ARTICLE SYNOPSIS ...Commodity Portfolios by DR. BASIL VENITIS The techniques introduced here are a pre-requisite for any serious commodity investor who does not play the game just for the fun of it. They are the guidelines that separate the men from the boys. The main reason futures traders lose money is poor portfolio management. Some economists subscribe to the random walk theory for commodities, i.e., they believe that it is impossible to forecast prices. Even when this extremely cynical point of view is considered, it is still possible to profit greatly in a consistent way by controlling the risk and proper ...
BY: DR. BASIL VENITIS
ARTICLE SYNOPSIS ...Commodity Spreading: An Art of Price Differentials by DR. BASIL VENITIS A Commodity Spread or Straddle is a combination of a long position and a short position in related commodity futures. It is a sort of arbitrage between futures. (The same way hedging is a sort of arbitrage between spot commodities and futures.) Four basic types of spreads are the following: 1. The arbitrage between different delivery months of the same commodity is called an interdelivery spread. 2. The arbitrage of the same commodity in different exchanges is called an intermarket spread. 3. Arbitrage of different bu...
BY: DR. BASIL VENITIS
ARTICLE SYNOPSIS ...Crooks, Cranks and Honest Citizens: Commodity Conferences by FRED S. GEHM/ Technical Analysis staff writer I wanted to title this column ""How I Spent My Summer Vacation."" But the conferences were in Chicago and no reasonable individual would ever believe that another individual, reasonable or not, would go to Chicago for a vacation. Especially in the summer. Be that as it may, the National Association of Futures Trading Advisors (NAFTA) and Managed Account Reports (MAR) held conferences in Chicago this summer. Attending these conferences is either A) absolutely essential or, B) a complete ...
BY: Fred S. Gehm
ARTICLE SYNOPSIS ...Further Analysis of Triple Exponential Smoothing by ANTHONY WARREN, Ph.D./Technical Analysis staff writer In the July issue of Technical Analysis, J. Hutson presented a method of using triple exponential smoothing (TRIX) as a trading oscillator and supplied a BASIC routine for calculating TRIX plots. In this article we present a precise method for selecting the TRIX alpha constant using Fourier Spectrum analysis and show how to use historical price data for selecting buy and sell indicators. In Part I we discuss choosing an optimal alpha value using Fourier Analysis and the author's alpha se...
BY: Anthony W. Warren, Ph.D.
ARTICLE SYNOPSIS ...Market Blueprints by JESSE H. THOMPSON/Technical Analysis staff writer A method or system for trading can be likened to a building in that its viability depends on its foundation and structure. Ideally the cornerstones of this building will be purpose, preparation and planning. That is, its important first to define the express purpose of a developing method, and then to adequately prepare yourself to properly develop and implement your plan on a practical basis. The framework of the building is composed of the specific parts of the plan. DEFINING A PURPOSE for your blueprint, is not as simp...
BY: Jesse H. Thompson
ARTICLE SYNOPSIS ...Modern Hedging For Everyone. by DR. BASIL VENITIS The business world is entering a new period full of excitement, which one day might well be called the Era of Hedging. When this period matures, everyone in the free enterprise system will probably be directly or indirectly involved in hedging! What is hedging? It is the arbitrage* between futures and their corresponding spot commodities financial instruments, or services. The classical hedger assumes a futures position exactly opposite to his spot position. For him, hedging is a sort of insurance against severe price fluctuations. On the oth...
BY: DR. BASIL VENITIS
ARTICLE SYNOPSIS ...My One and Only Stock Market Recommendation by MERTON A. HILL My interest in the stock market developed some 40 years ago. My first purchase was 100 shares of Budd Manufacturing (builders of railroad cars and heavy machinery -- Budd has since been acquired by Thyssen AG, West Germany's steelmaker.) Why I selected Budd for purchase I will never know -- probably because it appeared to be acting well on the market. . . This is in itself not necessarily a good reason for buying. It should be supported by sound background information. I was so green at this business I did not even know about broker...
BY: MERTON A. HILL
ARTICLE SYNOPSIS ...Taking Stock of Commodity Trading Methods by DR. BASIL VENITIS Fundamental Analysis Fundamental Analysis is price analysis based on basic economic, political, and ecological factors. These factors include supply and demand, seasonal cycles, weather, government policy, and so forth. Fundamental Analysis is different from Technical Analysis, which is based on psychological factors such as open interest, trade volume, price chart formations, commitments of large commercial houses, trends, and the like. In Fundamental Analysis, the present price of a commodity can be expressed as a function of ...
BY: DR. BASIL VENITIS
ARTICLE SYNOPSIS ...Technical Analysis by JACK K. HUTSON Thank you for your very kind and in some cases flattering response to the ""Reader Service Form"" published in Technical Analysis July 1983 issue. Feedback from you, our readers, helps guide both our growing staff and authors to what you would like to read about. In general, based on the forms received so far, our readers want to see more about trading technique application and theory presented in such a way that everyone can understand. It is probably apparent by now that some of our articles are not easy reading. In fact, to really get the most out of Te...
BY: Jack K. Hutson
ARTICLE SYNOPSIS ...The Funnel Formation by ORY J. CANAL The Funnel formation is a technical analysis tool that you may find very useful in analyzing stocks. To begin this discussion of the Funnel, let's locate one on a chart. For this we will use the chart in the back of the Wall Street Journal . It has the industrials, transports, rails, and of course volume of all the stocks traded on the New York Stock Exchange for that particular day. (The paper doesn't cost very much and if you make a mistake on the chart, you can buy a fresh one tomorrow.) The Funnel is formed by points 1, 2, and 3, 5, 6, and 7. Points 1,...
BY: ORY J. CANAL
ARTICLE SYNOPSIS ...To Forecast or To Follow by JESSE H. THOMPSON/Technical Analysis staff writer Browsing the ads of Barron's Financial Weekly or Commodities magazine can be mesmerizing. Financial gurus, ""new discoveries"" and ""wonder"" systems abound. Too much skepticism might be unwise, since new discoveries are in fact made and old knowledge rediscovered all the time. But it's doubtful given the velocity at which they are currently streaming forth, that all these discoveries are as valuable as they claim. Nevertheless, the good is always there in the shadows of the bold print. So, the task becomes to separ...
BY: Jesse H. Thompson