Download
Article

• Fitting a trendline by least squares by Arthur A. Merrill

  ARTICLE SYNOPSIS ...Fitting a trendline by least squares by Arthur A. Merrill Trendlines usually are drawn through tops or bottoms. They also are drawn through the center of prices by a lagged moving average or by eye (Figure 1). A straight line through the center of a price channel, if the scale is logarithmic, will give you the percentage growth or decline rate. If the straight line is drawn by eye, it is subject to debate. This doubt can be resolved by a mathematically calculated line called ""least squares"" (Figure 2). The deviations of the points from the line are A, B, C, D and E. The line produced by th...

AUTHOR: Arthur A. Merrill, C.M.T.DATE: JUL1988

Download
Article

• Gann made easy by Hans Hannula, Ph.D.

  ARTICLE SYNOPSIS ...Gann made easy by Hans Hannula, Ph.D. Author: Bill McLaren with Mathew J. Foreman Publisher: Gann Theory Publishing Co. 10290 Rosewood Overland Park, KS 66204 (913) 491-5411. 155 pages, hardbound 60-page manual of charts $180 If you ever wanted a good buy in technical trading tools, Gann Made Easy is it. While it is advertised as a book-- which it is--it is really much more. It is a solid book on the basic analysis techniques used by W. D. Gann that is actually closer to a course because the book comes with a manual of 60 charts the size of newspaper pages which are explained in the te...

AUTHOR: Hans Hannula, Ph.D., RSA, CTADATE: JUL1988

Download
Article

• Letters To S&C

  ARTICLE SYNOPSIS ...Letters To S&C Questions on Smoothing Editor, I have recently become a subscriber to your magazine and also purchased back volumes of articles. I have analyzed all articles pertaining to smoothing, and particularly to triple exponential average smoothing. I am quite familiar with exponential averages but not what you define as triple exponential smoothing. The articles show certain contradictions and all lack the essential analytical formulas. Why? Is not such an analytical formula the essential conclusion of the discussion? Some show a BASIC program which can be no better than the formula...

AUTHOR: Technical Analysis, Inc.DATE: JUL1988

Download
Article

• Loops: static and dynamic Part 7 by Jim Summers, Ph.D.

  ARTICLE SYNOPSIS ...Loops: static and dynamic Part 7 by Jim Summers, Ph.D. This month, we develop a loop to manage the calculation of the trading range (TR 1) used in J. Welles Wilder's Directional Movement Index (DMI) system. The previous columns developed the formula for line-by-line processing of this indicator using {Put} and @ Index(...) commands. Loops are an important topic; knowing how to use them with {Put} and @ Index(...) make up one of the strongest Lotus 1-2-3 tools for managing la rge amounts of data in technical anal ysis. We'll be using the data i n Figure 1, taken from Wilder's book , New Conce...

AUTHOR: Jim Summers, Ph.D.DATE: JUL1988

Download
Article

• Martingale money management by Robert Pelletier

  ARTICLE SYNOPSIS ...Martingale money management by Robert Pelletier An age-old method used by professional gamblers may be useful to the active trader as a means of money management. A martingale, according to Webster's dictionary, is a scheme for doubling your bet size following losses. The system is named after a successful 19th century gambler who frequented the casinos of the French Riviera. In a converted form the idea can be transformed into a mild progression which requires a slightly increasing wager level following losing trades and an equal or decreasing unit wager following winning trades. To use the...

AUTHOR: Robert PelletierDATE: JUL1988

Download
Article

• Moving averages Part 2 Ehlers Leading Indicator (ELI) by John Ehlers

  ARTICLE SYNOPSIS ...Moving averages Part 2 Ehlers Leading Indicator (ELI) by John Ehlers Most technical indicators use a moving average of some kind, and this usually dooms the indicator to lag price. Some indicators use momentum, or rate of change, to generate a leading function. However, this is similar to taking the derivative of a continuous function, and it results in a very noisy signal. The noise is usually reduced by smoothing or averaging. This averaging delays the indicator so that, at best, it runs even with price, without lag or lead. I have developed a new indicator that provides leading signals wh...

AUTHOR: John F. EhlersDATE: JUL1988

Download
Article

• Mutual fund trading strategy by Stan Jones

  ARTICLE SYNOPSIS ...Mutual fund trading strategy by Stan Jones It has always struck me that the typical technical analysis software package doesn't answer the right question. It plots technical indicators on the same screen with prices so the user can pick the one or the combination that seems to call turns in the market. Then, presumably, the user goes away and begins to trade on that indicator. The problem is that the real trading question is not, ""How does the indicator Q look on a computer screen?"" The question is, ""How much money will I make or lose if I use indicator Q in the real world?"" This questi...

AUTHOR: Stan JonesDATE: JUL1988

Download
Article

Opening Position by John Sweeney, Editor

AUTHOR: John SweeneyDATE: JUL1988

Download
Article

• Peter Hackstedde: profile of a winning trader by Van K. Tharp, Ph.D.

  ARTICLE SYNOPSIS ...Peter Hackstedde: profile of a winning trader by Van K. Tharp, Ph.D. It was two o'clock on a Friday afternoon. I found myself having lunch with Peter Hackstedde in the Turf Club at Santa Anita race track. I had just finished two articles on compulsive trading (see Stocks & Commodities, January and March 1988) and here I was at the race track with Peter Hackstedde, whom I consider to be a model trader. He is as different from a compulsive trader as day is from night. Peter loves the markets and the track, but he controls the action--the action does not control him. ""I learned how to manage my...

AUTHOR: Van K. Tharp, Ph.D.DATE: JUL1988

Download
Article

• SIDEBAR: More on optimization

  ARTICLE SYNOPSIS ...More on optimization It may seem a daunting prospect to find the optimal combination of 10 trading parameters over an eight-year quote file on a personal computer, but it's not as bad as it sounds. What Strategist does is to start with an initial strategy specified by the user, go through the quote file and compute the initial payoff. Then it varies the first of the 10 parameters until it finds the value that gives the highest payoff--the optimal value for that parameter. It optimizes each of the remaining nine parameters in turn, then starts over again with the first parameter. It may seem...

AUTHOR: Technical Analysis, Inc.DATE: JUL1988

Download
Article

• SIDEBAR: SIDEBAR 1

  ARTICLE SYNOPSIS ...SIDEBAR 1 As an aside, note that volatility must be adjusted for the price action around dividends in mutual funds. I calculate a ""price factor"" (PR) if a dividend (D) paid between quotes Qi-1, and Qi:...

AUTHOR: Technical Analysis, Inc.DATE: JUL1988

Download
Article

• SIDEBAR: Testing your macros

  ARTICLE SYNOPSIS ...Testing your macros The lines between the {Down} macros separate the processing. Each macro is a separate line and you rename each macro as '\x in order to test it separately. You can use other letters if you choose. I always use '\x for test macros in order to avoid confusion. Next, set up the range name for Range1, Range2, Counter1, and Counter2 using the /Range Name Down command. Lastly, when it is time to invoke the macro, put the cursor somewhere such that you can observe the down movement, and hit Alt x. Enhanced uses of {Down} If you read the documentation for 2.0, you probably know...

AUTHOR: Technical Analysis, Inc.DATE: JUL1988

Download
Article

• The Adam theory of markets by Lesley B. Orr

  ARTICLE SYNOPSIS ...The Adam theory of markets by Lesley B. Orr Author: J. Welles Wilder Jr. Publisher: Cavida Ltd., N.C. The Adam Theory of Markets by J. Welles Wilder Jr. is a book about ""making profits trading...any freely traded markets anywhere in the world."" It starts from the premise, repeated many times, that ""There is really a lot less to trading than meets the eye."" It enumerates and expounds on a group of trading rules, presents a simplistic graphic method of predicting future price activity, walks through the anatomies of three trades and even tells a fairy tale and some relevant anecdotes. Th...

AUTHOR: Lesley B. OrrDATE: JUL1988

Download
Article

• The value of optimization by Louis P. Lukac and B. Wade Brorsen

  ARTICLE SYNOPSIS ...The value of optimization by Louis P. Lukac and B. Wade Brorsen Optimization based on historical data is used widely in the futures industry to determine the most profitable parameter sets for a trading system. The underlying premise is that if some parameter set worked well in the past, it should work well in the future. Simply picking the best parameter set from historical data and stating the accompanying profit level (called in-sample profits) is of no real value because you cannot see into the future to know what the best parameter set will be. Actual or blind simulation (out-of-sample)...

AUTHOR: Louis P. Lukac and B. Wade BrorsenDATE: JUL1988

Download
Article

• Trading clues from options volatility by Dave Caplan

  ARTICLE SYNOPSIS ...Trading clues from options volatility by Dave Caplan The significance of volatility is overlooked and underestimated by most traders in the options area. This includes both the effect of volatility on the premium cost of an option when purchased, and the effect of future changes in volatility on a position. Volatility is simply a mathematical computation (I use a ""modified"" Black-Scholes model.) of the magnitude of movement in an option. This is based of course, on the activity in the underlying futures market. If the market is making a rapid move up or down, volatility will rise. In a qui...

AUTHOR: Dave CaplanDATE: JUL1988