ARTICLE SYNOPSIS ...NOVICE TRADER Comparing Technical And Fundamental Analyses by Alex Saitta Philosophically, technicians and fundamentalists appear to be at odds: One group studies underlying factors driving the market, while the other focuses on the market itself. Technical approaches count on the existence of price trends to make profitable strategies, but fundamentalists count on trends, too. Here, one market analyst reviews the differences and similarities between the two. If nothing else, fundamental and technical analysts agree on one thing: The trends of fundamental forces are the sole reason for ev...
BY: Alex Saitta
ARTICLE SYNOPSIS ...TRADING TECHNIQUES Detecting The Minimum Tradable Cycle by Robert Wayman Cycle theorists will tell you that there may be tradable cycles within market data. Before looking for those cycles, though, you must determine the noise level within the data. Here are some methods to do so in this, the first of two parts. The simple moving average (SMA) is the most basic of what can be done to a pricing datastream, whether for stocks, futures, options or other financial instruments. The simple moving average is easy to calculate and allows us to quickly interpret what prices are doing. If prices a...
BY: Robert Wayman
ARTICLE SYNOPSIS ...INTERMARKET ANALYSIS Interest Rates And Stock Returns by Mark C. Snead Stocks perform best when interest rates are declining, but rate levels can make a difference. Here's how. Interest rates can be a dependable component of a stock market forecasting model. Many models use changes in interest rates, in which falling interest rates are considered to be more favorable for stock prices than rising rates are. Many of these applications have weathered the rigors of lengthy real-time testing and are among the favorite tools of market forecasters. Often overlooked in the relationship between i...
BY: Marck C. Snead
ARTICLE SYNOPSIS ...Letters to S&C by Technical Analysis TRADING PSYCHOLOGY REVISITED Editor, When I was first learning the trading business, a mentor once told me to pick a system, any system, and use it. The emphasis was appropriately placed, because actually implementing the signals from your trading system is the hard part. Professional traders know that trading is all in the mind, not the system. The trading psychology articles are among the most valuable in your outstanding magazine. Please continue publishing them. JOHN BOLLINGER, CFA, CMT, Manhattan Beach, CA MORE VOTES FOR PSYCHOLOGY Editor, I am...
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...INTERVIEW Trading with the Conscious and Subconscious Minds: New Market Wizard Robert Krausz by Thom Hartle Robert Krausz, who was featured in Jack Schwager's The New Market Wizards, is many things: He is a trader, a student of the market, and a practicing hypnotherapist as well as a special investment advisor to the European Bank for Reconstruction and Development. With that background in mind, STOCKS & COMMODITIES Editor Thom Hartle spoke with Krausz on June 20, 1995, via a telephone interview about the steps to successful trading, the role of the subconscious for traders, and other topics...
BY: Thom Hartle
ARTICLE SYNOPSIS ...TRADING PSYCHOLOGY Preventing Trader Burnout by Adrienne Laris Toghraie Do you ever feel too tired to go on trading? Do you feel as though you're losing the mental energy to even think about trading? You may be suffering from burnout. Here are some hints to overcome or avoid the problems that can come with trading. Have you ever had that dulling, lethargic sensation that accompanies a complete lack of desire to do anything constructive? When an individual loses the desire and the energy necessary to continue working, he could be suffering from burnout. In such cases, it's almost as if the...
BY: Adrienne Laris Toghraie
ARTICLE SYNOPSIS ...TRADING TECHNIQUES Refining The Relative Volatility Index by Donald Dorsey The relative volatility index was designed to measure the direction of volatilty. Since it was first introduced, however, its developer has not simply rested on his laurels; here are further refinements on the original. In 1993, when I introduced the relative volatility index (RVI), my intention was to demonstrate how greater performance can be achieved if technical indicators are diversified in a trading system. My thinking was that since the vast majority of technical indicators are derived by calculating price ...
BY: Donald Dorsey
ARTICLE SYNOPSIS ...CALCULATING NOISE LEVEL Some of the other methods I use to calculate noise level (NL) are: ... where P is the averaging period for the daily range; the article's Figure 3 is a plot of ADR j . Another method uses the average daily range and three standard deviations of the daily range: ... The next method uses the length of the price path data file (ADR j ), the lookback period (P ) and the length of the original pricing data file (M ): ......
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...OLD RVI, NEW RVI AND INERTIA The relative volatility index (RVI) is a modified form of the relative strength index (RSI). The original RSI calculation separates one-day net changes into positive closes and negative closes, then smoothes the data and normalizes the ratio on a scale of 11 to 100 as the basis for the formula. The RVI uses the same basic formula but substitutes the 10-day standard deviation of the last 10 days' closing prices for either the up close or the down close. The goal is to create an indicator that measures and reports the general direction of the volatility. In a Micros...
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...THE SHORT-RANGE OSCILLATOR The short-range oscillator combines daily New York Stock Exchange (NYSE) market statistics with the daily closing price of the Dow Jones Industrial Average (DJIA) to provide indications of overbought and oversold market conditions. Sidebar Figure 1 is a Microsoft Excel 4.0 spreadsheet demonstrating the results of the formulas. The first step is to add the day's number of advancing stocks to 50% of the day's number of unchanged stocks and express this sum as a percentage of the total issues traded. This step is calculated in column E. Enter the following formula into...
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...TRADING TECHNIQUES The Short-Range Oscillator And The DJIA by Christopher Cadbury Oscillators come in many shapes and forms. Here, one unique oscillator is analyzed to determine patterns and the results in the stock market after a particular pattern occurs. A simple oscillator mathematically modifies the price data so the results oscillate in a range. Some oscillators use a range of zero to 100, while others move above and below zero. For example, one popular oscillator is the difference between today's closing price and a 20-day simple moving average (SMA) of the closing price. If the ...
BY: Christopher Cadbury
ARTICLE SYNOPSIS ...A Time Price Oscillator by Tushar S. Chande Technical indicators, and oscillators in particular, measure the behavior of price relative to time. For example, the rate of change oscillator calculates the percentage change in price over a set period. That said, now consider an indicator that reverses the roles of price to time and measures the passage of time relative to price. This article details such an indicator, presenting numerous applications. All major price trends evolve, both in price and time. A market trading in a sideways trend may begin to advance, turning into an upward trend,...
BY: Tushar S. Chande, Ph.D.
ARTICLE SYNOPSIS ...This month's Traders' Tips give MetaStock software code for the indicators in Donald Dorsey's ""Refining the relative volatility index,"" and SMARTrader & Technifilter Plus code for Tushar S. Chande's time price oscillator....
BY: Technical Analysis, Inc.