STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For JAN2003

  • A Nonparametric Performance Measure by Guy Brys and Luc Van Hof

    ARTICLE SYNOPSIS ...A Nonparametric Performance Measure by Guy Brys and Luc Van Hof Many an indicator generates buy/sell signals, but how effective are they? We can measure the quality of such signals by embedding them into a fairly simple trading system. We will apply two performance measures -- the classical return on account (ROA) and a nonparametric one (ACC) -- to four indicators to measure the quality of the buy/sell signals, followed by a walk-forward optimization and a discussion of the results. IN THEORY Generally speaking, a trading strategy is a collection of rules triggered by one or more indicators...

Books For Traders

  • Eve & Adam Double Bottoms by Thomas Bulkowski

    ARTICLE SYNOPSIS ...Eve & Adam Double Bottoms by Thomas Bulkowski If you read this author's first two articles about the Adam and Eve combinations of double bottoms, the Eve & Adam combination should be a snap. It combines elements from the Eve & Eve and Adam & Adam double bottom combinations, with performance that nestles comfortably between the two. Of the four varieties of Adam and Eve combinations, the Eve & Adam pattern is the rarest. Just finding good examples for this article proved challenging. When attempting to distinguish between the double bottom varieties, compare each bottom with its opposite. If ...

  • Explore Your Options by Tom Gentile

    ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile COVERED CALL STRATEGIES With the market at yearly lows and the volatility of most options at yearly highs, I think covered calls would make a great strategy. I know you don't like to do them because of the high risk, but with stocks down some 90% from their 2000 highs, the risks are definitely less than before. What do you think?-- Rick F. I can't disagree with you. Hindsight tells us any bullish strategy now is going to have less risk than it did two years ago. First, I'll describe covered calls for the folks out there who don't know what they are. Then I...

  • Fresh Start by Adrienne Laris Toghraie

    ARTICLE SYNOPSIS ...Fresh Start by Adrienne Laris Toghraie Start off the New Year on the right foot. The past several years have been disastrous for many traders. Even concerted attempts by disciplined traders to follow their own trading rules have failed to produce profits. Why has this downward spiral continued? It is because the markets have changed but many traders are choosing not to acknowledge that they must as well. Traders are no longer as confident as they used to be; instead, they are embarrassed, fearful, and angry. To reverse the losing trend, they put more and more time into their trading in the b...

  • Intermarket Review by David Penn

    ARTICLE SYNOPSIS ...Intermarket Review by David Penn THE AMEX GOLD BUGS INDEX ($HUI) The AMEX Gold BUGS (basket of unhedged gold stocks) index represents shares of gold mining and production companies that do not engage in hedging their gold beyond 11?12 years. The index is designed to give investors better exposure to movements in the price of gold compared to other, broader indexes such as the Philadelphia Gold and Silver Index ($XAU). ...

  • Interview: John Hill Of Futures Truth by Jayanthi Gopalakrishnan

    ARTICLE SYNOPSIS ...Interview: John Hill Of Futures Truth by Jayanthi Gopalakrishnan Think of all those trading systems you see advertised and hyped. Haven't you wondered whether they work? Of course you have. John Hill is the president and founder of Futures Truth magazine, which tracks, tests, and evaluates trading systems and then publishes the results. Starting the magazine was his response to the many ineffective or downright fraudulent systems that he saw were being sold to would-be traders. STOCKS & COMMODITIES Editor Jayanthi Gopalakrishnan spoke to Hill via telephone on October 25, 2002, discussing trad...

Letters To S&C

Opening Position by Jayanthi Gopalakrishnan

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright CONVERSIONS I'm new to options trading. Would you explain what a conversion is? -- Kelly, Cincinnati "Conversion" means the buying of puts and selling of calls at the same price, and also buying the underlying stock at the same time. Conversions are critical to valuations, because although calls or puts may look overvalued based on historical volatility, interest rates, and so on (option modeling), they probably aren't when compared to the full "three-way." If you look at the call, put, and stock, you will find that the net pricing will be near fair value (again, based on i...

  • Survival Of The Fittest by Don Bright

    ARTICLE SYNOPSIS ...Survival Of The Fittest by Don Bright What do we do now? A new era in the market has dawned, and we have to figure out how best to adapt to it. Take a look around. The market bubble has burst, and we must learn how to adapt to the new era of trading the markets. There are new trading platforms, new ways to access the markets, and new products such as single-stock futures (SSFs) and narrow-based indexes. Traders must adapt to the new climate to remain successful. As a species, traders face the same dilemma that many of our ancestors did: we must adapt or become extinct. Although the penalty f...

  • The Moving Trend by William Rafter

    ARTICLE SYNOPSIS ...The Moving Trend by William Rafter Here's a look at a nonlagged filter that can be used as a forecasting tool. Data smoothing has long been likened to taking the first generation of allergy medication. The medication relieved the symptoms, but slowed you down so much that the effect seemed worse than the original allergic discomfort. For years, I have been using a data smoother called the "moving trend," which is the market's best forecast -- based on a previous trend -- of where the price level should be today. It proved to greatly diminish the lag problem. John Ehlers' article in the July 20...

  • The Profit's In The Details by Bryan Babcock

    ARTICLE SYNOPSIS ...The Profit's In The Details by Bryan Babcock Minimize the effects of greed with the trader profit equilibrium equation. For many traders, success always remains just around the corner, just a step away. All too often traders allow one bad trade to ruin their day. Or perhaps one bad day ruins the week or even the month. These are symptoms of a trading strategy that, while it may appear to have what it takes for a successful strategy, is doomed to fail. Most traders focus their energy on the trade setup or entry, concentrating too little on actual trade management or the exit. They want to hi...

Traders' Resource: Trading Systems

  • Traders' Tips

    ARTICLE SYNOPSIS ...Traders' Tips This month's selection of Traders' Tips, contributed by various developers of technical analysis software, include code from: AmiBroker, Tradestation, eSignal, Wealth-Lab, TradingSolutions, Neuroshell Trader, Neoticker, Metastock, SmarTrader, and Wall Street Analyzer for: Implementation of the moving trend indicator as described by William Rafter in his article in this issue, "The Moving Trend."" Amibroker, Tradestation, Wealth-Lab, and Neuroshell Trader for: The nonparametric performance measure (ACC) described by Guy Brys and Luc Van Hof in "A NonparametricPerformance Measur...

  • Trading The E-Mini by Dennis Meyers, Ph.D.

    ARTICLE SYNOPSIS ...Trading The E-Mini by Dennis Meyers, Ph.D. Here's a technique you can use to trade the e-mini futures intraday. In my April 1999 article, "The Discrete Fourier Transform Illusion," I demonstrated the misuses of the mathematical technique called the Fourier transform as applied to the Standard & Poor's 500. In that article I discussed how fitting the Fourier transform to the S&P 500 index data series produced a perfect curve-fit on past data, giving the illusion that this technique would predict the major turning points of the S&P 500. However, when the Fourier transform was examined on a day...

  • Websites For Traders: TMitchell.com by Jayanthi Gopalakrishnan

    ARTICLE SYNOPSIS ...Websites For Traders: TMitchell.com by Jayanthi Gopalakrishnan TMITCHELL.COM "Learn to read the markets like a newspaper," Todd Mitchell of Trading Concepts likes to say to his students. How does he teach them to do this? You can find out through his home study course and live, one-on-one trading/training session. The course focuses on trading the Standard & Poor's 500, e-mini, Nasdaq, and Dow contracts, although Mitchell claims that the strategies you learn from his course can be applied to any market and time frame. The course -- unlike most other home study courses -- includes a manual, aud...

  • Websites For Traders: www.BondsOnline.com by Jayanthi Gopalakrishnan

    ARTICLE SYNOPSIS ...WWW.BONDSONLINE.COM by Jayanthi Gopalakrishnan With the stock markets plunging, and widely expected to continue on down, perhaps it's not a bad time to think about putting your investments in safer, more conservative instruments such as fixedincome securities. The returns -- however grim -- are a lot better than the negative double- or triple-digit returns you may be faced with if you remain invested in stocks. But before making that switch, there are certain nuances about the bond market you need to become familiar with. For that, a visit to www.BondsOnline.com may be worth your time. Although...

Working Money: Bear-Baiting & The Dogs Of The Dow by David Penn

Working Money: Even In A Bear Market, Opportunity Abounds by Austin Passamonte

Working Money: Trading Secrets Of The Consistent Losers by Roy M. Sidewitz, Ph.D







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