ARTICLE SYNOPSIS ...Buy-And-Hold Comparisons To Evaluate Stock Trading by Jack Schwager Benchmark comparisons are a standard technique for the performance of a trading system. One particular benchmark is the buy-and-hold approach. This noted market analyst looks at the steps to using it. Just because a trading system makes money in the stock market doesn't mean it's a good system. After all, it is possible for a system to do well but still fall short of the results that could have been realized by a simple buy-and-hold approach. The key question in testing a stock market system is: How does the system compare w...
BY: Jack SchwagerSUBJECT: New Techniques
ARTICLE SYNOPSIS ...How Smooth Is Your Data Smoother? Traders use moving averages to remove random fluctuations from price data. Some moving averages work better than others. Take a look. In 1995, I wrote an article for STOCKS & COMMODITIES presenting some of the properties of three methods for removing random noise from financial time series. I discussed the lags between the turning point of a simple test data sequence and the turning points of three types of moving averages. I showed that for equal moving average periods, the three moving averages had markedly different lag characteristics. Specifically, for ea...
BY: Patrick E. LaffertySUBJECT: Trading Techniques
ARTICLE SYNOPSIS ...Keeping Investing Simple Doug Fabian Of Fabian Investment ResourcesFor mutual fund investors, one of the bestknown newsletters is Fabian Investment Resources, previously known as Telephone Switch Newsletter. It was begun by financial planner Dick Fabian, whose 1976 book, How To Be Your Own Investment Counselor, triggered enough response for him to start the newsletter the following year. Since then, the newsletter has prospered, with Fabian's son, Doug, later picking up the reins and expanding its horizons. Editor Thom Hartle talked to Doug Fabian via telephone on March 24, 1999, asking him ab...
BY: Thom HartleSUBJECT: Interview
ARTICLE SYNOPSIS ...Pseudo Securities For Technical Analysts As you develop your analytical skills, you probably pick a favorite market to study. So depending on the market, you could come to different conclusions about the value of different techniques of analysis. With that in mind, what if you used artificial data with distinct properties as a basis for learning the attributes of technical methods? In this, the first of a threepart series, we explore the notion of using pseudo securities. The objective of technical analysis is to locate securities with the necessary volatility to make potentially profitable ro...
BY: Charles E. MillerSUBJECT: New Techniques
ARTICLE SYNOPSIS ...Studying Risk Behavior Taking risk and taking losses are two different parts of trading. Here's how to manage the emotional side of risktaking. by Ari Kiev, M.D. If you think about it, the markets are a natural laboratory for studying risktaking behavior, especially decisionmaking in a volatile, unpredictable, and uncertain environment. It is the given task of the trader to reduce risk by identifying patterns in sectors, companies in specific as well as the marketplace in general. This can be an extremely difficult task for even the most sophisticated of traders as we have seen in the past ye...
BY: Ari Kiev, M.D.SUBJECT: Trading Psychology
ARTICLE SYNOPSIS ...The Euro's Weekly Cycles As a followup to last month's introduction to the newborn European currency, here's what may happen to the Euro. n January 4, 1999, the 40odd years of planning and 10 years of political and economic work paid off as the Euro began trading in a calm, orderly manner. But what's the bottom line? How will improved efficiencies from a single currency affect Europe's competitiveness? When will the Euro's status as a reserve currency begin to shift demand away from US dollars? The brandnew European Central Bank (ECB) is determined to establish its credibility. Europeans, on t...
BY: Walter Bressert and Doug SchaffSUBJECT: Market Timing
ARTICLE SYNOPSIS ...?METASTOCK In the May 1998 issue of STOCKS & COMMODITIES, a Traders' Tip provided MetaStock formulas for calculating support and resistance levels and the WRO and WSO support and resistance oscillators. The Traders' Tip was based on my article, "Automated Support And Resistance," also in that issue. Since then, I've received many E-mail messages from STOCKS & COMMODITIES readers about it. ?METASTOCK "How Smooth Is Your Data Smoother?" by Patrick E. Lafferty in this issue reviews different types of moving averages, including a sine-weighted moving average. The sine-weighted moving average can ...
BY: Technical Analysis, Inc.SUBJECT: Traders' Tips
ARTICLE SYNOPSIS ...ELECTRONIC DAYTRADING Editor, As a long-time subscriber to your magazine, I would like to ask why I haven't seen any articles on electronic or online trading. That being the case, could you recommend some books or other sources of information so that I can get a better understanding of this new means of trading stocks? ROBERT CAMPBELL, via E-mail In the May 1999 STOCKS & COMMODITIES, we presented an interview with David Nassar, author of How To Get Started In Electronic Day Trading. The other recent article was Mark Conway's "Daytrading Stocks" in our August 1998 issue.--Editor BOLLINGER BANDS...
BY: Technical Analysis, Inc.SUBJECT: Letters To S&C
ARTICLE SYNOPSIS ...Yield Spread Tunnels Fixed income investors have an array of instruments in which to invest. They can choose from an assortment of maturities as well as credit quality. Here's a simple technique with which to identify opportunities in the fixed-income market. One common technique for assisting fixed-income investors and traders in their decision making is the analysis of yield spreads. A yield spread is the difference in yield to maturity (or that discount rate which equates the present value of a bond to its market value) between two bonds. The spread is expressed in terms of basis points (e...
BY: Lorne W. RaeSUBJECT: New Techniques