Article Archive For
JAN1991
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A Session With Alex Elder by Thom Hartle
ARTICLE SYNOPSIS ...A Session With Alex Elder by Thom Hartle
Alexander Elder, director of the Financial Trading Seminars, is no newcomer to technical analysis nor
to trading. Technical Editor John Sweeney and Editor Thom Hartle interviewed Elder on July 18 of last
year in the STOCKS & COMMODITIES offices.
How are you learning to become a better trader?
The best way I know to become better at anything is to teach. Being confronted with a whole group of
people who expect information and who ask very tough questions is the best way to organize my thinking
and to become better at whatever it is that I'm doing. I f...
AUTHOR: Thom HartleDATE: JAN1991
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A Wyckoff Guide for Investors and Speculators by Craig F. Schroeder
ARTICLE SYNOPSIS ...A Wyckoff Guide For Investors And Speculators
by Craig F. Schroeder
The Wyckoff method as it is taught today represents the results of more than 100 years of continuous
market study. Those years have brought the development of numerous refinements and a variety of
applications. The basic building blocks of the approach, however, have remained the same. The ability to
stand the test of time in a field where techniques come and go as regularly as the seasons makes a
working knowledge of the method a worthwhile undertaking for all serious investors and speculators.
In his course in stock market...
AUTHOR: Craig F. SchroederDATE: JAN1991
AUTHOR: Thom HartleDATE: JAN1991
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Creating A Synthetic Security by Jean-Olivier Fraisse, C.F.A.
ARTICLE SYNOPSIS ...Creating A Synthetic Security
by Jean-Olivier Fraisse, C.F.A.
Experienced investors know their goal is to maximize returns while minimizing risk. The smaller the
capital invested for a profit is, the higher the return is. Using synthetic securities may reduce the
investment that is required to implement a given strategy.
To describe synthetic instruments is at once simple and complex. A synthetic security is created by
buying and writing a combination of options that simulates the risk and profit profile of a security. To
decide on a beneficial combination, first group several financial inst...
AUTHOR: Jean-Olivier Fraisse, C.F.A.DATE: JAN1991
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Currency Investment With Tactical Trading by John Beatty
ARTICLE SYNOPSIS ...Currency Investment With Tactical Trading
by John Beatty
Foreign currency deposit accounts -- for German Deutschemarks, British pounds and so forth--are not
routinely available in the cities and towns of the United States. In fact, before January 1989, federal law
prohibited such accounts. As a consequence, many believe that currency investments comprise only the
trading of futures and options. And unfortunately, for many investors, futures and options are definitely
too risky.
Should you want to move your funds across foreign currency deposit accounts in a bank, however, you do
have interesti...
AUTHOR: John BeattyDATE: JAN1991
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Double Smoothed-Stochastics by William Blau
ARTICLE SYNOPSIS ...Double Smoothed-Stochastics
by William Blau
The stochastic oscillator devised by George Lane is one of the most useful and widely used tools in
technical analysis. This oscillator is based on the current close in relation to the highest and lowest prices
in a specified time interval (Figure 1). By definition, price increases as the close approaches the highest
price of the interval and, conversely, decreases approaching the lowest price in the interval. A maximum
is defined when price touches the highest price and then recedes. These characteristics are succinctly
expressed by Lane's stochast...
AUTHOR: William BlauDATE: JAN1991
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Letters To S&C
ARTICLE SYNOPSIS ...LETTERS TO S&C
FAST FOURIER AND SPECTRAL ANALYSIS
Editor,
I am a student at The School of Business Economics, Aarhus, Denmark. Presently I am working on my
graduate report, which concerns the efficiency of the foreign exchange market. In order to detect
inefficiency in the market I have performed several statistical tests, including spectral analysis. None of
these tests have produced any significant results, however, and considering the fact that certain investors
and investment firms through the use of technical analysis have produced profits substantially larger than
could be expected un...
AUTHOR: Technical Analysis, Inc.DATE: JAN1991
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Managing Emotions And Money by Robert J. Hamilton
ARTICLE SYNOPSIS ...Managing Emotions And Money
by Robert J. Hamilton
The pitfalls of trading are well known to investors as well as traders. As perils go, the star performers
by far and away are hope, fear and greed. The mavens of trading theory agree that avoiding these pitfalls
will lead to successful and profitable trading. The problem is, the mavens never tell you how to avoid
those pitfalls successfully. They don't even tell you how to get a good commission discount.
Successful option and commodity traders usually won't admit the ""h"" word--hope--to their trading
vocabulary. They know that whenever you get...
AUTHOR: Robert J. HamiltonDATE: JAN1991
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Pseudo Stocks by Mark Harris
ARTICLE SYNOPSIS ...Pseudo Stocks
by Mark Harris
The stocks charted in Figure 1 look for all the world like typical charts you might find in a chartbook. I
have added a few uptrend and downtrend lines and shown how 52 (in the upper chart) seems to provide
long-term resistance, then support, and in the latter stages resistance again. I can't tell you what stocks
these are, because they aren't charts of real stocks: the charts were generated by my computer along with
thousands of others. They are shown as a family here because they all possess common statistical
characteristics.
Some years ago I became interested...
AUTHOR: Mark HarrisDATE: JAN1991
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SIDEBAR: EXPONENTIAL MOVING AVERAGES
ARTICLE SYNOPSIS ...EXPONENTIAL MOVING AVERAGES
Defining exponentially smoothed moving averages -- which, for most traders, would be a series of
closing prices -- is simply another form of a moving average....
AUTHOR: Technical Analysis, Inc.DATE: JAN1991
AUTHOR: Technical Analysis, Inc.DATE: JAN1991
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SIDEBAR: RELEVANT FORMULAS AND OBSERVATIONS
ARTICLE SYNOPSIS ...RELEVANT FORMULAS AND
OBSERVATIONS
Focusing on the profit and loss profiles, we have established that:
Rstock + Rput - Rcall = 0
Where Rstock, Rput and Rcall are the risk--profit or loss --of holding the stock, the put and the call,
respectively. ......
AUTHOR: Technical Analysis, Inc.DATE: JAN1991
SIDEBAR: SMALL TALK
AUTHOR: Technical Analysis, Inc.DATE: JAN1991
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SIDEBAR: TERMS AND PROGRAMMING HOW -TOS
ARTICLE SYNOPSIS ...TERMS AND PROGRAMMING HOW -TOS
Here are the definitions of the terms used in Article Figures 2 and 3, and the names of storage variables
you see at the top of the macro:
CURR--Currency for which the database holds exchange rates
SERIES--Ex. 12345, a numerical series that is optimized
......
AUTHOR: Technical Analysis, Inc.DATE: JAN1991
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SIDEBAR: THE WYCKOFF WAVE
ARTICLE SYNOPSIS ...THE WYCKOFF WAVE
To determine the current trend, the present position and probable future trend of the market, a means of
charting the market's action to reveal the general direction of the trend is necessary. ......
AUTHOR: Technical Analysis, Inc.DATE: JAN1991
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Support And Resistance Levels by John J. Kosar
ARTICLE SYNOPSIS ...Support And Resistance Levels
by John J. Kosar
With the advent of personal computers and charting software, support and resistance levels and their
value as a technical tool have been overshadowed by sophisticated indicators. Nonetheless, support and
resistance levels are one of the most basic and essential components of technical analysis.
Support and resistance are price areas where an abundance of trading has taken place and where
considerable buying or selling pressure exists. Underlying support (that is, buying pressure) keeps a
market in an uptrend, and overhead resistance (selling pre...
AUTHOR: John J. KosarDATE: JAN1991
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Trading Simply: Minimizing Losses by John Sweeney
ARTICLE SYNOPSIS ...Trading Simply: Minimizing Losses
by John Sweeney
Richard Dennis is said to have said, ""There's a lot less to trading than meets the eye."" If so, he was
correct. I like to describe an approach that has nothing to do with entry or exit, but everything to do with
minimizing losses. I believe virtually any system that can identify successful trades can be profitable,
given good loss control. Here's how.
FUNDAMENTAL RULES
Approach trading, particularly futures trading, as a zero-sum game. In such a game you can only win if
someone else loses. Stock trading is not such a game, definitively, si...
AUTHOR: John SweeneyDATE: JAN1991
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Trend Exhaustion Index by Clifford L. Creel, Ph.D.
ARTICLE SYNOPSIS ...When a price trend changes direction, it is sometimes difficult to predict whether that change is just a
small correction or the start of a major trend change. I use a simple indicator, which I call the trend
exhaustion index (TEI), to help interpret such trend changes.
TEI gives an indication of change in market direction. It is not infallible, but after using it for the past
year, I have learned to appreciate it as part of my technical toolbox. It is especially useful in giving exit
signals prior to major market declines.
The index is constructed by dividing the New York Stock Exchange (NY...
AUTHOR: Clifford L. Creel, Ph.D.DATE: JAN1991
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Volatility by Arthur A. Merrill, C.M.T.
ARTICLE SYNOPSIS ...Volatility
by Arthur A. Merrill, C.M.T.
Does the degree of volatility in the stock market give us any clue to the future of the market? I tested
day-to-day volatility and found that it does have a good forecasting record.
I took the percent change of the Dow Jones Industrial Average from the preceding day's close to the
current close, and multiplied by 1,000 to get a reasonable number. All changes up or down were made
positive. The changes in the week were then averaged to make the v basic index. The chart is a 33%
exponential average, which is about the equivalent of a five-week average....
AUTHOR: Arthur A. Merrill, C.M.T.DATE: JAN1991