Contents For DEC1998

  • Measuring Risk by Dick Stoken

    ARTICLE SYNOPSIS ...There are two common ways to measure performance: the standard deviation of returns and the Sharpe ratio. Here's a third way. How do we measure risk? In the financial industry, the generally accepted method is the standard deviation of returns. A low standard deviation indicates that expected returns vary little from average returns (suggesting less risk), while a high standard deviation suggests that expected returns vary greatly from average returns (implying more risk). The assumption is that stable past returns are less risky, yet many practitioners are uneasy with this concept. FACTORIN...

  • Plotting Trendlines by Stuart Evens

    ARTICLE SYNOPSIS ...Drawing trendlines may seem simple, but there is a right way and a wrong way to plotting trendlines. With so many different indicators, oscillators, and moving averages making up the science of technical analysis, it is easy to forget about the basics. One basic rule of most trading strategies is to always trade with the trend, and it follows that early recognition of a change in trend would be important. Therefore, it is imperative that we apply techniques to determine what the initial trend is so that we can either trade with it or be in a position to recognize when it has, in fact, change...

Quick Scan: A W.D. Gann Treasure Discovered

Quick Scan: Hit and Run Trading, The Short Term Traders' Bible

Quick Scan: Indigo Blue Chip Investment Strategies

Quick Scan: John Murphy Explains Market Analysis, Volume 1

Quick Scan: Market Center Platinuim Edition

Quick Scan: Martin Pring's Introduction to Technical Analysis on CD-ROM

Quick Scan: Option Advisor

Quick Scan: PowerAnalyzer from EZTrade

Quick Scan: Sharpen Your Trading Skills video

Quick Scan: Spec-Trader+ ver 1.0

Quick Scan: The Art of Short Selling

Quick Scan: The Essex Option Trading Seminar video

Quick Scan: The Four Biggest Mistakes In Option Trading

Quick Scan: The Ultimate Book on Stock Market Timing, Volume 1

Quick Scan: Trading in the Zone

  • The Global Trend: Mark Boucher by Thom Hartle

    ARTICLE SYNOPSIS ...When S&C first spoke to hedge fund manager Mark Boucher in 1996, he shared some of his techniques for analyzing the economy, picking stocks, and money management. See what he says this time. Refresh our memories with a bit of your history. Sure. I started trading stocks and commodities when I was in high school. My father died when I was nine, and he left me a trust fund. The manager of my trust was looking after my college fund. Unfortunately, the stock market fell apart starting in 1973 and the bank managing my trust stayed 100% invested during the bear market. My account lost about 90% o...

  • The MACD Profit Alert by Barbara Star, Ph.D.

    ARTICLE SYNOPSIS ...The moving average convergence/divergence (MACD) is a momentum indicator, and here, it's combined with pattern recognition to help you identify exit points for your system. It takes more than a good entry strategy to trade profitably. Many traders have experienced the exhilaration of being in a winning trade. Some of those same traders have also known the disappointment of watch-ing their profit turn into a loss when prices change. Knowing when to take profits is part of good money management. The moving average convergence/ divergence (MACD) profit alert presented here is a pattern that hel...

  • 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...

  • The Yen, Recursed by Dennis Meyers, Ph.D.

    ARTICLE SYNOPSIS ...Combine the exponential moving average with a trend estimate to identify changes in the direction of the market. The Japanese yen (JY) is a major currency traded worldwide by corporations, institutions, banks, commodity funds and futures traders. The yen is traded 24 hours a day and most of the world's largest banks make a two-sided market in the yen and its associated derivatives. Small traders, however, are constrained to trade the yen futures on the Chicago Mercantile Exchange (CME). The JY futures are traded from 7:20 am to 2 pm on the CME and from 2:30 pm to 7:05 am overnight Monday thr...

  • Trends And Moving Averages by Robert Nikifork

    ARTICLE SYNOPSIS ...How do you choose which length and type of moving average to use for chart analysis? Take a look. One commonly used technical indicator is the moving average (MA), which is plotted as a line connecting the average of closing prices over a lookback period. Moving averages may be used as trend indicators and to identify support and resistance levels and breakouts. The major complaint concerning moving averages is that they lag changes in the trend and thus lead to late signals. Because of that flaw and their widespread use, many articles have been written about moving averages. In most of the...

  • Using Normal Distribution For Writing Options by Mark Vakkur, MD

    ARTICLE SYNOPSIS ...How can you go about selecting the best strike price for writing an option? Perhaps no branch of knowledge has been as abused or misunderstood as statistics. Yet, without some grounding in basic statistical concepts, our ability to trade profitably is limited. Trading does not require a doctorate in mathematics, but mastering some basic fundamentals should help stack the odds in our favor. This is particularly helpful in developing an options trading strategy. Many trading software packages automatically generate statistics on any tradable or indicator; often included are mean, median, and s...

  • V16:12: Letters

    ARTICLE SYNOPSIS ...CUP WITH HANDLE Editor, The article "Cup-with-handle and the computerized approach" in your October 1998 issue was great, but authors Rick Martinelli and Barry Hyman certainly leave us in the dark as to the software that will enable us to use the ideas expressed there. Producing a valid system using the "Cup-with-handle" article as a basis would take a high level of programming knowledge. ACEEBO, via E-mail, Chagrin Falls, OH See Traders' Tips in this issue for software code implementing the cup-with-handle concept. Each month, Traders' Tips features programming code contributed by vendors ...