Contents For
JUL1998
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A Volatility Trade In Gold by David S. Landry
ARTICLE SYNOPSIS ...A Volatility
Trade In Gold
by David S. Landry, CTA
Large moves often follow low-volatility environments. Here's
one method of combining volatility indicators and pattern
recognition along with trend-following methods to capture a
breakout in the 1997 gold futures market.
A simple review of a market chart
will illustrate that markets trade
in periods of lackluster sideways
price action and then
abruptly adjust to new conditions
by trending to another price
level. The goal of many traders
is to trade these short-term trends
profitably. Technical analysis
can aid you in identifying potential tr...
BY: David S. LandrySUBJECT: Real World
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Barrier Stops And Trendlines by J. Katz, Ph.D., and D. McCormick
ARTICLE SYNOPSIS ...Barrier Stops
And
Trendlines by Jeffrey Owen Katz, Ph.D., and Donna L. McCormick
Last time, Katz and McCormick measured the performance
of using this strategy as an exit rule. This time, we examine the
effect of eliminating entries that would have been taken in
instances where the trendline stop was farther than $1,250
away from the entry price.
In recent articles, we experimented
with exits to determine
whether simple exit strategies
can improve the performance
of a system with essentially
random trade entries. We have
explored a strategy that involved
a profit target exit, a
stop-loss exit...
BY: J. Katz, Ph.D., and D. McCormickSUBJECT: Money Management
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Channel Analysis by Thom Hartle
ARTICLE SYNOPSIS ...Channel
Analysis by Thom Hartle
A market does not move in a straight line; instead, its
movement travels across the chart in peaks and
valleys, forming a channel in the direction of the
trend. Early identification of the channels can give
you important information, including that the trend
has changed direction, what the profit objectives are
and risk points.
As computers and technical
analysis software become
more and more sophisticated,
there is an increasing
reliance by traders on using
indicators for trading signals.
This focus on using
technical indicators for developing
trading systems...
BY: Thom HartleSUBJECT: Classic Techniques
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On System Development; Part 2 by Mark Vakkur, M.D.
ARTICLE SYNOPSIS ...On System
Development Part 2
by Mark Vakkur, M.D.
Last month, this author introduced the initial steps that
someone, novice or veteran, should take when developing a
stock market system. This time, he explains the final steps.
Last time, I posited that successful
trading consists of systematically
putting the odds in your
favor. Since our only guide to
the future is the past, I showed
how the trader must find historical
relationships and apply
them to the markets going forward.
I outlined four steps.
First, historical data must be
gathered; I used monthly closing
data of the Standard & Poor'...
BY: Mark Vakkur, M.D.SUBJECT: System Design
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Predicting The Market With Earnings Per Share by Randall J. Covill
ARTICLE SYNOPSIS ...Predict The Market With
Earnings Per Share
by Randall J. Covill
Take a look at the relationship between changes in earnings
per share for each year and the performance of the market for
the following year. Is there a correlation?
One of Benjamin Graham's investment
classics, The Intelligent
Investor, has a chapter in
which he discusses a comparison
of the change in average
stock earnings and the change
in average stock prices. Intrigued,
I decided to graph and
calculate a linear correlation
coefficient for the actual level
in average stock earnings for
the Standard & Poor's 500 versus the ac...
BY: Randall J. CovillSUBJECT: Trading Techniques
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Secure Fractional Money Management by L. Zamansky, Ph.D., and D. Stendahl
ARTICLE SYNOPSIS ...Secure Fractional
Money Management
by Leo J. Zamansky, Ph.D., and David C. Stendahl
Here's how to find a new fractional value of capital to invest
in every trade to maximize returns subject to a constraint on
drawdown, using a variation of the optimal f money management
strategy.
Over the past four years, we have
developed and applied evaluation
software to trading systems
that use money management
techniques and have studied
the impact of these techniques
on trading systems. A
new money management strategy
called secure f is one of the
outcomes of that work, and
here, we will demonstrate ho...
BY: L. Zamansky, Ph.D., and D. StendahlSUBJECT: Money Management
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Stocks & Commodities V16:7: Letters
ARTICLE SYNOPSIS ...The editors of S&C invite readers to submit their opinions and information on subjects
relating to technical analysis and this magazine. This column is our means of communication
with our readers. Is there something you would like to know more (or less) about? Have you
run across trading techniques, services or products that have proved useful? Tell us about
it. Without a source of new ideas and subjects coming from our readers, this magazine would
not exist.
Address your correspondence to: Editor, STOCKS & COMMODITIES, 4757 California Ave.
SW, Seattle, WA 98116-4499, or E-mail to editor@Trad...
BY: Technical Analysis, Inc.SUBJECT: Letters To S&C
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Traders' Tips
ARTICLE SYNOPSIS ...Here is this month's selection of Traders' Tips, contributed by
various developers of technical analysis software to help readers
more easily implement some of the strategies presented. Internet
users will also find these and some previous Traders' Tips on our
home page at http://www.traders.com.
WINDOW ON WALLSTREET
In ""A volatility trade in gold"" in this issue, David Landry
describes several volatility formulas. These formulas can be
implemented in Window On WallStreet Day Trader and Window
On WallStreet Professional Investor.
In Window On WallStreet, begin with any open chart on your
s...
BY: Technical Analysis, Inc.SUBJECT: Traders' Tips
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Triangles by David Vomund
ARTICLE SYNOPSIS ...Triangles
by David Vomund
Stock prices tend to move in trends. When an existing trend
ends, a classic technical pattern known as a triangle often
develops. Here's how to make use of this pattern in the
stock market.
When an existing trend is in the
process of ending, there is typically
some backing and filling,
during which a classic
technical pattern referred to as
a triangle often develops.
There are many variations of
this pattern, but here, we will
concentrate on two variations:
the right triangle and the symmetrical
triangle.
THE RIGHT TRIANGLE
The right triangle pattern exhibits a ser...
BY: David VomundSUBJECT: Classic Techniques
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Truth In Futures: John Hill by Thom Hartle
ARTICLE SYNOPSIS ...Truth In Futures:
John Hill
John Hill started out in the business of trading commodities in a most
remarkable way when he managed to run $1,000 up to $80,000 in a matter of
three months - and then managed to lose all but $5,000 in a single day. Some
traders would hang up their charts after that, but Hill was determined to
understand what he'd done wrong. It took years of study, but he figured it out.
STOCKS & COMMODITIES Editor Thom Hartle interviewed Hill via telephone on
April 23, 1998, asking him about Futures Truth, the publication he has
produced since the 1970s; why novices could benefi...
BY: Thom HartleSUBJECT: Interview