ARTICLE SYNOPSIS ...At The Close by William Ferree Where Do Indexes Reverse? Those big round numbers have an influence on prices?sometimes great, and sometimes (surprisingly) not so great. Big round numbers, those with a single digit followed by zeroes, obviously have an influence on prices, and most major reversals have occurred as a popular index was hitting one. The Dow Jones Industrial Average (DJIA) has long represented the market to most observers, and Figure 1 shows that near the turn of the last century, it reversed six times from the 100 level. After finally breaking above the resistance around 100, i...
BY: William FerreeSUBJECT: At The Close
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile FOCUSED ON THE FINANCIALS The recent problems at the brokerage firms has me concerned about wider credit problems. Is there a way to protect my portfolio from future volatility in the banks and brokerage sector? Good question. Volatility in the financial sector is at its highest levels in years because of worries about hedge fund and credit problems. The trend has had an important impact on overall levels of volatility in the stock market because the financials are the largest sector within the Standard & Poor's 500. As a result, the financial sector will ...
BY: Tom GentileSUBJECT: Expore Your Options
ARTICLE SYNOPSIS ...Forex Focus by Patrick Nouvion Backtesting And Forex Does backtesting produce valid results for foreign exchange trading? Here's a study that answers this question. For many years, backtesting and simulations have been banished from my toolbox. I only use these tools as debuggers and I never look at the results. I have told people that backtesting is useless without actual historical tick data, and only a dreamer would believe all these simulation reports. I just got my hands on historical tick data from my broker, so I thought I would do some testing. I decided to check to see if I was wro...
BY: Patrick S. NouvionSUBJECT: FocusForex
ARTICLE SYNOPSIS ...Futures For You by Dan O'Neil GOING SOFT What are "soft" commodities and where do they trade? Also known as the "food and fiber" category or the "tropical softs," this market sector is composed of five products traded primarily at the New York Board of Trade (NYBOT) -- coffee, sugar, cocoa, cotton, and orange juice. These products trade both in the physical open outcry pits at NYBOT and electronically on the state-of-the-art Intercontinental Exchange (ICE) platform. In fact, much of the volume in the softs these days has migrated to the electronic arena, where traders can enjoy faster and mo...
BY: Dan O'NeilSUBJECT: Futures For You
ARTICLE SYNOPSIS ...How Much Money Should You Allocate? by Torbjorn Iwarson If this question is niggling at you, consider how risk-averse you are. That may give you the answer you're looking for. Trying to figure out how much money you should allocate to your trading is a difficult task. How risk-aversive are you? To get the answer, I will look at the traditional stocks and bonds and a trendfollowing method applied to gold, EUR/USD, and the Standard & Poor's 500, covering different asset classes. THE TRADING SYSTEM I use point & figure for the signals, using 2% sized boxes and three-box reversals. Point & fig...
BY: Torbjorn IwarsonSUBJECT: Money Management
ARTICLE SYNOPSIS ...Ichimoku Kinko Hyo Charts by Nicole Elliott Here's another charting method that's been around for decades, and yet can be brand-new to most Western audiences. Ichimoku kinko hyo is a method of technical analysis that has been around since before World War II, yet is virtually brand-new to most Western audiences. Why? Because textbooks on the subject have been, until recently, available only in Japanese. I joined Mizuho Bank as a senior analyst 10 years ago. When I arrived, I realized much to my horror that all the Japanese dealers I would be working with were well up to speed with charts, a...
BY: Nicole ElliottSUBJECT: Charting
ARTICLE SYNOPSIS ...Interview Henry Hank Pruden: What The Future Holds by Jayanthi Gopalakrishnan Hank, why don't you start by telling us how you got interested in the Wyckoff method. What attracted me to the Wyckoff method can be summarized under my notions of Wyckoff the man, Wyckoff the method, and Wyckoff the mystique. An excellent article written by David Penn and published in your magazine a few years ago had a profile of Richard Wyckoff, and it was well done. I really thought he was an outstanding character in the history of technical analysis thinking. So early on I was attracted to Wyckoff. I thought h...
BY: Jayanthi GopalakrishnanSUBJECT: Interview
ARTICLE SYNOPSIS ...VANTAGEPOINT REVIEW Editor, I have just purchased VantagePoint software and I noted with interest your review by Phil Crosby published earlier this year ("VantagePoint 7.0," February 2007 S&C). In the review, he states that he uses the system in conjunction with other tools. I would be interested to know what these additional tools are. Perhaps Mr. Crosby could write another article about this, as I am sure that many of your readers would be interested as well. -FATIMA RIORDAN Phil Crosby replies: I use a few other tools for trading beyond VantagePoint. I primarily use TradeStation, since i...
BY: Technical Analysis, Inc.SUBJECT: Letters To S&C
BY: Jayanthi GopalakrishnanSUBJECT: Opening Position
ARTICLE SYNOPSIS ...Q&A by Don Bright IS AUTOMATION THE ANSWER? I've been trading for about seven months. I'm a good trader when it comes to entering trades and gauging the market's strength and direction, but I have no risk tolerance, perhaps because I don't have a lot of money in my account and I tend to butcher the trade (for example, I was in the airlines before the market yesterday but got out way too soon, and they were the strongest sector). I thought the best method might be to get an automated program that would exit my positions for me, thereby getting rid of the emotional factor that's killing my pro...
BY: Don BrightSUBJECT: Q&A
ARTICLE SYNOPSIS ...The Angle Of Ascent by Martha Stokes, CMT Understanding the concept of the angle of ascent will help you make strong entries and protect your profits. Successful traders know that technical analysis skills require an understanding of buy signals and indicators. Today, we tackle angle of ascent. Angle of ascent involves price, which is the most important aspect of technical analysis and an indicator onto itself. Yes, price is an indicator -- the most important of any. Why? Because the stock market, while closely tied to mathematical concepts, is even more closely related to biology. If that se...
BY: Martha Stokes, CMTSUBJECT: Chart Patterns
ARTICLE SYNOPSIS ...Traders Tips by Technical Analysis, Inc. ? METASTOCK: TRADING TRENDLINE BREAKS For the MetaStock code to implement the techniques discussed in Sylvain Vervoort's article in this issue, "Trading Trendline Breaks, Part 2," see the sidebar in the article on page 24 for code provided by Vervoort.--Editor ? TRADESTATION: TRADING TRENDLINE BREAKS Sylvain Vervoort's articles in his two-part series, "Trading Trendline Breaks," describe the use of trendline breaks in trading. The articles include code that approximates the author's trading style. Vervoort's code identifies zigzag peaks and troughs i...
BY: Technical Analysis, Inc.SUBJECT: Traders' Tips
ARTICLE SYNOPSIS ...Trading The Cup & Handle by Larry Swing Guidelines For A New Classic...Cup & handle patterns may be tricky to identify. But if you follow these guidelines you will be able to identify them more easily and accurately. Although it didn't come from the traditional trading patterns, today the cup & handle pattern is nearly synonymous with the rest of the classics. According to many technical analysts, the classic patterns are the triangle, rectangle, head & shoulders, pennant, flag, double bottom, and double top. These are just a few classical formations that many have come to know. When William...
BY: Larry SwingSUBJECT: Trading Techniques
ARTICLE SYNOPSIS ...Trading Trendline Breaks - PT 2 by Sylvain Vervoort Trendlines are common technical analysis charting tools, but there are a number of ways to implement them in your trading. Here's an in-depth look at trendlines. Previously, I discussed how trendlines are plotted, emphasizing that logarithmic trendlines are more effective than linear ones. This time, I'll discuss how to trade breaks in trendlines as well as the system I apply to my trading. A long-term investor using monthly data could act upon a number of trendlines in Figure 1. Assuming you can trade this stock both long and short: 1. At...
BY: Sylvain VervoortSUBJECT: Trading Techniques
BY: Thomas MaskellSUBJECT: Novice Traders' Notebook
ARTICLE SYNOPSIS ...Websites For Traders Chart Ex by Jayanthi Gopalakrishnan WWW.CHART-EX.COM Lisa Erdmier, president and cofounder of the Chart-Ex website, which displays free commodity charts, developed a data visualization tool that displays volume at price in a unique format. It is similar to the Market Profile format in that it compares volume at price for one time frame to another. After spending several years as a floor trader, Erdmier wanted to develop a trading tool that would give the offfloor trader a picture of what goes on behind the numbers seen on a computer screen. The display, if you look at Fi...
BY: Jayanthi GopalakrishnanSUBJECT: Websites For Traders