STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For FEB2011

  • Books For Traders

    ARTICLE SYNOPSIS ...The Evolution Of Technical Analysis (212 pages, $29.95 hardcover, 2010, ISBN 978-1-576-60349-9) by Andrew W. Lo and Jasmina Hasanhodzic, published by Bloomberg Press, an imprint of John Wiley & Sons. For years, technical analysis has been misconceived as gambling or magic. This form of "voodoo finance" has sought to spot trends in the market, past, present, and future. This work presents an account of the origins and development of this "black art" from ancient times to the rise of Wall Street as a wo...

  • Comparative Trading Volume by Anthony Trongone

    ARTICLE SYNOPSIS ...The first part of this series looked at how price action can be used to anticipate future price movement in the S&P 500 Spdr exchange traded fund. This time, we add trading volume to the mix, but not in the typical way. As technicians, we depend primarily on two variables to augment our predictive ability: price and volume. In my previous article, the emphasis was on using yesterday's action to determine the price movement of the Standard & Poor's 500 depositary receipt (Spdr) exchange traded fund (Spy), also known as spiders ...

  • Does Gold Still Have Room To Run? by Teresa Fernandez

    ARTICLE SYNOPSIS ...Many investors are hesitant about investing in gold. Memories of the stratospheric and unexplained rise to the unchartered territory of the high $800s in January 1980, followed by several limit-down days, still haunt baby boomers, many of whom had never before witnessed such action in their entire investing lives. In three short months, gold plunged from its all-time high of $873 on January 21, 1980, to $453 on March 27, 1980, or a drop of 51.9%. But it didn't stay there; the precious metal inched back up, reaching $729 on September 23, 1980, an encouraging gain of 60.9% ...

  • Explore Your Options by Tom Gentile

    ARTICLE SYNOPSIS ...A CALL ON VOLATILITY I'm new to options and having some difficulty. Despite the broader market having more or less trended higher since September 2010, I've found my purchased calls, which I make sure aren't expensive in their relative historical and implied pricing, are nonetheless resulting in net losses. Any insight into what I might be doing wrong would be appreciated. First of all, I'm pleased to see you're learning about the mechanics of option pricing with regards to the influences of volatility. The bad news is when you're buying an option cheap with no other hedge, t...

  • Futures For You by Carley Garner

    ARTICLE SYNOPSIS ...TOOLS, TOOLS, TOOLS What are your thoughts on some of the geometrical technical analysis tools such as Fibonacci rulers, Elliott wave theory, and Gann fans? Geometric charting tools, sometimes referred to as advanced charting tools, require active decision making by the user. This ambiguity creates an environment in which analysts can draw dramatically different conclusions despite using the same tools. More than with less interactive tools, such as computer-generated oscillators, these advanced charting tools are only as good as the trader using them. In my opinio...

  • How Good Is Your Data? by Sunny Harris

    ARTICLE SYNOPSIS ...Is all data equal? If truth be told, I never gave it much thought. I have been using one vendor nearly exclusively for about 20 years. My fills are good enough. My closing prices seem to match what I see on television or find online. As long as the profits roll in, there has been no reason to question the data. But then I was told by another vendor that my vendor's data is off by just enough to generate a side income, through the slippage from actual price to the price I am presented. My curiosity was piqued, and so I decided to investigate. First, I set up a spreadsheet an...

  • Investment VS Trading In Covered Call Writing by Jay Kaeppel

    ARTICLE SYNOPSIS ...With the investment approach, shares of stock are viewed as rental property and calls are written to generate additional income from what is expected to be a longer-term stock investment. The trading approach involves executing buy/writes based on the possibility of generating a high annualized rate of return on a given stock/option combination. Which is better? It can be argued that covered call writing is the second-most commonly used option trading strategy, trailing only straight call and put buying. This is not surprising, since many investors assert that covered c...

  • Letters To S&C

    ARTICLE SYNOPSIS ...Author Duane Archer replies: Gw t is both a refinement and expansion of the old 50% measured move [AB=CD] rule. The propagation principle is an expansion allowing the creation of several templates for forecasting. The intersection and 3-C rules are refinements for delimiting possibilities and zeroing in on legitimate trade candidates. These are the three primary principles of Goodman wave theory, but there are quite a few more principles and rules. My article in the December 2010 issue was simply meant as an introduction ...

  • Opening Position by Jayanthi Gopalakrishnan

    ARTICLE SYNOPSIS ...In this playing field of uncertainty, whether you trade equities, options, currencies, bonds, or futures, you need a method to assist you in making objective decisions so you can justify risking money on a trade. You are not going to put money into a trade unless you think it's worth taking the risk. You need to always know what your risk/reward ratio is before making a trade. This is why it's always a good idea to have a handful of trading strategies and systems you have faith in. The key is to keep this handful of trusty tactics up to date. Not only that, make sure it keeps up ...

  • Option Strategies With Roy Radziszewski by Jayanthi Gopalakrishnan

    ARTICLE SYNOPSIS ...So often, options are something that you can take or leave, but sometimes they catch your interest and never let go. That seems to have been the case with Roy Radziszewski, the product manager of option products for TradeStation Securities, who began actively trading commodities and equity options while pursuing his graduate studies. A registered representative with Finra and NFA (series 7, 63, and 3), he holds an electrical engineering degree from the Milwaukee School of Engineering and an MBA from the University of Houston. STOCKS & COMMODITIES Editor Jayanthi Gop...

  • Product Review: MarketGauge The Complete Swing Trading System

    ARTICLE SYNOPSIS ...MarketGauge is a robust trading enterprise. In an earlier STOCKS & COMMODITIES review, I examined Market Gauge's Opening Range Success Formula trading system. The Opening Range course focuses on strategies for daytrading, while the Swing Trading system focuses on trades that last from a half day to a week or more. When you go to the website you'll see a number of products offered for sale, including the Swing Trading course for $1,297. But you also get a number of other items for that $1,297, so let's spend a minute on the other systems ...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...MIDPOINT TRADING WITH PENNIES Hey, Don, I had a quick question for you about midpoint trading. Not sure if you know the exact answer, but figured was worth a shot asking you. I have a buddy who trades Citigroup actively -- he just trades to make the spread. For example, C is bid offer 4.16/4.17. He works both sides looking to make the penny. So if he gets hit on his 16 bid, he looks to sell 17s. I told him his life would be much easier if he could sell the 16.5s (as there is always a ton of volume trading in between the spread). I told him it makes sense to work both...

  • The Expiration Trade by Joe Luisi

    ARTICLE SYNOPSIS ...In this world of algorithmic trading, how can an independent trader stand a chance? Here's one way you can trade options to get an edge in the markets. We have all heard that 70% to 80% of all options expire worthless. Many of us have purchased options, only to watch the market move in the direction we anticipate and still lose money as the option we bought drops to zero. I'm not sure whether the percentage of options that expire worthless is correct and there have been articles published about that statement in general, but the one thing I do know is that all out-of-the-m...

  • The Spearman Indicator For Technical Analysis by Dan Valcu

    ARTICLE SYNOPSIS ...This indicator is a very old statistical tool that even to this day helps determine trend strength and turning points. Here's how to apply it to your trading. Technical analysis can be considered both a science and an art; patterns and chart reading represent the artistic component, while technical indicators help us analytically understand trend strength, buy/sell pressure, and divergences. There are perhaps thousands of technical indicators, but few seem to deliver real analytical power and differentiation in this increasingly crowded landscape, especially since many can b...

  • Traders' Tips

    ARTICLE SYNOPSIS ...For this month's Traders' Tips, the focus is Dan Valcu's article in this issue, "The Spearman Indicator For Technical Analysis." Code for AmiBroker is already provided in Valcu's article. Subscribers will also find Valcu's AmiBroker code at the Subscriber Area of our website, www.Traders.com. Presented here is an overview of possible implementations for other software. Traders' Tips are provided to help the reader implement a selected technique from an article in this issue. The entries are contributed by various software developers or programmers for software that is capable of ...

  • Traders' Resource: Advisory Services

    ARTICLE SYNOPSIS ...Advisory services are all over the place, as our listing at Traders.com shows. You have plenty of choices and price points to consider. One key factor is whether the outfit you're checking out is a Registered Investment Advisor (Ria) or a registered Commodity Trading Advisor (Cta). Though it doesn't weed out the undependable advice, the act of registration puts the person or persons under the government's scrutiny. In this listing, filled in by the companies themselves, you'll find those who have Ria and/or Cta certifications as well as those who are nonregistered advi...







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