Globex, the first electronic futures after-hours trading system, developed in conjunction with Reuters Holdings PLC. Melamed served as the first chairman of the system until 1993. Melamed, an attorney by profession, is an active futures trade...
Thomas Donovan And Patrick Catania Of The CBOT by John Sweeney
Interview: Yale Hirsch: Market Historian by John Sweeney
ARTICLE SYNOPSIS ...Interview: Yale Hirsch: Market Historian by John Sweeney Yale Hirsch is best known as the editor and publisher of The Stock Trader's Almanac, now in its 33rd annual edition. He is a stock market historian and stock analyst who could probably tell you, within reason, what the stock market is likely to do any hour, on any day, in any future year. That's not the result of any clairvoyance on his part, but rather the result of his detailed analysis of historical stock market behavior and cycles in differing political and economic environments. The January barometer is the best-known indicator fo...
Philip Berber Of CyBerCorp by John Sweeney
ARTICLE SYNOPSIS ...Brokerages: The Next Generation Philip Berber Of CyBerCorp Before Philip Berber formed CyBerCorp, a next-generation, electronic brokerage group providing real-time, direct-access trading, and Internet execution technology, he had already made a name for himself as the founder of Financia. Financia was notable for being the first company in Europe to apply artificial intelligence, expert systems, and technical analysis to market prediction, stock selection, and timing. Berber, a native of Ireland, sold CyBerCorp to top US online broker Charles Schwab Co. in March 2000. What's next for him? To...
Interview: Technician Walter Deemer by John Sweeney
ARTICLE SYNOPSIS ...The Grand Old Man Technician Walter Deemer Walt Deemer began his Wall Street career in 1963 as a Merrill Lynch research trainee. Since then, he has seen the ebb and flow of Wall Street through booms and busts, spending time with the Manhattan Fund in the mid-1960s -- arguably the best known of the Go-Go funds of the period -- and with Putnam Management along the way, managing to be one of the founding members of the Market Technicians Association (MTA)in the early 1970s before forming Deemer Technical Research in 1980, offering market strategies and insights to institutional clients on a consul...
Product Review:ASCTrend/eASCTrend
Quick Scan:Online Trading Academy
Product Review:EquityTrader.com
Product Review:The Ultra Signal File Optimizer
Product Review:Byte Into The Market
Quick Scan:OmniAlert
Quick Scan:OptionsNerd.com
Quick Scan:Option Money Version 2.2
Product Review:Preferred Trade
Product Review:BioComp Profit 2000 Professional
Product Review:WindowOnWallStreet.com
Product Review:AIQ OptionExpert
Product Review:Ensign Windows
Quick Scan:Scan Wizard
Product Review:The On-Site Trader
Interview: David Vomund Of AIQ by John Sweeney
ARTICLE SYNOPSIS ...On The Opening Bell - David Vomund Of AIQ David Vomund of AIQ Systems wears a few hats, chief of which is his positions as chief analyst of artificial intelligence?based charting software developer AIQ Systems and the editor of AIQ's newsletter, The Opening Bell. Not only that, Vomund is also president of Legarza Vomund Investment Management, a registered investment advisory firm where he manages aggressive blue-chip portfolios. Under this money management program, Vomund utilizes his growth investing strategy while concentrating on a limited number of well-known companies; for the first half...
Volatility Of Returns by John Sweeney
ARTICLE SYNOPSIS ...Volatility Of Returns by John Sweeney Designing a profitable trading system is key, but the way that profits and losses vary can have an impact on your long-term success. Here's why looking at how the returns deviate can help you design your own system. Traders spend a lot of time worrying about the proper trading signals. Then they think about stops, and sometimes they even worry abut exits. (Not to mention complementary trades, diversification and capital management.) Hardly anyone, assessing his trading system, worries too much about its volatility. In most trading system evaluation sof...
Trading Ranges With Moving Averages by John Sweeney
ARTICLE SYNOPSIS ...Trading Ranges With Moving Averages by John Sweeney Using simple moving averages may seem like a straightforward approach to trading, but there are subtle techniques that can improve performance. A few months ago, I pointed out that moving averages are neat boundaries for trending action. Short-term averages are also handy for finding yourself in a trading range. How can that be, you ask? Usually, averages are curses for their behavior in a trading range. Those who use them to enter trends find themselves trading in and out rapidly, usually losing money in the process. By the very nature of...
The Volatility Edge by John Sweeney
ARTICLE SYNOPSIS ...Designing a profitable trading system is key, but the way that profits and losses vary can have an impact on your long-term success. In my previous article, I wrote that, other things being equal, a trading system with lower volatility would triumph over a system with higher volatility. To prove my point, I gave examples (and a small spreadsheet model) wherein a system with half the volatility of its competitor came out ahead 70-80% of the time when given the same sequence of trading results. Before we go any further, I should make a point of definition: Volatility is the variance of return...
Applying Moving Averages by John Sweeney
ARTICLE SYNOPSIS ...Applying Moving Averages by John Sweeney The moving average, one of the first technical methods that novice traders study, can be applied to your favorite markets. Here are its strengths and weaknesses. It's commonplace to honor simplicity but to simultaneously forsake it. The proliferation of indicators developed in the past 10 years alone is testament to that. What is simple is that prices are rising, falling or unchanging. What is complex are the indicators, mathematical contortions depicting the movement of price and volume in some abstracted form. As a fan of the objectivity of indica...
The Relative Strength Index (RSI) by John Sweeney
ARTICLE SYNOPSIS ...Here, one of the most popular indicators found in most analytical software packages is explained. When the relative strength index (RSI) became popular in the 1980s, it was touted as the indicator that led every turn in the market. Indeed, for certain futures contracts, financials and currencies, it could be prescient: In those markets, it had the peculiar ability to turn just as the financials would find a level of support or resistance before taking off to another price level. On other items, say, pork bellies or corn or cocoa, it would ape the price swings precisely. However, on trending p...
On-Balance Volume by John Sweeney
ARTICLE SYNOPSIS ...The on-balance volume indicator is a technical tool that traders use to determine the trend of volume. Here are the basics. The interplay of price and volume is the combination that is most discussed in traditional technical analysis. In these discussions, volume either confirms or does not confirm price movement by its expansion or contraction from prevailing values. Analysts examine the wildly fluctuating bar charts usually shown below price graphs to determine whether volume is truly expanding or contracting. To smooth the fluctuations in volume and also provide an overall indicator of pr...
On Moving Averages by John Sweeney
ARTICLE SYNOPSIS ...It's been around forever, and it's a tried-and-true favorite. It's also the source of great frustration. How can anything end up as both? Here are the basics for using moving averages to identify the trend in the market. No technique is more frequently used -- or more maligned -- than moving averages of prices. It's used frequently because it's the embodiment of a fundamental trading rule: Go with, not against, changing prices. Averages can't help themselves; they always go in the proper direction, not sooner but later. Hence, the malignment: Since averages' movement lagsÝ price action, their i...
Parabolics by John Sweeney
ARTICLE SYNOPSIS ...Here's a look at the parabolic trading system, with details on the way it works and how it's calculated. by John Sweeney Few books have produced as many indicators of lasting value as J. Welles Wilder's New Concepts in Technical Trading Sys-tems. From that single text came the volatility index, the directional movement index, the relative strength index and the parabolic system, among numerous others. Even today, these four are staples of virtually every technical analysis toolbox after all these years because their robust simplicity gets directly to the concepts that percolate in traders' m...
Quick-Scans: Formula Research by John Sweeney
Quick-Scans: Tsunami by John Sweeney
Quick-Scans: Funds On-Line by John Sweeney
Product Review: Windows On WallStreet by John Sweeney
Product Review: Proview by John Sweeney
Product Review: ProfitCenter by John Sweeney
Product Review: TeleChart 2000 by John Sweeney
Product Review: Personal Hotline by John Sweeney
Product Review: MATLAB For Windows by John Sweeney
The ADX by John Sweeney
ARTICLE SYNOPSIS ...THE ADX The calculation of the average directional movement (ADX) indicator is built on the intuitive notion that a trend is a series of price ranges extending in a consistent direction. In sidebar Figure 1, example A, the second day's trading range is higher than the first day's trading range, indicating positive directional movement. In example B, the second day's trading range is below the first day's trading range, an indication of negative directional movement. ......
Product Review: Black or White by John Sweeney
Product Review: MESA by John Sweeney
Product Review: N-Train by John Sweeney
Product Review: TechniFilter Plus by John Sweeney
Product Review: Enhanced Chartist by John Sweeney
Product Review: AIQ TradingExpert 2.5 by John Sweeney
Product Review: NAVA Patterns 2.0 by John Sweeney
Product Review: Option Pro by John Sweeney
Product Review: First Alert by John Sweeney
Breaking Out Of The Trading Range by John Sweeney
ARTICLE SYNOPSIS ...Breaking Out Of The Trading Range by John Sweeney Some blessed day, after being mired in a trading range for two years, your market is going to finally go into a trend. You must be there when it does, not trading something else or, worse, ignoring it from the golf course. Ideally, you've been trading the range back and forth trying to avoid losing money and possibly even making a little. You've been selling the tops and buying the bottoms as best you can, waiting for a breakout. How can you tell if it's happened? Graphically, as in Figure 1, you are waiting for a trade that hits your maximum...
Shifting To Another Dimension by John Sweeney
ARTICLE SYNOPSIS ...Shifting To Another Dimension by John Sweeney I have spent the last several months tweaking a simple trading system to provide good profits with minimal drawdowns. The underlying idea (""Settlement,"" November 1991 through February 1992) isn't too complicated, and it is summarized in Figure 1. Last month, 1 tried to exploit the underlying system by adding on trades to the underlying positions with a separate, simple rule: Add positions when the trending price retraces to the simple average following it (Figure 2). This logic failed, though it was spectacularly successful in some test periods...
Reversing For Dollars by John Sweeney
ARTICLE SYNOPSIS ...Reversing For Dollars by John Sweeney Harebra ined ideas bein g a plentiful ite m in my daydreams, the idea tha t I mentione d in April's Settlement tha t I implement a n automa tic reversin g tra de at my maximum a dverse excursion ( MAE) stop point had less than a 2% chance of survival after analysis. I tested it anyway. (To spare your digging out old issues, this idea is ex plained in Figure 1.) BUT FIRST, A SYNOPSYS Anyone who dropped in on this Settlement without having read the last five must be wondering what in the world I'm talking about. Briefly, I defined a basic, underlying trad...
Review Freebies! by John Sweeney
Quick Scans: MarketBase by John Sweeney
Returning To The Basics by John Sweeney
ARTICLE SYNOPSIS ...Returning To The Basics by John Sweeney Since November last year, I've gone through exploiting the trend-related activities -- trading the underlying trend, adding trades to the trend trades and reversing trades when wrong about the trend -- but there's the other half of trading that some would say is going on 80% of the time: trading-range trading. Recall that the original system was a trend-following system but inevitably, there were times when no trend was apparent. Thus, the first clue to a trading range is being out of the market when using the underlying system. Another clue to look for...
Testing Trading Rules Over Different Time Periods by John Sweeney
ARTICLE SYNOPSIS ...Testing Trading Rules Over Different Time Periods by John Sweeney After two Sundays of dinking around (Settlement, STOCKS & COMMODITIES November and December 1991), I'd finally converted a chance idea to something with remotely promising prospects something on the order of a three-to-one return on margin. I'd done that by emulating the basic ideas in four trading rules (Figure 1) plus two stops. As has been my experience, the stops were the most effective in improving the results and the stops were selected by the maximum adverse excursion (MAE) analysis (Figure 2) to cut off the big losers w...
Developing An Edge by John Sweeney
ARTICLE SYNOPSIS ...Developing An Edge by John Sweeney Once you've developed something with an edge on the market, it's only natural to want to exploit it mercilessly, making hay while the sun shineth, so to speak. The simplest way I know to do this is to add more positions to your basic direction, buying dips when long, selling rallies when short. In my last three Settlements, I've battered one harebrained idea into reasonably profitable shape so that it gives us good trend selections and gets me out in a timely manner. However, there's more. Once we're in a good trade (which we know via the maximum adverse ex...
Trading Back Into A Range by John Sweeney
ARTICLE SYNOPSIS ...Trading Back Into A Range by John Sweeney Last month in Settlement, I wrote briefly about some simple ideas for defining nontrending periods. Although exotic approaches are possible, simple things are easier to teach to computer packages. The program I've been using here for testing, Behold!, has a great worksheet capability and many sophisticated functions, so virtually anything can be defined mathematically. The problem with this software occurs when defining trading rules beyond entry and exit. Reversals and add-on trades are tougher if not impossible to program. When trading a range, you ...
Reversing Your Losses by John Sweeney
ARTICLE SYNOPSIS ...Reversing Your Losses by John Sweeney Last month, Settlement closed with some incomplete work: the profit and loss charts for trades added onto the underlying system that was developed in the months prior. To finish the subject of evaluating add-on trades, I've completed those charts by trading the add-on system for the remaining years of data -- 1991, 1990 and 1988. To recap, the underlying bond trading system trades solely off the 35-day simple moving average of closing bond prices in the December contract. The trend is determined by the 17-day average of the day-to-day difference in the mov...
Ensign IV by John Sweeney
Market Center 4.0
Product Review: The Equalizer 2.3 by John Sweeney
Product Review: QuoteMaster Pro 1.63 by John Sweeney
Product Review: OptionVue IV by John Sweeney
Product Review: DollarLink by John Sweeney
Product Review: MINITAB by John Sweeney
Quantifying The Tried And True by John Sweeney
ARTICLE SYNOPSIS ...Quantifying The Tried And True by John Sweeney Some people think that my use of numbers indicates a lack of respect for traditional charting techniques. Quite the opposite is true. I've found over the years that what I've come up with generally confirms many of the tried-and-true trading axioms and charting techniques, only I've been able to put numbers to many of them which before were unquantified advice. A good example is the work on maximum adverse excursion (MAE) (STOCKS & COMMODITIES, October 1985, and S&C, January 1991), which advised you to focus on minimizing losses in order to be a...
Developing A System by John Sweeney
ARTICLE SYNOPSIS ...Developing A System by John Sweeney The great thing about many of the new trading support systems is that they facilitate the respectable practice of ""dinking around"": that process of tweaking every crazy idea that strikes one until something productive and, hopefully, profitable pops out. I've found this is best done on quiet Sunday afternoons. Now, this article is not for everyone. I'm going to take you through the grind-it-out process of developing a trading system. As you'll see, even with nifty software and fast computers, there's mostly sweat and dirt before you get to the gold--if yo...
The Skimming Discussion Continues by John Sweeney
ARTICLE SYNOPSIS ...The Skimming Discussion Continues by John Sweeney Remember the moving average ""skimming"" discussion that's gone on over the last several issues? I received another cogent letter describing the effect for a half-wave moving average. Amos Newcombe of Manor Lake, NY, makes the point that to ""skim"" tops and bottoms precisely, the amplitude of any inherent cycle must be the same size as any trend over one-quarter of a cycle: This is in reply to your article ""Average Behavior"" [STOCKS & COMMODITIES, April 1991]. You say that the half-cycle moving average moves along the bottom of rising tren...
Fourier Analyses by John Sweeney
ARTICLE SYNOPSIS ...Fourier Analyses by John Sweeney One of the fascinating ideas that came up early in STOCKS & COMMODITIES' days was the Fourier analyses applied to stock and commodity data by Anthony Warren and Jack Hutson (see Technical Analysis of STOCKS & COMMODITIES, Volume 1). While this technique has its limitations for forecasting, it's great for seeing what cyclical content there is in your price data. Given this, you can detrend the data and select the ""correct"" length of trend-following indicators, whether they are averages, cycles or whatever (''filters'' to you engineers). Practically speaking, ...
Trading The Deutschemark's Gaps by John Sweeney
ARTICLE SYNOPSIS ...Trading The Deutschemark's Gaps by John Sweeney Talk about humiliation! Looking at a Deutschemark chart, I figured I'd trade with the direction of any gap for short small gains. The evidence showed I was 180 degrees wrong! I asked my computer to look at four years of mark prices and trade long if the opening price were above the previous day's range and short if it were below it. Ignoring my usual practice, I asked only what the best and worst move for each intraday trade would be. As you can see from Figure 1, there is very little difference between favorable (MFE) and unfavorable (MAE) pri...
What Is A Trend, Anyway? by John Sweeney
ARTICLE SYNOPSIS ...What Is A Trend, Anyway? by John Sweeney A reader reacting to the Settlement article in January on trading basics (Settlement, ""Trading simply: Minimizing losses,"" Stocks & COMMODITIES, January 1991) asked a key question: What is a trend? How do I identify it when I'm trading? (Personally, I use dual moving averages.) Most of us could think of a number of ways of defining trends, but it fascinates me what our analytical methods tell us about our own thinking. Typically, our thought of ""trend"" amounts to no more than drawing lines upward or downward. I think it should also encompass drawin...
Trading Simply: Minimizing Losses by John Sweeney
ARTICLE SYNOPSIS ...Trading Simply: Minimizing Losses by John Sweeney Richard Dennis is said to have said, ""There's a lot less to trading than meets the eye."" If so, he was correct. I like to describe an approach that has nothing to do with entry or exit, but everything to do with minimizing losses. I believe virtually any system that can identify successful trades can be profitable, given good loss control. Here's how. FUNDAMENTAL RULES Approach trading, particularly futures trading, as a zero-sum game. In such a game you can only win if someone else loses. Stock trading is not such a game, definitively, si...
Average Behavior by John Sweeney
ARTICLE SYNOPSIS ...Average Behavior by John Sweeney Let me speculate a little here. I know from experience that the half-cycle moving average generally runs along the tops of declining trends and along the bottoms of rising trends Ñ at least in the financials I follow. This behavior makes it possible to identify rich sells in declines and cheap buys in advances. But why does the average behave this way? Well, a moving average Ñ as we usually plot these things Ñ is actually plotted ahead of its ""centered"" position. Instead of plotting it in the center of the data periods that it averages, we plot it at the la...
"Stopping" A System by John Sweeney
ARTICLE SYNOPSIS ...""Stopping"" A System by John Sweeney Once you get hold of an idea, it's often tough to get rid of it, especially if it shows no promise whatever. It tugs at the back of the mind--what was it about the original insight? What was valid? What was bogus? I hate to admit that my subconscious could have produced a bummer. Closing last month's Settlement, I mused, ""Reasonable progress, but what next? Could something simple work profitably?"" My first thought on returning to the subject and reviewing Figures 1a and 1b was that the losses were pretty big. Those needed to be reduced in size, if not n...
Back To Averages by John Sweeney
ARTICLE SYNOPSIS ...Back To Averages by John Sweeney Getting back to the subject of averages skimming tops and bottoms of price curves (Settlement, STOCKS & COMMODITIES, February 1991), two readers, C. Skelley of Tucson, AZ, and John Ehlers of Goleta, CA, wrote to explain things to me. In that column, I tried to estimate roughly the effects on an average of lag and attenuation 2 --two factors that positioned the averages along the tops and bottoms of price curves. Skelley pointed out J.M. Hurst's Profit Magic of Stock Transaction Timing, appendix 4, wherein Hurst estimated the effects for a centered moving avera...
Market Analyzer PLUS
Shelly Natenberg: trader and teacher by John Sweeney
ARTICLE SYNOPSIS ...Shelly Natenberg: trader and teacher by John Sweeney Shelly Natenberg, a floor trader at the Chicago Board of Trade, is the author of Options Volatility & Pricing Strategies, Probus Publishing, Chicago, 118 North Clinton St, Chicago, IL 60606, (800) 426-1520 or (312) 346-7985. He has been teaching options for six years to professional and floor traders at the Chicago Mercantile Exchange and is currently active in giving seminars for many different exchanges. Shelly, Probus sent us your book for review. I've scanned through this thing, but I wanted to get some more background on you before di...
In This Issue by John Sweeney, Editor
Opening Position by John Sweeney, Editor
Opening Position by John Sweeney, Editor
Opening Position by John Sweeney, Editor
Opening Position by John Sweeney, Editor
Opening Position by John Sweeney, Editor
Winning on Wall Street by John Sweeney
ARTICLE SYNOPSIS ...Winning on Wall Street by John Sweeney Author: Martin Zweig Publisher: Warner Books 666 Fifth Avenue New York, NY 10103 Price: $20 This is a good book. It has a very reasonable approach to trading the market, or even individual stocks. It's a compendium of experience-generated trading guidelines and indicators which should well serve a new trader or someone with fewer than five years of market study. It's frank (""Had I stayed with it, I would have made 50 points ... But that's only a fantasy.""), focused (""There is nothing wrong with bonds. My specialty happens to be stocks."") and str...
Opening Position by John Sweeney, Editor
Opening Position by John Sweeney, Editor
Opening Position John Sweeney Editor
Opening position by John Sweeney, Editor
In This Issue John Sweeney, Associate Editor
Want to try something HOT!? by John Sweeney
ARTICLE SYNOPSIS ...CF-DM from J.C. Productions. By John Sweeney Some systems are so active it could give a guy a heart attack. J.C. Productions has put together one of the most active and breathtaking trading systems I've run across. Of course, I haven't seen everything in the world, but of the trading systems I have used, this one is unique. To begin with, like a lot of floor traders and senior traders, CF-DM often trades against the market. Oh, it has its ""I'm wrong"" points when it will turn around and go the other way, but generally it will hold onto a stance with bulldog tenacity until normal market osci...
In This Issue by John Sweeney, Associate Editor
In This Issue John Sweeney, Editor
Technical Analysis of the Futures Markets by John Sweeney
ARTICLE SYNOPSIS ...Technical Analysis of the Futures Markets by John Sweeney Author: John J. Murphy Publisher: New York Institute of Finance 70 Pine Street New York, NY 10270 (212) 344-2900 Price: $45 plus $2 shipping (U.S. only) Mr. Technician, John Murphy, has written a book to meet the need for a ""good solid text that [begins] at the beginning and [takes] the reader through most of the important areas of technical analysis as they [apply] to the futures markets in a logical, step-by-step fashion...."" This is a tall order, given the disparities in the many approaches taken to technical analysis....
In this Issue by John Sweeney, Associate Editor
SWEENEY AGONISTES by John Sweeney
ARTICLE SYNOPSIS ...SWEENEY AGONISTES by John Sweeney I must start off this issue with an apology. In the November 1986 issue, Frank Tarkany published evidence of non-randomness and serial dependence in Dow Jones prices. The Figure 7 we published, which estimated the trading windows at confidence levels from 95% to 99.5% was just a repeat of Figure 6. Below is the correct Figure 7. Frank's article, which defines the time horizon within which we may reasonably expect to define effective trading strategies, clearly deserved far better treatment. Once again, my apologies for this error. Recently revived is the Fou...
In This Issue John Sweeney, Associate Editor
In This Issue by John Sweeney, Associate Editor
Quick-Scans: Disk Technician Advanced
Quick-Scans: Macro-World Investor
In This Issue John Sweeney
Quick Scan: Essex Eurotrader
ARTICLE SYNOPSIS ...Adobe Acrobat Document...
In This Issue by John Sweeney,Editor
In This Issue by John Sweeney, Editor
The Professional Option Trader's Manual by John Sweeney
ARTICLE SYNOPSIS ...The Professional Option Trader's Manual by John Sweeney Author: David L. Caplan Publisher: Opportunities in Options P.O. Box 2126 Malibu, CA, 90265 Price: $70 (or $150 with a three-month subscription to Opportunities in Options) Despite its name, this is a book for beginners in the options world and particularly for futures traders. Professionals who might, indeed, be using the techniques discussed here will know them well enough to forego this review. Nevertheless, this book has value as an attempt to take the typical options trader past the usual pestholes (generally, buying options) an...
In this issue by John Sweeney, Associate Editor
Using Maximum Adverse Excursions for stops by John Sweeney
ARTICLE SYNOPSIS ...Using Maximum Adverse Excursions for stops by John Sweeney So often the key to success is the reverse of what we initially perceive. Young basketball players are fascinated with the shot, never suspecting the game is won with fast feet. Traders focus on winning signals when they should worry about when to admit they were wrong. Here it is: It's more important to know when your trade is bad than it is to know how to get into it. Said theoretically, ""minimize your maximum loss"" to win in the long run. In Stocks & Commodities October 1985 issue, I described how to determine stop placement qu...
Van K. Tharp, Ph.D.: Trader's Psychologist by John Sweeney
ARTICLE SYNOPSIS ...Van K. Tharp, Ph.D.: Trader's Psychologist by John Sweeney In purely technical terms, Van K. Tharp is a psychological researcher and counselor specializing in neurolinguistic programming. In the lay language of his clients, he's the specialist who helps them unearth and change their unprofitable states of mind. ""Why I got into psychology, I have no idea. It just interested me,"" says Dr. Tharp, recalling the first decisions that led him to a bachelor's degree in psychology from Beloit College and a doctorate in biological psychology from the University of Oklahoma. He found, however, that h...
In This Issue John Sweeney, Associate Editor
EPOCH by John Sweeney
Product Review: N-Squared Analytic Software by John Sweeney
Spectrum by John Sweeney
Optionvue Plus by John Sweeney
AIQ/Stock Expert Version 2.51 by John Sweeney
Market Maker by John Sweeney
Trading Tactics A livestock futures anthology by John Sweeney
ARTICLE SYNOPSIS ...Trading Tactics A livestock futures anthology by John Sweeney Editor: Todd Lofton Publisher: Chicago Mercantile Exchange Agricultural Commodity Marketing 30 South Wacker Drive Chicago, IL 60606 (312) 930-8213 (direct line to order the book) Price: $29.95 Trading Tactics will serve novice traders well as a survey of approaches to trading the livestock and meat futures. Those who have four or five years under their belts may find that some of the chapters are useful introductions to areas in which they have not spent time. Those who are not about to change their established, effective trading ...
Sweeney Agonistes by John Sweeney
ARTICLE SYNOPSIS ...Sweeney Agonistes by John Sweeney FEEDING FRENZY I opened my Journal today to find Kidder Peabody explaining ""What is a stock?"" on the editorial pages. My mother calls to find out if she should be going for ""higher returns in the market."" I've not been through a stock market feeding frenzy personally, but it seems to me a lot of ordinary people are thinking about throwing money at the stock market. Of course, through their mutual funds and retirement plans, they already have thrown a lot of money at the market. With cash inflows in both areas growing, fund managers seem to be sorely pres...
Marshall wave theory by John Sweeney
ARTICLE SYNOPSIS ...Marshall wave theory by John Sweeney Yet another ""wave"" is being added to the futures lexicon: the Marshall Wave. Originated by John Marshall (Box 2302, Naples, FL33939 (813) 263-3114. Marshall Wave is a complicated system for trading futures in heavily diversified portfolios of contracts. Results for one 18-commodity portfolio actually traded since Christmas 1984 show an initial slow rise followed by a skyrocket rise beginning in March, 1985 As Marshall says, ""Heavy diversification is the key to success in trading commodity markets."" A completed Marshall portfolio would have 36 commodit...
SWEENEY AGONISTES by John Sweeney
ARTICLE SYNOPSIS ...SWEENEY AGONISTES by John Sweeney OUR APPROACH - Believe it or not, there is method to our madness in publishing articles. Two series of articles going on right now are laying the groundwork for much more rigorous technical systems. Clifford Sherry's articles are extracting the statistical techniques developed in neurophysiology for processing neural signals and applying them for our readers to trading time series. These articles constitute an arsenal of tools to analyze and categorize--objectively--the markets with which you are working. It is important to me to know whether the market I'm f...
Want to try something HOT!? by John Sweeney
Essex Eurotrader by John Sweeney
Telescan Stock Evaluation Service by John Sweeney
C3KANSYS by John Sweeney
Volatility Breakout System Version 2 by John Sweeney
N-Squared Stock & Futures Analyzer-XL N-Squared Market Analyzer-XL by John Sweeney
Where to Put Your Stops by John Sweeney
ARTICLE SYNOPSIS ...Where to Put Your Stops by John Sweeney Stops protecting an initial entry position are like forward passes in football: Three things can happen to you and only one of them is good! 1)You can be taken out of a strong adverse move early (That's good). 2)You can be taken out of a losing trade at the worst possible price (That's bad). 3)You can be taken out of a winning trade by an interim fluctuation (That's catastrophic!). It's worth keeping in mind how these events come about, although the first is easy. Protection is what stops are supposed to provide. You have presumably set a stop where...
Novice Speculator Trading Plan by John Sweeney
ARTICLE SYNOPSIS ...Novice Speculator Trading Plan by John Sweeney When all the waiting is done and a new trade is signaled I can at last, get to work. However, it's not to burn up the wires to Chicago -- it's paperwork that needs to be done, before the job even starts! Actually, if things are working right, I'll be making out my trading plan a week to two weeks ahead of the trade. Then it gets a yellow paper clip and goes into my pile of daily logs awaiting execution--right next to the paper trades (white paper clips) and the trades under way already (red). Then, as I update the daily action, it's a simple matte...
MMS-Technical Research Money Market Services on Telerate by John Sweeney
ARTICLE SYNOPSIS ...MMS-Technical Research Money Market Services on Telerate by John Sweeney MMS -Technical Research Money Market Services on Telerate 490 El Camino Real Belmont, CA 94002 (800)227-7304 (415)595-0610 Price: $145 per month on already installed Telerate Widely renowned for its fundamental analyses of the government debt markets, Money Market Services also offers a technical analysis capability on Telerate. This is a service for institutional traders who are occupied with short-term trades or with the day-to-day jobs of taking, adjusting, or removing positions in institutional portfolios. It ...
Book Review: by John Sweeney
ARTICLE SYNOPSIS ...Book Review: by John Sweeney An Easy Course in Using the HP-12C and Other Financial Calculators by Chris Coffin and Ted Wadman Grapevine Publications, Inc. Corvallis, Oregon 97339 Price: $18.00 There seems to be something about financial calculations that boggles minds. I've taught finance courses for years and I'd guess that less than 20% of introductory students finish with a solid working knowledge of the fundemental equation. Now Messrs. Coffin and Wadman have written a book whose great value is not its explanation of a particular calculator, but its graphic presentation and detailed...
Financial Futures by John Sweeney
ARTICLE SYNOPSIS ...Financial Futures by John Sweeney When you're on top, don't believe it. There's nothing like winning to upset your equilibrium. You can win--and still lose. This article is a blow-by-blow account of two trades that were unrelated but, through me, managed to befoul each other. I still think back on these events with anguish. ""I was right!"" I keep telling myself. But in the end, I went wrong and, since this series is about novices' mistakes, I'll tell you the story. It may do you some good, it has me. Think back to late 1983. What's happening in the financial complex? Well, bonds are backing...
NOVICE SPECULATOR: My First System by John Sweeney
ARTICLE SYNOPSIS ...NOVICE SPECULATOR: My First System by John Sweeney As a novice trader, newly equipped with a price monitor, personal computer, and a fresh reading of Kaufman's Commodity Trading Systems and Methods, I was looking for some steady money in day-trading. In May of 1983 I was focused on T-Bills. I was afraid of what I called ""overnight risk"" in the financials especially given market antics over the money supply. I wanted a way to generate a small amount of money from the market on a regular basis. I could always, if successful, increase the number of contracts to get into more serious money. Tr...
Novice Speculator by John Sweeney
ARTICLE SYNOPSIS ...Novice Speculator by John Sweeney Bill Wyckoff suggested I write this--not personally, of course, since he's long out of print. He just noted in Wall Street Ventures and Adventures Through Forty Years that writing and publishing The Ticker was a terrific way of learning about his market (the stock market). I can take a hint. I decided to write about growth. After all, nine months of full-time speculation have given me more growing pains than I ever thought possible. It occurred to me that a careful documentation of my path might be valuable to others as well as to me. That this would probably...
NOVICE SPECULATOR: An Anti-COMMODEX System by John Sweeney
ARTICLE SYNOPSIS ...NOVICE SPECULATOR: An Anti-COMMODEX System by John Sweeney One observation I made when starting technical analysis was that there were relatively few bits of data to work with: price, volume, and open interest for a given futures contract and its related contracts and indices. Thus, any ""black box"" I constructed to forecast price action would be dependent on these inputs. I didn't want to repeat others' work (perhaps poorly), so my first thought was simply to find the advisory service which had best exploited each one of these variables--or a combination of them--and sign up. I figured years...
BOOK REVIEW: Commodity Market Money Management by John Sweeney
ARTICLE SYNOPSIS ...BOOK REVIEW: Commodity Market Money Management by John Sweeney Commodity Market Money Management by Fred Gehm John Wiley & Sons, 1983 One Wiley Drive Somerset, New Jersey. Price: $37.95 There are really two sides to trading: the idea and the execution. The idea to trade, we get from a system or from our imagination. The management and execution of our activity (goal-setting, planning, controlling) is an area few pursue. Commodity Market Money Management covers this neglected side of trading, and it's a long-overdue treatment. Properly seen, money management covers the entire program of t...
Mitronics IIC by John Sweeney
Tradeplan Mitronix IIC by John Sweeney
Compu/CHART by John Sweeney
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