ARTICLE SYNOPSIS ...TRADING TECHNIQUES A Price- And Volume-Based System Traders often use moving averages of just price to signal trends. Here's a moving average system that uses price and volume for trading signals. by Alex Saitta N ot a month goes by that a trading magazine or technical analysis journal doesn't publish an article introducing a new and more sophisticated technical idea or tool. As a result, there's a widespread assumption that old ideas and simple tools are no longer applicable to today's markets - an erroneous assumption. The drive for ever-more sophisticated concepts and indicators notwit...
BY: Alex Saitta
ARTICLE SYNOPSIS ...DERIVATIVES Covered Call Writing Here's a primer on writing options to boost return on investment. by Steven P. Schinke, Ph.D. Options derivatives for stocks and commodities come in two types: One is bought and sold in transactions between two parties directly, while the other is traded on exchanges. The first, over-the-counter (OTC) options, are often complex in their mechanisms and pricing, and so are negotiated between institutions with counterparty backing. Because of their singular properties, OTC options are usually not transferred. In contrast, exchange-traded options are priced in...
BY: Steven Schinke, Ph.D.
ARTICLE SYNOPSIS ...Letters To S&C TECHNICAL ANALYSIS IN AUSTRALIA Editor, I received my November 1996 issue of STOCKS & COMMODITIES magazine and noted the addresses of the various professional organizations in the Letters to S&C column. Missing from the list was the Australian Technical Analysts Association, GPO Box 2774, Sydney, NSW 2001, Australia. President: Merril Armstrong (+61-2-2310011); public relations: Tony Reeves (+61-2-299-7858). The fax number is +61-2-6347772. We have branches in each state, a fantastic monthly newsletter, monthly meetings and annual conferences. We extend an invitation to any m...
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...TRADING TECHNIQUES Measuring System Performance Want to improve the evaluation of your trading systems? Here's a new performance measure that uses some statistics to measure profitability through time. by Lars N. Kestner Starting with an idea and developing a trading system is a relatively simple and straightforward process. Because it is a simple process, it is possible to create numerous systems in a short time. Since trading is a profit-oriented process, our interest lies in the performance of the best systems created, not the number of systems created. How, then, can performance be de...
BY: Lars N. Kestner
ARTICLE SYNOPSIS ...INDICATORS New Highs And New Lows The number of new highs and new lows is a classic stock market indicator, and here are ways that this market statistic can be modified to build a number of market indicators. By Tim Hayes, CMT Market breadth and the health of the broad market as a whole can be measured in many ways. You can use advance/decline lines and other indicators based on the number of advancing and declining stocks. You can use indicators based on advancing and declining volume. And you can use the number of stocks reaching new highs and new lows. All are very useful, but let's foc...
BY: Tim Hayes
ARTICLE SYNOPSIS ...INDICATORS AND FORMULAS Bollinger bands are channel lines plotted two standard deviations above and below a 20-day simple moving average. A 20-day lookback period is also used for the standard deviation measurement. The formula for standard deviations is as follows: ... Standard deviation measures the difference between each day in the lookback period and the moving average, squares the differences so that they are all positive values, sums the differences and divides by N . The square root is then calculated of this ratio....
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...MAXIMIZING YOUR ZEN MEDITATION EXPERIENCE Here are eight pointers to help you make the most of your meditation exercise....
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...THE K-RATIO TRADESTATION CODE The K-ratio system includes no buy or sell signals. When run simultaneously with other trade-generating systems, it prints the K-ratio of the trade-generating system to the print log window. System Name : K-ratio VAR: Observation(0), Count(0), SumXY(0), SumX(0), SumY(0), SumXSqr(0); VAR : Beta0(0), Beta1(0), SumResidSqr(0), SigmaRegress(0), StandardErrB1(0); VAR: StandardErrB1Denom(0), YProjected(0), KRatio(0); ARRAY: Equity[5000](0); Observation = Observation+1; Equity[Observation] = NetProfit + OpenPositionProfit; ......
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...STATISTICS The Knight-Ridder Crb Index The Knight-Ridder-Commodity Research Bureau Index - the CRB to you and me - has been updated to reflect today's commodity markets. Here's an explanation of the changes to this industry barometer. by Raymond T. Murphy The Knight-Ridder-Commodity Research Bureau (CRB) Index has been the premier barometer of commodity prices since 1956, tracking tradables such as wheat and corn, crude and heating oil. Over the years, the index has evolved into a comprehensive commodity benchmark covering a wide range of actively traded commodity futures contracts. As fu...
BY: Raymond T. Murphy
ARTICLE SYNOPSIS ...INTERVIEW Top Down Investing with S&P's Sam Stovall Some wander onto Wall Street by mistake, while others seem destined to find their way there. Sam Stovall is a member of Standard & Poor's Investment Policy Committee, editor of S&P's Industry Reports and author of Standard & Poor's Guide to Sector Investing. Stovall spoke with STOCKS & COMMODITIES Editor Thom Hartle on December 20, 1995, via telephone interview about market cycles, sector investing and relative strength, among other topics. I had all this data on industry indices, and anybody can find out when economic constractions and ex...
BY: Thom Hartle
ARTICLE SYNOPSIS ...TRADERS' TIPS TRADESTATION Alex Saitta's simple method of confirming a price cross of the moving average with an increase in volume (""A price-and volume-based system,"" elsewhere in this issue) is equally simple to test with both SuperCharts and TradeStation. The code below should be written in the quickeditor. Type the corresponding line of code into the condition box of the editor and select the enter or exit on close order; be sure to define the two inputs. The first input of length will have a default of 20 to represent the length of the moving average, while the second input is length2...
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...NOVICE TRADER Trendlines As A Technical Tool Applying trendlines to charts is a classic form of analysis. Here are some of the basics of using this tool. by Joe Luisi Trendlines, which are one of the most basic techniques in chart analysis, are lines drawn to portray market direction and even project where the market is going. A trendline? connects either a series of highs or a series of lows in a trend. It can represent either support?, as in an uptrend line, or resistance?, as in a downtrend line. (Consolidations are marked by horizontal trendlines.) Trendlines can provide visually orie...
BY: Joe Luisi
ARTICLE SYNOPSIS ...NOVICE TRADER Developing A Trading System On the road to using technical analysis for trading, developing a trading system is a logical step to take along the way. Here are some guidelines to develop a basic system. by Greg Morris Beginners in the art of technical analysis using indicators should not recoil at the mention of a trading system, because a trading system is built upon one or more indicators used in a systematic fashion. The advantage is the user can take the indicators beyond a seat-of-the-pants approach, develop some rules and test applications. Here, we will deal with the d...
BY: Gregory L. Morris
ARTICLE SYNOPSIS ...TRADING PSYCHOLOGY Zen And Emotional Control This occupational psychologist explains that trading combines market knowledge and emotional discipline and that through meditation techniques, a trader can develop better emotional control. by Richard D. McCall Traders in the futures and commodities markets can probably empathize with Mike Hoban, an aspiring basketball player from Strongsville, OH. In early 1995, fate dealt Mike an opportunity when his name was drawn from among millions of other contestants in the Footlocker ""Million-Dollar Shot"" sweepstakes. Winning the drawing entitled the...
BY: Richard D. McCall