ARTICLE SYNOPSIS ...Analysis Of A Winning Trade by Gary Smith Winning traders tend to have something in common in at least one way, and that is the ability to make rapid trading decisions based on all the factors that affect the market. Here, private trader Gary Smith recounts a trade he made in November 1993 in stock futures and explains about the monthly, weekly, daily and intraday indicators that made that day an obvious buy. The world of successful real-time trading in stock futures differs markedly from that portrayed by theorists and academicians who have little or no hands-on experience as traders. These...
BY: Gary Smith
ARTICLE SYNOPSIS ...Breadth Stix And Other Tricks By Tushar S. Chande, Ph.D. Interested in advance-decline indicators? Well, you're in luck. Here, Chande reviews popular versions of these indicators and explains that since they are all derived from the same raw data, they have certain similarities. Chande explains how to derive a stochastic oscillator from market breadth data for market timing. The daily number of advancing issues (ADI) and the daily number of declining issues (DCI) are two items of data unique to the stock market. Technical analysts have developed a variety of ways to analyze this data. Strong...
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...Determining Leverage For Trading Systems by John Kean When your trading's going your way, you're apt to think about leveraging your trading based on your success in hindsight. However, leveraging can be a two-edged sword when it comes to profits and drawdowns. Admit it. Getting rich quick has a certain allure, but pursuing it as a goal seldom pays off. In the world of trading, fast or instant wealth plans usually involve the use of leverage far and above what is reasonable. Often, those at risk don't realize what's involved, and they don't realize that overleveraging an otherwise profitable ...
BY: John Kean
ARTICLE SYNOPSIS ...Gilbert Raff: From Medicine To Money Management by Thom Hartle Stocks & Commodities readers have suggested that we interview someone who did not start his or her career in the financial community but was successful enough in the markets to change careers midstream to trading. Gilbert Raff is one such individual. Raff, who was a cardiologist with a background in physics who has also written for Stocks & Commodities, left his medical career to manage money. S&C Editor Thom Hartle spoke with Gilbert Raff about why he changed careers, the similarities between assisting people in managing their he...
BY: Thom Hartle
ARTICLE SYNOPSIS ...Managing Risk With Options by Scott H. Fullman Ever get the feeling you're throwing good money after bad in your stock transactions? Ever feel your wallet getting lighter and lighter while it's still in your pocket because of what your stock's doing? Ever feel like selling it all and getting out of the market altogether? Well, fear not. Author and derivatives strategist Scott Fullman explains how to keep your wallet in place by using options. Imagine this scenario: You're going on a road trip, so your mechanic checks the car out to the tune of $550 to make sure it's in working order. But tr...
BY: Scott H. Fullman
ARTICLE SYNOPSIS ...Objectivity In Elliott Wave-Based Trading by D.W. Davies There's no doubt about it. Elliott wave analysis can thoroughly confuse the uninitiated due to all the choices at potential turning points in markets. Only the correct wave label will be verified by subsequent market action. Can additional technical tools help identify the most likely turning points? Newsletter publisher D.W. Davies explains his use of cyclical channel analysis and the commodity channel index with Elliott wave analysis to identify turning points in markets. Elliott wave analysis continues to trigger debate. On one side...
BY: D.W. Davies
ARTICLE SYNOPSIS ...CALCULATING AN 11-PERIOD CCI by Thom Hartle, Editor The commodity channel index (CCI) can be calculated using any lookback period chosen by the trader. The Excel spreadsheet shown in sidebar Figure 1 is an 1 l-period CCI for the Dow Jones Industrial Average. The first step is to calculate the daily typical price. This is the high, low and close added together and divided by three. This step is performed in column E....
BY: Thom Hartle
ARTICLE SYNOPSIS ...An explanation of Figure 2 from the article ""Analysis of a Winning Trade.""...
BY: Thom Hartle
ARTICLE SYNOPSIS ...SPREADSHEET ANALYSIS by Technical Analysis, Inc. Here's a simple way of setting up a return versus leverage analysis in a spreadsheet (sidebar Figure 1). Specifically, this is for Lotus 1-2-3, but you should be able to follow the example and apply it to any spreadsheet....
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...The Technical Basis Of Risk-Reward Analysis by Victor Sperandeo Author and money manager Victor Sperandeo offers details on his investment approach in this excerpt from his latest work, Trader Vic II: Principles of Professional Speculation. Here, Sperandeo explains the dos and don'ts of risk-reward analysis. Risk and reward are two of the most commonly used words on Wall Street, and yet, they are probably the most ill-defined. They represent concepts that few ever bother to spend time refining because "everyone knows what they mean." Risk is generally associated with losing money, and reward...
BY: Victor Sperandeo
ARTICLE SYNOPSIS ...The Trading Saboteur by Adrienne Laris Toghraie STOCKS & COMMODITIES contributor Adrienne Toghraie discusses how traders may not realize they are sabotaging their own success. Here's how to change that behavior. Adam's roller-coaster wins and losses followed a predictable pattern. When he would reach a certain level of success, he would somehow find a way to sabotage it and create losses for himself. At times, his trading was highly profitable because he had developed an intuitive feel for the markets. By backing up that intuition with a solid foundation of technical and fundamental knowledg...
BY: Adrienne Laris Toghraie
ARTICLE SYNOPSIS ...The Volatility Index by David C. Stendahl David Stendahl explains the volatility index (VIX), which measures volatility based on the implied values of eight Standard & Poor's 100 (OEX) options from which the weighted volatility index is derived when combined. The volatility index (VIX) is a measurement of the market's volatility. It specifically measures volatility based on the implied values of eight Standard & Poor's 100 (OEX) options that when combined calculate the weighted volatility index. The Chicago Board of Options Exchange (CBOE) has been using this index for five years and has on...
BY: David C. Stendahl
ARTICLE SYNOPSIS ...The c-Test by William Eckhardt We all know that thorough testing is the only way to determine whether a particular trading system or indicator is viable. William Eckhardt, the mathematician whose conversation with Richard Dennis helped bring about the Turtles, points out that before you spend time testing a method, you should first use a methodological test for dimensional coherency called the c-test. In most cases, the only way to evaluate trading indicators or systems is through diligent and rigorous testing. However, there are cases in which indicators, systems or even entire approaches ...
BY: William Eckhardt