ARTICLE SYNOPSIS ...Books For Traders The Winning Edge 4: Traders' & Investors' Greater Success (227 pages, $69.00 hardcover, 2002, ISBN 0934380821), by Adrienne Laris Toghraie, published by Traders Press, Inc. Okay, you have a good trading system. It gives you signals that prove profitable more than 75% of the time. Your money management program keeps your overall risk to a minimum. So why aren't you making lots of money? Perhaps what is lacking is the proper emotional outlook. The mental and emotional arena is the focus of this book. Toghraie's belief in repeating the basics of good trading practices over and...
BY: Technical Analysis, Inc.SUBJECT: Books for Traders
ARTICLE SYNOPSIS ...Calendar Spreads by Joe Corona and Bill Winger Look at the different ways you can use this strategy. The calendar spread, also known as the time spread or the horizontal spread, is so called because it exploits differences in time value between options. Time value is the difference between the option's market price and its intrinsic value. The magnitude of the time value depends on a number of variables, including the strike price of the option, the price of the underlying, and the implied volatility of the option. The calendar spread is composed of two options of the same type (both puts o...
BY: Joe Corona and Bill WingerSUBJECT: Options
ARTICLE SYNOPSIS ...Conquer The Crash by Robert R. Prechter Jr. You Can Survive And Prosper In A Deflationary Depression Publisher: John Wiley & Sons, www.wiley.com Author: Robert R. Prechter Jr. It is hard to ignore the idiosyncrasies when studying Elliott wave theory. As I geared up for this review of Conquer The Crash, the latest book from Elliott wave's chief contemporary practitioner, Robert R. Prechter Jr., I found myself wandering through an earlier work of his: The Wave Principle Of Human Social Behavior And The New Science Of Socionomics, published in 1999. Paging through the foreword, I encountered ...
BY: Robert R. Prechter Jr.SUBJECT: Book Review
ARTICLE SYNOPSIS ...Designing Volatility Breakout Systems by Paolo Pezzutti Interested in improving your system's profit factor? Here are some suggestions. The principle of range expansion/contraction was first studied and analyzed by Toby Crabel in Technical Analysis of STOCKS & COMMODITIES. According to Crabel, the market oscillates between contractions and expansions. When the market moves between areas of equilibrium (the balance of supply and demand), it does so quickly through range expansion days. This forms the premise of volatility breakout systems. Since traders focus on these short-term range expansi...
BY: Paolo PezzuttiSUBJECT: System Design
ARTICLE SYNOPSIS ...Evaluate Your Risk by Simone Vine To accurately determine risk, you must filter classical statistical factors. How, you ask? With a personal risk profile. In classical statistics, risk is defined as the standard deviation from the mean. To some extent, this basic concept governs the minds of most decisionmakers, including investors: A decision in a given situation carries a risk equal to the deviation from the average person's decision. Of course, it is anybody's guess as to what the average person's decision might be, so you cannot be certain how far away you are from the average. Thus, the...
BY: Simon VineSUBJECT: Trading Psychology
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile CALENDAR STRATEGY How dependent is a calendar strategy on sideways movement? A sideways-moving market is important, but not as important as the volatility of the options that are being used to create the calendar spread. The best calendar spreads I have seen in the markets have two important traits: 1. The options volatility of the month sold is higher than the month bought. This is referred to as volatility skew. Since volatility is the mean reverting, these usually come back together. . ....
BY: Tom GentileSUBJECT: Explore Your Options
ARTICLE SYNOPSIS ...If Beta Doesn't Work, What Does? by William G.S. Brown, Ph.D. Beta not doing it for you? Try the price regression line. Conventional wisdom says that a stock (or stock fund) having a beta close to 1.0 will follow the market. Is that true? This piece of common knowledge can easily be verified by going to a stock or fund screen and searching for investments with beta greater than 0.99 but less than 1.01 and a five-year growth between -90% and +200%. In Figure 1 you will find the unusual values I came up with when I used the stock screener at www.hoovers.com. If a stock with a beta of 1.00 fol...
BY: William G.S. Brown, Ph.D.SUBJECT: Statistics
ARTICLE SYNOPSIS ...Interview: Bernie Schaeffer by Jayanthi Gopalakrishnan Bernie Schaeffer, chairman of Schaeffer's Investment Research, is also the editor of Bernie Schaeffer's Option Advisor. The Market Technicians Association awarded him its Best of the Best award in sentiment and psychological analysis in 1997, and he has written on the subject, The Option Advisor: Wealth-Building Techniques Using Equity And Index Options, published by John Wiley & Sons. What's he got to say about the market these days? STOCKS & COMMODITIES Editor Jayanthi Gopalakrishnan spoke to Schaeffer via telephone on August 12, 2002. ...
BY: Jayanthi GopalakrishnanSUBJECT: Interview
ARTICLE SYNOPSIS ...Letters To S&C FAST FOURIER TRANSFORM Editor, The recent article "Fast Fourier Transform" by Amy Wu in the July 2002 STOCKS & COMMODITIES was an informative article. The last two sentences stated: "...many aspects, such as phase, are being discounted to fit the type of data in use. [I agree.] Still, interpreted correctly, FFT can greatly enhance your accuracy on other more fitted indicators." We need a followup article telling us what these other indicators are -- such as stochastics, MACD, RSI and others -- and how to select the best parameters for them using the FFT results. LEE S. AKIN,...
BY: Technical Analysis, Inc.SUBJECT: Letters To S&C
BY: Jayanthi GopalakrishnanSUBJECT: Opening Position
ARTICLE SYNOPSIS ...Q&A by Don Bright TRADING DISCIPLINE I am a new proprietary trader about seven months in. I have started moving up the learning curve, but my biggest problem is discipline. I have great entries and I feel I have developed an intuition for when something is going to move; my problem is holding on to money and sitting on my losses. For example, today I had three great trades. My problem began when I traded a stock for the fourth time and was up another 0.25 when it started to rally against me. I could have easily gotten out with a profit but I decided to sit a little, and ended up giving back ...
BY: Don BrightSUBJECT: Q&A
ARTICLE SYNOPSIS ...The RSI Smoothed by John F. Ehlers Here's how you can enhance the performance of the RSI. Smoothing an indicator usually means a tradeoff between the amount of smoothing you desire and the amount of lag you can stand. In this article I will show you how the relative strength index (RSI), an indicator developed by J. Welles Wilder, can be smoothed and enhanced with a minimum of lag penalty. RSI DEFINED J. Welles Wilder defined the RSI as RSI = 100 ? [100 / (1 + RS)] where RS = (closes up) / (closes down) or = CU / CD RS is shorthand for relative strength. CU is the sum of the difference...
BY: John F. EhlersSUBJECT: Indicators
ARTICLE SYNOPSIS ...The Titans Of Technical Analysis by David Penn A not-so-random walk through the history of charting the markets. Many years ago, a poet friend who was editing a collection of contemporary verse noted to me that "about half the working poets in America are going to be really upset about this anthology. Of course, the other half of them are in the book. ?" Such sentiments came to mind when I embarked upon the task of highlighting the few among the many whose contributions to the field of technical analysis have made them what STOCKS & COMMODITIES has designated the "Titans Of Technical Analys...
BY: David PennSUBJECT: Real World
ARTICLE SYNOPSIS ...The Truth About Trendlines by Thomas Bulkowski Many of the rumors about trendlines are true. Find out what the facts are here. Is it true that the longer a trendline is, the more significant it becomes? The answer is yes, but this in turn raises other questions. How long should the trendline be to qualify? What is meant by significant? While researching my book Trading Classic Chart Patterns I found lots of platitudes, but little substance. No one seemed to knowhow well trendlines behaved, or at any rate no one was telling. I decided to find out. A BRIEF REVIEW In case you are unfamiliar w...
BY: Thomas BulkowskiSUBJECT: Classic Techniques
BY: Technical Analysis, Inc.SUBJECT: Traders' Resource
ARTICLE SYNOPSIS ...Traders' Tips Here is this month's selection of Traders' Tips, contributed by various developers of technical analysis software, all to help readers more easily implement some of the strategies presented in this issue. TradeStation code for: ""The RSI Smoothed"" by John Ehlers, ""Volatility Breakout Systems"" by Paolo Pezzutti. MetaStock code for: ""The RSI Smoothed"" by John Ehlers, ""Volatility Breakout Systems"" by Paolo Pezzutti. eSignal code for: ""The RSI Smoothed"" by John Ehlers. AIQ code for: ""Volatility Breakout Systems"" by Paolo Pezzutti. Wealth-Lab code for: ""The RSI Smoot...
BY: Technical Analysis, Inc.SUBJECT: Traders' Tips
ARTICLE SYNOPSIS ...Website Review: OptionSites.com by Jayanthi Gopalakrishnan Trying to find good options-related sites on the Internet is -- as I discovered -- a time-consuming task. Site after site contained nothing but proprietary information with testimonials and promising triple-digit returns. I was relieved when I finally came across OptionSites.com, which, not surprisingly, listed quite a few other option sites. The simplicity of the website's design and its clarity encouraged me to stop and take a more detailed look....
BY: Jayanthi GopalakrishnanSUBJECT: Websites For Traders
ARTICLE SYNOPSIS ...Working Money: Beat The Markets With McNeel And Lynch by James Maccaro Two viewpoints, both resulting in spectacular gains. W. McNeel was one of the leading writers about the stock market during the boom years of the 1920s. From 1912 to 1922, he was the financial editor of the respected Boston Herald, and in 1922 he started McNeel's Financial Service, an early stock market newsletter. As the bull market of the 1920s got into high gear, investment newsletters became popular and McNeel's venture prospered. He advertised it as the newsletter for "An Envied Aristocracy of Successful Investors."...
BY: James MaccaroSUBJECT: Money People
ARTICLE SYNOPSIS ...Working Money: The Andrews Pitchfork Vs. Speed Resistance Lines by S. Yamanaka Can you ever have too much support? One of the pitfalls of using technical analysis to gauge stock movement is that it often depends on whether a stock is trending. In the early stages of a trend, there is often a hotbed of contention, especially now in the erratic, often seemingly psychotic movement of stock prices, whether or not a stock is beginning a new trend. So there would be an advantage in using a system that gets you into the market after a trend has been established. The question then becomes, if you've...
BY: Sharon YamanakaSUBJECT: The Chartist
ARTICLE SYNOPSIS ...Working Money: Using Breakdowns by Len Yates Breakdowns are handy patterns to keep an eye on when you're trading. Pattern trading is one of the most interesting ways to trade the markets. And one of the most reliable patterns to trade is a breakdown, which occurs when a stock experiences a swift selloff. Humans have a tendency to trickle into things -- as in an entry into a market -- but rush out in a stampede -- as in an exit from a tumbling market. Sometimes, a news announcement or a rumor is all it takes to trigger a ministampede when the news is perceived to be more significant than it real...
BY: Len YatesSUBJECT: The Chartist
BY: Tim W. Wood, CPASUBJECT: Market Update