Article Archive For JUN2004
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Books For Traders by Technical Analysis, Inc.
ARTICLE SYNOPSIS ...V. 22:6 (130): Books For Traders by Technical Analysis, Inc. Here are brief descriptions of recently published books in the financial field. Ponzi (347 pages, $14 softcover, 2004, ISBN 0- 7679-1499-6) by Donald Dunn, published by Broadway Books. The republishing of this 1975 biography seems altogether fitting in light of today's recent corporate shenanigans. The tie-in is exemplified by Senator Peter Fitzgerald's quote on the cover of the book of his comment to former Enron chairman Kenneth Lay: "You, sir, are the most accomplished confidence man since Charles Ponzi." This book is about the ...
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Charting The Market by David Penn
ARTICLE SYNOPSIS ...V. 22:6 (90-91): Charting The Market by David Penn SUPPORT AND RESISTANCE Among the first things anyone who studies technical analysis learns is the role that support and resistance play in market price action. Why does a collapse in the price of cattle futures abruptly end and suspend in place, as if tethered by an invisible string? Why does a breakout in a stock occasionally stop dead in its tracks as if it hit a brick wall and refuse to move higher? Often, the answers to these questions are support and resistance, respectively. And while there are some technical analysts (to say nothing ...
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Does Volume Matter? by Thomas N. Bulkowski
ARTICLE SYNOPSIS ...V. 22:6 (18-22): Does Volume Matter? by Thomas N. Bulkowski If a chart pattern breaks out on high volume, is it a blessing or a curse? Recently, I was reading some reviews on Amazon.com for a book on technical analysis, and one reader comment that stuck in my mind was that the author didn't discuss volume. Maybe it's because volume isn't important, I thought. In my daily routine, I rarely look at volume unless I'm considering a trade. Otherwise, it doesn't even appear on my screen. But how important is volume? Does a high-volume breakout really suggest a better-performing pattern? Does a rec...
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Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...V. 22:6 (89): Explore Your Options by Tom Gentile STRADDLES How do straddles make money? If the call moves up, doesn't the put lose just as much? Straddles are a "delta-neutral" strategy. Since straddles are composed of both an at-the-money put and call, the deltas start at zero; hence the term. (Delta is the rate of change in the value of the option for each $1 move in the underlying stock.) If the stock were to move higher, the calls would appreciate and profit, while the puts would depreciate. This works the same way if the stock moves down, but vice versa. This is where the confusion se...
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Forex Trading Platforms And The Real World by Chris Melendez
ARTICLE SYNOPSIS ...V. 22:6 (52-58): Forex Trading Platforms And The Real World by Chris Melendez Here are some of the properties and pitfalls of online retail trading platforms versus the institutional foreign exchange execution systems. Today's foreign exchange markets are rapidly acquiring new traders and investors. Many daytraders and equity investors imagine they can easily become forex traders. But those who venture into the world of foreign exchange are often handicapped by the lure of quick money and by systems that are designed to benefit the trading platform operator, not necessarily the individual t...
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Intermarket Review by David Penn
ARTICLE SYNOPSIS ...V. 22:6 (82-83): Intermarket Review by David Penn GOLDMAN SACHS COMMODITIES INDEX The Goldman Sachs Commodities Index (GSCI) is a world production?weighted index of commodity prices based on the average quantity of production for the last five years of available data. The index is an appropriate benchmark against which the price performance of commodities can be judged. At the same time, the subgroups of the Goldman Sachs Commodities Index can also be used to measure the price performance of the various commodities that make up the GSCI. The weekly charts of the GSCI subgroups shown here inc...
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Interview: Helene Meisler of TheStreet.com by Jayanthi Gopalakrishnan
ARTICLE SYNOPSIS ...V. 22:6 (72-77): Interview: Helene Meisler of TheStreet.com by Jayanthi Gopalakrishnan If you've ever traded the overseas markets, you know how confusing the time difference can be. Now imagine being on the other end of the time difference. Technician Helene Meisler of TheStreet.com, who spent more than a decade covering institutional accounts at various investment banks in New York, including Cowen & Co. and Goldman Sachs, as well as managing equity money for three years at Cargill Inc. in Minneapolis, lives and trades from Shanghai. Yes, as in China. STOCKS & COMMODITIES Editor Jayanthi Gop...
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Letters To S&C by Technical Analysis, Inc.
ARTICLE SYNOPSIS ...V. 22:6 (10-15): Letters To S&C by Technical Analysis, Inc. SPREADSHEETS Editor, The April 2004 issue of S&C contained an article called "Trend Quality Indicator." I would like to see an update of this article in your magazine showing the formulas using Excel. WOLFGANG TILCH, via email Thank you for your interest. Unfortunately, we cannot always include formulas for Excel. Perhaps other readers who have created a spreadsheet will be able to share it with you. You may wish to post a message to this effect at our Message Board at http://messageboards.traders.com/.--Editor...
Opening Position by Jayanthi Gopalakrishnan
Put/Call Parity by Alex Mendoza
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Q&A by Don Bright
ARTICLE SYNOPSIS ...V. 22:6 (59): Q&A by Don Bright ARBITRAGE With regard to arbitrage, I think I understand the reasons why someone trading from a retail account cannot realistically (or should I say consistently) capture arbitrage opportunities. Based on what I can gather, the barriers to entry for "the little guy" are: 1. Cost. This includes commissions but also includes the effects of the bid/ask spread for retail customers. 2. Speed of execution. This includes not only the ability to spot the opportunity quickly, but also the speed with which you get filled. Based on your experience, is this correct? Wh...
Sidebar: MetaStock code for VFI by Markos Katsanos
The Shark Attack Strategy And Fibonacci Levels
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Trader Equilibrium by Ruth Barrons Roosevelt
ARTICLE SYNOPSIS ...V. 22:6 (78-79): Trader Equilibrium by Ruth Barrons Roosevelt To handle the volatility in the markets, you must maintain balance within yourself. Like life itself, trading is about balance. The markets are in constant motion, and in order to handle the volatile forces appropriately, you need to have equilibrium within yourself. This balance will enable you to be on an even keel as you handle any situation. With equilibrium, your emotional inclinations are equalized and stabilized over time. FEAR AND GREED As a trader, it is important for you to balance your fear with your greed, and vice v...
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Traders' Resource: Consultants by Technical Analysis, Inc.
ARTICLE SYNOPSIS ...V. 22:6 (116-121): Traders' Resource: Consultants by Technical Analysis, Inc. Consultants consult on just about every conceivable worry traders have. A quick perusal of our listing in this issue shows that they have been called in to consult on everything from tax advice to weather reporting. Can all this help you? Maybe. The rules for checking out consultants are simple: check references, check references, and (did you guess?) check references. Nothing can be more vague than a consultant's initial proposal, but nothing is clearer than a client's opinion on the success of a consultant's engag...
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Traders' Tips by Technical Analysis, Inc.
ARTICLE SYNOPSIS ...V. 22:6 (96-105): Traders' Tips by Technical Analysis, Inc. Here is this month's selection of Traders' Tips, contributed by various developers of technical analysis software, all to help readers more easily implement some of the strategies presented in this issue. This month's tips are for Markos Katanos' article ""Using Money Flow To Stay with The Trend."" In it, he describes a method of assessing trend strength with a modified on-balance volume calculation. Code for his volume flow indicator are provided for: Tradestation, AmiBroker, eSignal, Wealth-Lab, TradingSolutions, Neuroshell Trade...
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Using Money Flow To Stay With The Trend by Markos Katsanos
ARTICLE SYNOPSIS ...V. 22:6 (40-51): Using Money Flow To Stay With The Trend by Markos Katsanos Avoid impending disasters and stay on the right side of the trend with the volume flow indicator. In their classic Technical Analysis Of Stock Trends, Robert Edwards and John Magee make an appropriate introduction to my topic: Changes in trend, which represent an important shift in the balance between supply and demand ? are detectable sooner or later in the action of the market itself. The ? real value of a share is determined at any time ? by supply and demand, which are accurately reflected in the transactions co...
WM: Arbitrary But True: Hidden Influences On The Stock Market by James A. Maccaro
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Websites For Traders: MarketVolume.com by David Penn
ARTICLE SYNOPSIS ...V. 22:6 (86-88): Websites For Traders: MarketVolume.com by David Penn In the secular trinity of technical analysis ("the Price, the Volume, and the Passage of Time"), volume is included for good reason. While there can be no market without price, there can also be no price movement -- and thus, no profit -- without a pricing mechanism. I'll never forget seeing legendary Austrian economist F.A. Hayek in a PBS interview from the late 1970s criticizing socialism for having, at root, no way to determine the price of anything. The absence of a pricing mechanism -- or, more accurately, the substitutio...
Working Money: Island Trader by Matt Blackman
Working Money: Return To The 50-50 Strategy by Charles Bradshaw Schaap
Working Money: Symmetrical Triangles And The MACDH by David Penn
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Zigzag And One Rank Compared by Norman J. Brown
ARTICLE SYNOPSIS ...V. 22:6 (24-31): Zigzag And One Rank Compared by Norman J. Brown Try this to switch mutual funds. The zigzag indicator has long been used to pick out the peaks and troughs of the price changes (rate of change, or ROC) of stocks and mutual funds. However, such an indicator typically cannot be used as an investing tool for switching funds. This is because the process of confirming the peaks or troughs with a following trough or peak will introduce excessive delays. OVERCOMING THESE DELAYS These delays can be overcome if you set the zigzag filter level below the smallest ROC of the fund being...
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