STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For DEC1992

  • A Spreadsheet For Time Ratio Analysis by Robert Miner

    ARTICLE SYNOPSIS ...A Spreadsheet For Time Ratio Analysis by Robert Miner Traders using ratio of time cycle analysis will find this spreadsheet version of determining target dates of possible cycle highs or lows helpful. The author discusses the use of projected target dates, along with an example of a trade. As W. D. Gann described more than 70 years ago, markets make swing highs or lows in proportion (relation) to past market cycles. My March 1991 STOCKS & COMMODITIES article, ""Time as a trading tool,"" described the theory and methodology of projecting proportions of past cycles forward in time to deter nin...

  • Appreciating The Risk Of Ruin by Nauzer J. Balsara

    ARTICLE SYNOPSIS ...Appreciating The Risk Of Ruin by Nauzer J. Balsara Traders focus on developing trading rules and systems that identify market entry and exit points. A factor that is often overlooked is the percentage of trading capital available that is risked on trades. This article analyzes the risk of ruin by varying three parameters using a Monte Carlo simulation. The results can help you determine your chances of success. A trader is said to be ruined if his or her available capital falls below the minimum required to trade. The risk of ruin is a probability estimate ranging between zero and 1. A prob...

  • Bond Yield Diagnosis by John Kean

    ARTICLE SYNOPSIS ...Bond Yield Diagnosis by John Kean Inflation is usually the first choice for analyzing the forces driving the direction of bond yields, but systems analyst John Kean illustrates that charting government borrowing can help determine the trend of interest rates. Bond yields are one financial factor that stands out from the rest in importance. They are a critical item in economic growth, have a particularly strong influence on stock prices and foreign exchange rates and are often used as a metaphor for a country's overall economic and political health. Although bond yields are acknowledged to be...

  • Contrarian Thought by John Blasic

    ARTICLE SYNOPSIS ...Contrarian Thought by John Blasic As a rule of thumb, the crowd is always wrong at the top or at the bottom, but how does one gain insight into what the crowd is doing? John Blasic discusses some basics of measuring crowd psychology and using it in contrarian strategy. Contrary thinking is an art form that should be included in every technician's arsenal. It is a single concept that comprises many individual parts. Contrary analysis studies market extremes as a form of psychological analysis, emphasizing the principle that whenever the crowd agrees on anything, they must be wrong. How can tr...

  • Gold And The CRB Index by John J. Murphy

    ARTICLE SYNOPSIS ...Gold And The CRB Index by John J. Murphy John Murphy, the leading proponent of intermarket analysis, closes the current circle of tradable interrelationships by examining how gold and the CRB index interact. The gold market plays a key role in intermarket analysis. Last time, I discussed gold's tendency to trade in the opposite direction of the U.S. dollar. Falling U.S. interest rates, which are usually associated with a weak dollar, at some point begin to reawaken inflation pressures. One of the first places that inflation begins to manifest itself is in a rising gold market. Because of gol...

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

    ARTICLE SYNOPSIS ...Letters To S&C by Technical Analysis, Inc. GANN-DO ATTITUDE Editor, January's article, ""The Gann Quarterly Chart,"" was the best article I have read in nine months. I can use it for buying and selling mutual funds for long-term investing. I would appreciate more articles simply written with actual buy and sell dates for long and intermediate investing. Could you explain the difference between a 50-day moving average and a 10-week moving average? DAVID PORTNEY Staten Island, NY The moving average, a mathematical procedure to smooth or eliminate the fluctuations in data, emphasizes the dir...

  • Looking At Momentum With TRIX by Ed Downs

    ARTICLE SYNOPSIS ...Looking At Momentum With TRIX by Ed Downs The TRIX oscillator has unique properties that make it ideal for identifying direction of trend as well as cyclical entry points. Last month, Ed Downs showed us how various oscillators can be tuned to the personality of an individual stock through optimization. This month, he'll explain the use of a derivative technique using the TRIX oscillator. If you smooth an exponential moving average (EMA) I of the closing price twice (taking the EMA of the EMA of the EMA) and then plot the percentage change per period on the y-axis, you'll have one version of ...

  • Market Turns And Continuation Moves With The Tick Index by Tim Ord

    ARTICLE SYNOPSIS ...Market Turns And Continuation Moves With The Tick Index by Tim Ord The tick index is a little-known indicator that can be used to indicate short-term stock market reversals and provide trend confirmation. Short-term traders should consider using the tick index, for though this indicator does not always tell you a story, it can help alert you to overbought and oversold situations. A little over a year ago, I wrote an article in which I described a buy and sell method using the tick index on the New York Stock Exchange (NYSE). The tick index is the difference between the number of issues tradin...

  • Multiple-Length Stochastics by Stuart Meibuhr

    ARTICLE SYNOPSIS ...Multiple-Length Stochastics by Stuart Meibuhr Plotting different indicators together and combining their analyses is a popular analytical method for timing trades. But how about using one indicator and varying its parameters? Stuart Meibuhr takes stochastics and varies the length of the lookback for trades of different time frames. The popular concept ""if one is good, two are better"" has often been used by technicians in the selection of indicators in the belief that combining the signals of different indicators is a more reliable strategy than following just one. But this idea has rarely...

  • On Index Funds by Stephen Littauer

    ARTICLE SYNOPSIS ...On Index Funds by Stephen Littauer Do mutual funds underperform the market? Statistics would indicate so. Index funds may better suit investor needs. Most mutual funds underperform the market. Over the past 10 years, CDA/Wiesenberger Mutual Funds Update reports that 356 mutual funds with an investment objective of long-term growth had an average annual return of 15.8%. The equivalent annual return for the Standard & Poor's 500 index during the same period was 19.1%. Was the difference of 3.3% a fluke or statistical error? Let's look at figures from additional sources. Morningstar Mutual Fun...

  • SIDEBAR: CALCULATING STOCHASTICS by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...CALCULATING STOCHASTICS by Technical Analysis, Inc. Calculating %K and %D, with formulas for a spreadsheet....

  • SIDEBAR: CALCULATING VIDYA by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...CALCULATING VIDYA by Technical Analysis, Inc. The variable index dynamic moving average (VIDYA) builds on the concept of the exponential moving average (EMA). While the EMA uses a constant (alpha) to smooth today's data, the VIDYA adjusts the alpha according to the data's volatility. The volatility is measured by taking the ratio of a 30-day standard deviation to a reference standard deviation ....

  • SIDEBAR: THE CANDLESTICK METHOD by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...THE CANDLESTICK METHOD by Technical Analysis, Inc. How to make a basic candlestick chart....

  • SIDEBAR: TRIX MOMENTUM IN METASTOCK by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...TRIX MOMENTUM IN METASTOCK by Technical Analysis, Inc. TRIX momentum in MetaStock....

  • Smart Stops by Tushar S. Chande

    ARTICLE SYNOPSIS ...Smart Stops by Tushar S. Chande Setting stops is a fine art, whether you trade one contract or a thousand. The challenge in setting stops is to participate in long moves without getting shaken out of the trade by market volatility. A variable-index dynamic average (Vidya) may be used to place trailing stops that adapt to market volatility, which combines enough sensitivity to price changes with flexibility to fit your trading needs. Using this combination, in fact, may well provide an extremely profitable stop for the intermediate-term trader. Once a trade has been initiated, most traders w...

  • Talking With "Turtle" Russell Sands by Thom Hartle

    ARTICLE SYNOPSIS ...Talking With ""Turtle"" Russell Sands by Thom Hartle We talked with ""turtle"" Russell Sands about the importance of risk management, following the trend and understanding crowd behavior. How did you end up becoming one of the turtles? Believe it or not, I was reading the help-wanted section in The New York Times and I saw this ad. I don't think it was very specific at all. It just said ""prominent Chicago trading firm looking for people that they can train in their methods"" and went on to say that they were willing to train and bankroll you. So I sent in a resume and they sent back this q...

  • Traders' Tips by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...Traders' Tips by Technical Analysis, Inc. METASTOCK PROFESSIONAL AND CANDLESTICKS Candlestick charts are still new to traders in the U.S. Here's a method to assist you in identifying specific candlestick patterns in MetaStock Professional. Candlestick patterns use the open, high, low and closing prices, and so your data will need all four to correctly plot a candlestick pattern. The opening and close for the day define the body of the candlestick, while low and high are the thin lines that extend beyond the body. The thin lines are called the shadows. If the market closes above the opening,...

  • Trading The Santa Claus Rally by Michael D. Sheimo

    ARTICLE SYNOPSIS ...Trading The Santa Claus Rally by Michael D. Sheimo 'Tis the season to be jolly and make a profit. What could be finer? Michael Sheimo explores the whys and wherefores of this seasonal phenomenon. Holiday rallies in the stock market are a fact of life. Various theories abound as to why they occur: institutional traders don't want any loose cash sitting around for a long weekend, trading houses want to maintain optimism for the holiday, investors are in a buying mood, a culmination of technical influences come together near holidays. The cause of a holiday rally can be as simple as institutio...








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