APR 1998 STOCKS & COMMODITIES Magazine

Article Archive For APR1998

Applying Moving Averages by John Sweeney

ARTICLE SYNOPSIS ...Applying Moving Averages by John Sweeney The moving average, one of the first technical methods that novice traders study, can be applied to your favorite markets. Here are its strengths and weaknesses. It's commonplace to honor simplicity but to simultaneously forsake it. The proliferation of indicators developed in the past 10 years alone is testament to that. What is simple is that prices are rising, falling or unchanging. What is complex are the indicators, mathematical contortions depicting the movement of price and volume in some abstracted form. As a fan of the objectivity of indica...

AUTHOR: John SweeneyDATE: APR1998SUBJECT: Novice Traders' Notebook

Asoka Selvarajah Of Rabobank International by Thom Hartle

ARTICLE SYNOPSIS ...Asoka Selvarajah Of Rabobank International by Thom Hartle According to Asoka Selvarajah, markets do make sense ultimately, but not in a way that most people imagine. To understand the markets, according to Selvarajah, requires a dash of Pythagorean theory, a smidgen of Newtonian physics, and even some chaos. Selvarajah, who works for Rabobank International, one of the largest banks in the world and one of the few European banks with a triple-A rating, was interviewed by Stocks & Commodities Editor Thom Hartle via E-mail over a period of several weeks in January 1998, discussing systematic tra...

AUTHOR: Thom HartleDATE: APR1998SUBJECT: Interview

Identifying Market Trends by Jack Karczewski

ARTICLE SYNOPSIS ...Identifying Market Trends by Jack Karczewski The trend of the market is key to most every technical approach available. But the market doesn't always trend. Here's how to use a statistical tool for determining if the market is in a trend. Traders spend untold amounts of intellectual capital analyzing a market for clues about trend. We try to determine if there is a trend present, when it began, if it has reversed or broken down. The methods employed to interpret this information range from simple chart analysis to sophisticated computer algorithms. Even simple moving averages can become qui...

AUTHOR: Jack KarczewskiDATE: APR1998SUBJECT: Indicators

The German Mark Noise Channel Breakout System by Dennis Meyers, Ph.D.

ARTICLE SYNOPSIS ...The German Mark Noise Channel Breakout System by Dennis Meyers, Ph.D. Interested in a trend-following method for currency markets? Currency markets generally exhibit the strongest tendency to trend, a key feature for trend-followers. Here's a method that's both simple and effective to take advantage of that. Presented here are the rules and steps to develop a trend-following method for currencies. The German mark (abbreviated DM, for Deutschemark) is a major currency traded worldwide by corporations, institutions, banks, commodity funds and futures traders. It is traded 24 hours per day, an...

AUTHOR: Dennis Meyers, Ph.D.DATE: APR1998SUBJECT: System Design

Traders' Tips

ARTICLE SYNOPSIS ...Traders' Tips Here is this month's selection of Traders' Tips, contributed by various developers of technical analysis software to help readers more easily implement some of the strategies presented. For Jack Karczewski's article ""Identifying Market Trends"", the r-squared calculations are given for: TradeStation/SuperCharts, Technifilter Plus, SMARTrader, Wave Wi$e, and Window on Wall Street....

AUTHOR: Technical Analysis, Inc.DATE: APR1998SUBJECT: Traders' Tips

Using Trailing Stops In Exit Strategies by J. Katz, Ph.D., and D. McCormick

ARTICLE SYNOPSIS ...Using Trailing Stops In Exit Strategies by J. Katz, Ph.D., and D. McCormick Last issue, we saw a demonstration of how an exit strategy can affect the performance of a trading system. This time, we will discover how to measure the impact of exiting the market by using trailing-stop techniques. Previously, we explored the behavior of a simple exit strategy involving a profit target exit, a stop-loss exit and a time-based exit. We used a standardized random entry system in which a random number generator provided us with entries into positions from which we could exit. Our goal was to find out ...

AUTHOR: J. Katz, Ph.D., and D. McCormickDATE: APR1998SUBJECT: Money Management

V16:4: Letters

ARTICLE SYNOPSIS ...Letters To S&C Letters this month include questions on ""The New Gann Swing Chartist"" by Robert Krausz, the interview with Andrew Lo regarding efficient market hypothesis, and suggested reading on divergence analysis and intraday trading....

AUTHOR: Technical Analysis, Inc.DATE: APR1998SUBJECT: Letters To S&C

What Is Risk? by Gary Anderson

ARTICLE SYNOPSIS ...What Is Risk? by Gary Anderson There are many ways to view risk. Some measurements treat risk and reward alike; if a stock is outperforming the market to the upside, there is an implicit expectation that the stock may also outperform the market to the downside. This article introduces the concept of comparing how a stock performs during up movements relative to a benchmark and then, separately, measuring performance relative to downward movements by the benchmark. Risk is routinely measured as standard deviation, or volatility. Certainly, volatility is risky. But as a definition, volatility...

AUTHOR: Gary AndersonDATE: APR1998SUBJECT: New Techniques

Zero Cost Averaging by Terrence M. Quinn and Kristin A. Quinn

ARTICLE SYNOPSIS ...Zero Cost Averaging by Terrence M. Quinn and Kristin A. Quinn This technique steps in to assist in the management of the investment after the investor has determined which securities to purchase and when to open the position. Traditionally, fundamental analysis and technical analysis have been used to evaluate stocks, mutual funds and other equity securities. With technical analysis, the focus is upon the tradable instrument's actual price movement in the marketplace, as opposed to fundamental analysis, whereby the company's earnings potential is examined and the trading instrument's perform...

AUTHOR: Terrence M. Quinn and Kristin A. QuinnDATE: APR1998SUBJECT: Money Management