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Article Archive For Peter Aan

  • Delayed Channel Breakout System by Peter Aan

    ARTICLE SYNOPSIS ...Delayed Channel Breakout System by Peter Aan Originator: Unknown; this is a variation of the simple channel breakout method. Rules and formula: The simple channel breakout is a tried-and-true trading system that has been used for years. The delayed channel is an interesting variation that has been discussed in print by several writers but is less well known. The rules are: Exit shorts and buy long on an intraday stop one point above the highest high of x days, with the most recent day being y days ago. Exit longs and sell short on an intraday stop one point below the lowest low of x days,...

  • A simple variation of the moving average by Peter Aan

    ARTICLE SYNOPSIS ...A simple variation of the moving average by Peter Aan General description: The Moving Average Direction System is trend-following; always in the market. Originator: Peter Aan Advantages: Profits from most significant trends; entry technique eliminates some false signals. Disadvantages: Must wait for close for entry signals; optimal stops somewhat loose for small traders; whipsaw losses in sideways markets. Rules and formulas: Uses a simple moving average (MA) of closing prices. To compute a 30-day MA, for instance, total up the closing prices for the most recent 30 days and divide that to...

  • Channel breakout by Peter Aan

    ARTICLE SYNOPSIS ...Channel breakout by Peter Aan Rules and Formulas: Channel systems use the highest and lowest prices in a series. Many possible trading variations can be employed and the one I tested involves finding the highest high and lowest low for the most recent n days. For instance, if you are using an 8-day channel you will examine the highs and lows for the most recent eight trading days to find the highest high and the lowest low, which are the reversal points. Buy/sell signals for an 8-day channel reversal are shown in Figure 1. This test entailed two separate computer runs . One required the mark...

  • Key reversal days by Peter Aan

    ARTICLE SYNOPSIS ...Key reversal days by Peter Aan Note the differences in this bearish pattern, however. Pattern A requires only a lower close than the previous day and does not require that the previous day's low be penetrated. Pattern B does require such a penetration, but does not require the close to be below the previous day's low . Pattern C requires a close below the low of the previous day. Of course, a simple chart pattern does not necessarily constitute a complete, viable trading system. What I have done in this study is attempt to isolate occurrences of the pattern at points that might become signif...

  • Parabolic stop/reversal by Peter Aan

    ARTICLE SYNOPSIS ...Parabolic stop/reversal by Peter Aan There are two primary variables for the system: the acceleration factor (AF) increment and the maximum acceleration value. In a long trade, for instance, the daily computation involves subtracting the current reversal stop from the most favorable point reached in the trade and multiplying this difference by the AF. This result is then added to today's stop to arrive at the reversal point for tomorrow. The general equation is: ... Every time the market moves into new highs, the AF is increased. As the AF increases, the stop, which will start out rather ""...

  • Simple moving average crossover by Peter Aan

    ARTICLE SYNOPSIS ...Simple moving average crossover by Peter Aan Editor's note:In this issue, Peter Aan reports on the first of his tests of different trading systems. He begins with probably the most widely known trading system. General Description: Trend following, always in the market. Originator: Unknown Rules and Formulas: The moving average crossover method calculates two moving averages, each based on a different number of days of trading data (Figure 1). When the shorter-term (fewer days) average crosses above the longer-term average from below, this is a buy signal for tomorrow's open. When the sho...

  • Volatility system by Peter Aan

    ARTICLE SYNOPSIS ...Volatility system by Peter Aan Rules: The volatility system uses a close-only reversing stop that is activated only on the close and trails behind the most favorable close attained in the trade. Volatility determines how closely the stop will trail the market. During volatile periods, the stop may lag considerably behind the market, and during quiet periods the stop will remain closer to recent market action. To follow the system, you must first measure the volatility. Wilder expresses volatility as the average true daily range over the last ""n"" days. True range refers to the actual range ...

  • Weekly high/low moving average by Peter Aan

    ARTICLE SYNOPSIS ...Weekly high/low moving average by Peter Aan Most moving averages of price are based on the closing price (see ""Simple moving average crossover,"" Stocks & Commodities, June 1989), but the weekly variation computes moving averages of the weekly highs and lows, based on the most recently completed calendar week. This is a very simple system; you only have to compute the average high and low once a week (Figure 1) and if, for instance, your current position is short, you will be concerned only with the high average. Both the high and low averages are plotted on a weekly bar chart (Figure 2). ...

  • Relative Strength Index by Peter Aan

    ARTICLE SYNOPSIS ...Relative Strength Index by Peter Aan Rules and Formulas: The formula for computing the Relative Strength Index (RSI) is well-known and computerized by dozens of commercial software packages. Briefly, to compute a 14-day RSI, you must first collect 14 days of closing prices. Looking at the daily net changes (DNC) from the previous close, add all of the up DNCs and divide by 14 to get the up average. Total the down DNCs and divide by 14 to get the down average. Divide the average up DNC by the average down DNC. Add 1 to this result and divide the new result into 100. Subtract this figure from...

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