Article Archive For
FEB2011
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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...
AUTHOR: Technical Analysis, Inc.DATE: FEB2011SUBJECT: Books For Traders
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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 ...
AUTHOR: Anthony Trongone, Ph.D., CFP, CTADATE: FEB2011SUBJECT: Trading Techniques
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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% ...
AUTHOR: Teresa FernandezDATE: FEB2011SUBJECT: Precious Metal
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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...
AUTHOR: Tom GentileDATE: FEB2011SUBJECT: Explore Your Options
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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...
AUTHOR: Carley GarnerDATE: FEB2011SUBJECT: Futures For You
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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...
AUTHOR: Sunny HarrisDATE: FEB2011SUBJECT: Trading Techniques
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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...
AUTHOR: Jay KaeppelDATE: FEB2011SUBJECT: Options
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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 ...
AUTHOR: Technical Analysis, Inc.DATE: FEB2011SUBJECT: Letters To S&C
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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 ...
AUTHOR: Jayanthi GopalakrishnanDATE: FEB2011SUBJECT: Opening Position
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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...
AUTHOR: Jayanthi GopalakrishnanDATE: FEB2011SUBJECT: Interview
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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 ...
AUTHOR: Dennis D. PetersonDATE: FEB2011SUBJECT: Product Review
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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...
AUTHOR: Don BrightDATE: FEB2011SUBJECT: Q&A
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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...
AUTHOR: Joe LuisiDATE: FEB2011SUBJECT: Options
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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...
AUTHOR: Dan ValcuDATE: FEB2011SUBJECT: Statistics
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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 ...
AUTHOR: Technical Analysis, Inc.DATE: FEB2011SUBJECT: Traders' Tips
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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...
AUTHOR: Technical Analysis, Inc.DATE: FEB2011SUBJECT: Traders' Resource