STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For AUG1987

  • Forecasting the market with the overbought/oversold indicator by Steven B. Achelis

    ARTICLE SYNOPSIS ...Forecasting the market with the overbought/oversold indicator by Steven B. Achelis The terms ""overbought"" and ""oversold"" are often used to discuss market conditions. However, as anyone who has placed a short trade simply on the basis that the market is overbought knows, the market can remain overbought for long periods of time. There are a number of indicators which can be used to quantify overbought/oversold (OB/OS) conditions. Most methods deal with internal momentum as measured by changes in price. Popular price OB/OS indicators include the rate-of-change of prices (expressed in eithe...

In this issue by John Sweeney, Associate Editor

  • Intraday swings with wave charts: The Wyckoff method of trading stocks part 12 by Jack K. Hutson

    ARTICLE SYNOPSIS ...Intraday swings with wave charts: The Wyckoff method of trading stocks part 12 by Jack K. Hutson The serious follower of Wyckoff, a trader who embraces the entire scope and intricate details of this methodology, has not completed his or her analytic arsenal without the Wyckoff Wave, a price vs. time chart that tracks intraday swings much like a doctor taking a patient's pulse. Whether you trade by the hour or the year, it's the intraday swings, where bears and bulls test each other's strengths and weaknesses minute by minute, that grow and merge into the minor, intermediate and longest-term ...

  • Letters To S&C by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...Letters To S&C by Technical Analysis, Inc. Edit Errors Editor, The articles in your magazine are usually so well written that they are interesting to read even though the reader may not agree with the contents. The article written by William Eng was therefore most surprising. It would have been an act of kindness to either edit it or not print it. The English language was much abused by Mr. Eng, and his writing style showed much confusion in use of words. For instance: page 23, column 1, last paragraph. The quote ""It's none of your goddamn business!"" is uttered 1) matter-of-factly, 2) w...

  • Mutual fund timing by Fay H. Dworkin, Ph.D.

    ARTICLE SYNOPSIS ...Mutual fund timing by Fay H. Dworkin, Ph.D. It's like a musical instrument: you have to learn to play it,"" says Hubert Cafritz about his trading strategy for managing a portfolio of mutual funds. The system has been used for three years by Cafritz, a pension fund manager, and by subscribers to The Cafritz Report. This article describes the results of my own test of the system which simulated the actions of an investor who began building a mutual fund trading portfolio at the beginning of 1984. This hypothetical portfolio is evaluated on a risk-adjusted basis for its 1984-86 performance....

  • Part 2 Modern Portfolio Theory in managed futures by Gary S. Antonacci

    ARTICLE SYNOPSIS ...part 2 Modern Portfolio Theory in managed futures by Gary S. Antonacci Optimal portfolio diversification using Modern Portfolio Theory is a particularly valuable tool when applied to futures trading and is the key to earning attractive returns with less risk. Developing efficient portfolios comprised of professionally managed commodity futures trading programs requires three elements: expected rate of return, volatility, and correlation. I have found through testing that 3.5 years of past performance data works best in estimating future performance results. A track record loses a great deal ...

  • Stop worrying yourself out of profits By Van K. Tharp, Ph.D.

    ARTICLE SYNOPSIS ...Stop worrying yourself out of profits By Van K. Tharp, Ph.D. Every time Michael thought about entering the market, he said to himself ""But what if I lose?"" Those thoughts often paralyzed him from action or delayed his entry so long that many opportunities simply passed before he would pick up the phone. When Michael did open a position, all he could think about were negative consequences. ""My system is wrong at least half the time--what if this is one of those times?"" He couldn't sleep because his mind was racing with those ""what if"" thoughts. Michael suffered from a chronic ""dis-ease"...

  • The Professional Option Trader's Manual by John Sweeney

    ARTICLE SYNOPSIS ...The Professional Option Trader's Manual by John Sweeney Author: David L. Caplan Publisher: Opportunities in Options P.O. Box 2126 Malibu, CA, 90265 Price: $70 (or $150 with a three-month subscription to Opportunities in Options) Despite its name, this is a book for beginners in the options world and particularly for futures traders. Professionals who might, indeed, be using the techniques discussed here will know them well enough to forego this review. Nevertheless, this book has value as an attempt to take the typical options trader past the usual pestholes (generally, buying options) an...

  • The algebra of inequalities by Donald D. Bump, Ph.D.

    ARTICLE SYNOPSIS ...The algebra of inequalities by Donald D. Bump, Ph.D. Many technical systems, simple and complex, come down to a decision based on inequality. For example, ""If the 10-day moving average for today is greater than that of yesterday, go (or remain) long."" The criteria for the decision can be expressed as the inequality: If 10MA1 > 10MA2 buy (hold) long Consider another simple system: ""If the 4-day moving average penetrates the 8-day moving average in the upwards direction, go long."" A decision here is indicated by: If 4MA1 > 8MA1 then buy (hold) long...

  • Using ProfitTaker by Terry Apple

    ARTICLE SYNOPSIS ...Using ProfitTaker by Terry Apple Currently, numerous software packages are available that employ optimization to create technical models for futures trading. Every day I receive calls from traders around the country who are considering buying one of these packages. Since many of these traders have little or no previous experience with technical trading software, the most common question that I am asked is, ""How would you perform an optimization test to find a profitable trading model?"" This series of three articles will provide a general description of three of the most widely used software...

  • Using stochastics by Cynthia Keel and Heidi Schmidt

    ARTICLE SYNOPSIS ...Using stochastics by Cynthia Keel and Heidi Schmidt The use of stochastics, particularly in the futures markets, has become a necessary part of the trader's daily strategy. Although application of stochastics is simple to understand, adaptations of the basic equation abound. Analysts should be aware of the ambiguous subtleties in stochastics calculation, the influences the ambiguities have on expected results, and how the uses of stochastics differ among financial software. This article presents a general summary of the stochastic and its use, as well as a financial software survey....








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