STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For JAN1996

  • Letters to S&C

    ARTICLE SYNOPSIS ...LETTERS TO S&C MOVING AVERAGE WINDOW Editor, I have been reading S&C now for about a year and have spent a lot of time understanding some of the trading systems presented in the magazine. I have also spent time actually setting them up with data in Excel. In your April 1995 issue was a really interesting program submitted by Alex Saitta for range breakout trading in Treasury bonds. I hope to try it in real-time trading soon. My question is actually a rather generic one having to do with comparing current trading data to some historical calculation. Mr. Saitta defines how he determines if the ...

  • On Using Stops by Joe Luisi

    ARTICLE SYNOPSIS ...V. 14:1 (45-49): On Using Stops by Joe Luisi Stop orders are used to manage risk and to enter and exit positions. But what are some of the methods you can use to do so? For a look at the basics plus some of the finer points, read on. Say your favorite indicator flashes a buy signal. You proceed to call your broker and enter the market. Then what do you do? Do you just sit back and wait for the profits to roll in? What happens if the market falls apart and it turns out you're facing a big loss? Getting into a trade is the easy part; learning how to protect and manage the trade is the hard par...

  • Quantifying Divergence with the Divergence Index by Matt Storz

    ARTICLE SYNOPSIS ...NEW TECHNIQUES Quantifying Divergence With The Divergence Index Divergence, a popular technical term used to denote a market movement in one direction when a technical indicator fails to follow it, can forewarn of a reversal in market direction. However, divergence has been difficult to quantify. Here's one software engineer's approach to tracking divergence. By Matt Storz Divergence between market prices and an indicator applied to those prices can provide a strong signal of an impending price reversal. For example, when prices make new highs but the indicator does not, an important market...

  • Quasi-Seasonal Tendencies in Bond Futures by Scott Barrie

    ARTICLE SYNOPSIS ...V.14:1 (19-25): Quasi-Seasonal Tendencies in Bond Futures by Scott Barrie Markets may have certain persistent characteristics. Here, a market analyst takes a close look at the Treasury bond futures markets to see if there are tradable patterns. Agricultural commodities traders are familiar with seasonal tendencies. Crops are planted at around the same time each year and harvested around the same time each year, so prices tend to follow the normal planting and harvesting cycle of production. Soybeans seem to rally in April, May or June based on drought scares, except in 1993, when soybeans ra...

  • Recovery and Preparing to Trade by Ari Kiev, M.D.

    ARTICLE SYNOPSIS ...V.14:1 (34-36): Recovery and Preparing to Trade by Ari Kiev, M.D. Keeping a level head is key to enhancing your success as a trader. In this article, this consultant, who teaches psychological breakthrough strategies, discusses how to relinquish the emotional impact of trading failures and successes and staying focused on the upcoming trades. Trading is a complex activity that requires unceasing self correction in the face of never-ending and ever-changing market conditions. To reach trading mastery, the trader must learn how to recover from previous trades, whether profitable or not, to rel...

  • Robert R. Prechter Jr. on the Elliott Wave Principle by Thom Hartle

    ARTICLE SYNOPSIS ...V14:1 (37-42): Interview: Robert R. Prechter Jr. on the Elliott Wave Principle by Thom Hartle It's inevitable: Anyone who enters into the realm of technical analysis runs into a reference to the Elliott Wave Principle sooner or later. Whether you're an adherent or a skeptic, the Elliott wave is certainly one of the best-known methods by which to analyze the markets. Robert Prechter, who is considered to be the world's leading authority on the Elliott Wave Principle, is president of market forecasting and publishing firm Elliott Wave International and is also the author of a number of books on...

  • SIDEBAR: Defining parameters

    ARTICLE SYNOPSIS ...DEFINING PARAMETERS TradeStation's EasyLanguage has a number of restrictions on the use of variable names. Variable names cannot exceed 20 characters in length, cannot use spaces and cannot use special characters (such as the characters above the number keys on a standard IBM keyboard). In addition, variable names cannot be one of TradeStation's reserved words; for example, the variable name delta , which is a TradeStation reserved word, cannot be used for that purpose. These restrictions make abbreviations necessary for the variables in this article, and some of them may confuse the reader. ...

  • SIDEBAR: Historical Market Turning Points

    ARTICLE SYNOPSIS ...HISTORICAL MARKET TURNING POINTS The Kinsman smoothed A-D has caught major trend changes in the market well over the past two decades. The most recent of these: 1987 1 Selecting norms for 1987 was one of the more complicated exercises in using this oscillator. The problem was the 1986 market (not shown), with four spikes above +400 and four under -400, plus one at -649 in September. Still, the other highs and lows averaged out to a range of +100 to +300 and -200 to -300. The September spike low barely qualified as a bear alert and no following second spike announced a trend change. 2 Janua...

  • SIDEBAR: Kinsman Smoothed A-D Calculation

    ARTICLE SYNOPSIS ...KINSMAN SMOOTHED A-D CALCULATION A clear advantage of this oscillator is its simplicity of calculation. Two Lotus or Quattro spreadsheet columns are all that are required, although I'll show them in four for the sake of clarity. The first two, the daily NYSE advances in A, and declines in B, can be combined as one net formula, A minus B, in column C....

  • Sidebar: The Elliott Wave by Thom Hartle

    ARTICLE SYNOPSIS ...V.14:1 (43): Sidebar: The Elliott Wave by Thom Hartle The Elliott wave principle is a method for classifying and forecasting market movement. The basic tenet is that markets move in a five-wave pattern in the direction of the trend. Once the five waves have been completed, the market will move counter to the trend in a three-wave pattern. For example, in Figure 1 the trend is up and there are five waves labeled waves 1, 2, 3, 4 and 5. Waves 1, 3 and 5 are called impulse waves. Waves 2 and 4 are corrective waves, moving counter to the preceding waves. Once a five-wave movement is complete, the...

  • The Advance-Decline Line Redux by Robert Kinsman

    ARTICLE SYNOPSIS ...V.14:1 (29-33): The Advance-Decline Line Redux by Robert Kinsman The advance-decline line is an ongoing sum of the difference between the number of stocks closing higher minus the number of stocks closing lower each day. Here's a primer on how to use a variation on this indicator. Often in technical analysis, a commonly used market indicator can be expanded or modified to improve its value. One case in point is the ubiquitous advance-decline line. Many technicians have found that it can be smoothed to provide oscillators that reveal both overbought and oversold levels, plus important short- ...

  • The Electric Utility Bond Market Indicator by Dennis Meyers, Ph.D.

    ARTICLE SYNOPSIS ...V.14:1 (11-18): The Electric Utility Bond Market Indicator by Dennis Meyers, Ph.D. There's a close relationship between the performance of the electric utilities stock index and the bond market. Technicians use this relationship to forecast the direction of interest rates. This S&C Contributing Editor takes it one step further and designs a trading system for bonds based on the S&P 500 electric utility index. Electric utilities stock indices have long been assumed to be a leading indicator of the bond market. Utilities are linked to bonds, the theory goes, because they are influenced by the...

  • Traders' Tips

    ARTICLE SYNOPSIS ...TRADERS' TIPS TRADESTATION To create the divergence index in Matt Storz's ""Quantifying Divergence with the Divergence Index,"" you must first create two User-Functions, PeakDivergence and TroughDivergence. The code for both is listed below. Be sure you create and verify these before you build the indicator. Since I have built them as User-Functions, you can now call these functions from any other study or system without having to recreate the code. Type: User-Function Name: PeakDivergence Inputs: Strength(NumericSimple), OSC(NumericSeries); Vars: Hc(0), Hp(0), Hh(0), HL(0), Ic(0), Ih(0), I...







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