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• A Volatility Trade In Gold by David S. Landry

  ARTICLE SYNOPSIS ...A Volatility Trade In Gold by David S. Landry, CTA Large moves often follow low-volatility environments. Here's one method of combining volatility indicators and pattern recognition along with trend-following methods to capture a breakout in the 1997 gold futures market. A simple review of a market chart will illustrate that markets trade in periods of lackluster sideways price action and then abruptly adjust to new conditions by trending to another price level. The goal of many traders is to trade these short-term trends profitably. Technical analysis can aid you in identifying potential tr...

AUTHOR: David S. LandryDATE: JUL1998SUBJECT: Real World

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• Barrier Stops And Trendlines by J. Katz, Ph.D., and D. McCormick

  ARTICLE SYNOPSIS ...Barrier Stops And Trendlines by Jeffrey Owen Katz, Ph.D., and Donna L. McCormick Last time, Katz and McCormick measured the performance of using this strategy as an exit rule. This time, we examine the effect of eliminating entries that would have been taken in instances where the trendline stop was farther than $1,250 away from the entry price. In recent articles, we experimented with exits to determine whether simple exit strategies can improve the performance of a system with essentially random trade entries. We have explored a strategy that involved a profit target exit, a stop-loss exit...

AUTHOR: J. Katz, Ph.D., and D. McCormickDATE: JUL1998SUBJECT: Money Management

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• Channel Analysis by Thom Hartle

  ARTICLE SYNOPSIS ...Channel Analysis by Thom Hartle A market does not move in a straight line; instead, its movement travels across the chart in peaks and valleys, forming a channel in the direction of the trend. Early identification of the channels can give you important information, including that the trend has changed direction, what the profit objectives are and risk points. As computers and technical analysis software become more and more sophisticated, there is an increasing reliance by traders on using indicators for trading signals. This focus on using technical indicators for developing trading systems...

AUTHOR: Thom HartleDATE: JUL1998SUBJECT: Classic Techniques

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• On System Development; Part 2 by Mark Vakkur, M.D.

  ARTICLE SYNOPSIS ...On System Development Part 2 by Mark Vakkur, M.D. Last month, this author introduced the initial steps that someone, novice or veteran, should take when developing a stock market system. This time, he explains the final steps. Last time, I posited that successful trading consists of systematically putting the odds in your favor. Since our only guide to the future is the past, I showed how the trader must find historical relationships and apply them to the markets going forward. I outlined four steps. First, historical data must be gathered; I used monthly closing data of the Standard & Poor'...

AUTHOR: Mark Vakkur, M.D.DATE: JUL1998SUBJECT: System Design

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• Predicting The Market With Earnings Per Share by Randall J. Covill

  ARTICLE SYNOPSIS ...Predict The Market With Earnings Per Share by Randall J. Covill Take a look at the relationship between changes in earnings per share for each year and the performance of the market for the following year. Is there a correlation? One of Benjamin Graham's investment classics, The Intelligent Investor, has a chapter in which he discusses a comparison of the change in average stock earnings and the change in average stock prices. Intrigued, I decided to graph and calculate a linear correlation coefficient for the actual level in average stock earnings for the Standard & Poor's 500 versus the ac...

AUTHOR: Randall J. CovillDATE: JUL1998SUBJECT: Trading Techniques

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• Secure Fractional Money Management by L. Zamansky, Ph.D., and D. Stendahl

  ARTICLE SYNOPSIS ...Secure Fractional Money Management by Leo J. Zamansky, Ph.D., and David C. Stendahl Here's how to find a new fractional value of capital to invest in every trade to maximize returns subject to a constraint on drawdown, using a variation of the optimal f money management strategy. Over the past four years, we have developed and applied evaluation software to trading systems that use money management techniques and have studied the impact of these techniques on trading systems. A new money management strategy called secure f is one of the outcomes of that work, and here, we will demonstrate ho...

AUTHOR: L. Zamansky, Ph.D., and D. StendahlDATE: JUL1998SUBJECT: Money Management

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• Stocks & Commodities V16:7: Letters

  ARTICLE SYNOPSIS ...The editors of S&C invite readers to submit their opinions and information on subjects relating to technical analysis and this magazine. This column is our means of communication with our readers. Is there something you would like to know more (or less) about? Have you run across trading techniques, services or products that have proved useful? Tell us about it. Without a source of new ideas and subjects coming from our readers, this magazine would not exist. Address your correspondence to: Editor, STOCKS & COMMODITIES, 4757 California Ave. SW, Seattle, WA 98116-4499, or E-mail to editor@Trad...

AUTHOR: Technical Analysis, Inc.DATE: JUL1998SUBJECT: Letters To S&C

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• Traders' Tips

  ARTICLE SYNOPSIS ...Here is this month's selection of Traders' Tips, contributed by various developers of technical analysis software to help readers more easily implement some of the strategies presented. Internet users will also find these and some previous Traders' Tips on our home page at http://www.traders.com. WINDOW ON WALLSTREET In ""A volatility trade in gold"" in this issue, David Landry describes several volatility formulas. These formulas can be implemented in Window On WallStreet Day Trader and Window On WallStreet Professional Investor. In Window On WallStreet, begin with any open chart on your s...

AUTHOR: Technical Analysis, Inc.DATE: JUL1998SUBJECT: Traders' Tips

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• Triangles by David Vomund

  ARTICLE SYNOPSIS ...Triangles by David Vomund Stock prices tend to move in trends. When an existing trend ends, a classic technical pattern known as a triangle often develops. Here's how to make use of this pattern in the stock market. When an existing trend is in the process of ending, there is typically some backing and filling, during which a classic technical pattern referred to as a triangle often develops. There are many variations of this pattern, but here, we will concentrate on two variations: the right triangle and the symmetrical triangle. THE RIGHT TRIANGLE The right triangle pattern exhibits a ser...

AUTHOR: David VomundDATE: JUL1998SUBJECT: Classic Techniques

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• Truth In Futures: John Hill by Thom Hartle

  ARTICLE SYNOPSIS ...Truth In Futures: John Hill John Hill started out in the business of trading commodities in a most remarkable way when he managed to run $1,000 up to $80,000 in a matter of three months - and then managed to lose all but $5,000 in a single day. Some traders would hang up their charts after that, but Hill was determined to understand what he'd done wrong. It took years of study, but he figured it out. STOCKS & COMMODITIES Editor Thom Hartle interviewed Hill via telephone on April 23, 1998, asking him about Futures Truth, the publication he has produced since the 1970s; why novices could benefi...

AUTHOR: Thom HartleDATE: JUL1998SUBJECT: Interview