STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For MAR1990

Letters to S&C

Letters to S&C

  • Liquidity Data Bank: Big promises, small deliveries by Thomas K Bonen

    ARTICLE SYNOPSIS ...Liquidity Data Bank: Big promises, small deliveries by Thomas K. Bonen In 1984, the Chicago Board of Trade (CBOT) introduced the revolutionary Liquidity Data Bank (LDB) to the general public. It was a truly unique venture intended to open up the exchange and its price information to the investing public with hopes of increasing non-member trading in its sagging agricultural products. With this introduction, the CBOT created a database of information that previously only floor traders could observe. It was a database of the actual trading volume for each price traded during the day--an absolute...

  • Moving the dollar by Eric Sharp

    ARTICLE SYNOPSIS ...Moving the dollar by Eric Sharp There's no doubt about it. The U.S. dollar isn't just an important trading vehicle in itself, but its price changes have major effects that ripple into many other markets. In essence, it's a ""dog"" with a tail that wags prominently into the bond, stock and gold markets. The dollar also is a rather misunderstood phenomenon. From the end of World War II until the early 1970s, the dollar was tied to other major currencies by fixed exchange rate agreements. After it became free-floating, the dollar went through some major ups and downs. Most striking of all is th...

  • Options? Let's get real by Ana Maria Wilson

    ARTICLE SYNOPSIS ...Options? Let's get real by Ana Maria Wilson When it comes to speculating in options, most players are losers (in bottom-line, real-life-transactions) who fall into two groups: most novices, and the war-scarred veterans struggling to survive. Both groups, however, share the same passionate goal: to crack the code that will put them on the winning side. Because everyone seems convinced the key to the code is lying out there somewhere, the search usually steers to the rich and unending universe of trade literature on the subject. If it has ""options"" in the title, the read is on. Let's face it...

  • Reducing profit variability from technical trading systems by Milton S. Boyd and B. Wade Brorsen

    ARTICLE SYNOPSIS ...Reducing profit variability from technical trading systems by Milton S. Boyd and B. Wade Brorsen Some technical traders spend a sizable portion of their time searching for the perfect trading system or the ""optimal"" parameters, hoping the newly discovered system will give them the highest-possible profit. However, research shows that some currently available popular trend-following systems have provided a reasonable profit, even when traded with conservative margin levels. Unfortunately, the variance of the profits from these technical systems tends to be very high. In fact, the variance o...

  • Resistance by Arthur A. Merrill, C.M.T.

    ARTICLE SYNOPSIS ...Resistance by Arthur A. Merrill, C.M.T. Prices, like everything else move along the line of least resistance. They will do whatever comes easiest therefore they will go up if there is less resistance to an advance than to a decline and vice versa. --Edwin Lefèvre, in Reminiscences of a Stock Operator If the market has low resistance to advances and strong resistance to declines, prices move up rapidly. When resistance to the advance builds up, prices slow down and finally reverse when the resistance to advance exceeds the resistance to decline. If the market then exhibits low resistance to t...

  • Reverse Martingales by James William Ferguson

    ARTICLE SYNOPSIS ...Reverse Martingales by James William Ferguson Perhaps the most celebrated legend in gambling lore tells of the French noble who, suspecting that he had detected an aberration in a roulette wheel on the Riviera, sent a team into the hall and had them record every coup. For several weeks he compiled the results until he learned the sequences to expect. Then, his suspicions confirmed, he rode the ""runs"" -- the consecutive reds or blacks, odds or evens, highs or lows -- in one grand foray after another until, finally, he broke the bank. Only once have I encountered an unbalanced wheel. It was in...

  • Tactical asset allocation with the Market Forecaster by Mark Hallinan

    ARTICLE SYNOPSIS ...Tactical asset allocation with the Market Forecaster by Mark Hallinan When used as an allocator, the Market Forecaster program, produced by William Finnegan Associates, Inc., may produce higher profits than a simple buy-and-hold strategy and at less risk. Using the program as an allocator also produces higher profits than market timing and is less sensitive to varying market conditions. The program, an intermediate-term econometric forecasting package for the U.S stock market, can be used to allocate assets between any U.S. stock portfolio that is highly correlated with either the Dow Jones ...

  • The 42/49/55 day reaction technique by Chuck Carpino

    ARTICLE SYNOPSIS ...The 42/49/55 day reaction technique by Chuck Carpino The 42/49/55 day reaction technique is a trading method I have used for years to buy a stock or index. Although the signal is infrequent, its reliability for a substantial profit is extremely high. In addition, the technique allows low-risk trades because stops can be placed close to the entry points with confidence. The indicator is based on a simple chart pattern that must occur within a specified time period. The pattern, should it evolve, will always take place during a market pullback. The basic signal is a stock completing three down ...

  • The average maturity of money market funds and Eurodollar futures by Glenn Mancher

    ARTICLE SYNOPSIS ...The average maturity of money market funds and Eurodollar futures by Glenn Mancher The high interest rate environment of the early 1980s resulted in great swings in the average maturity of money market funds (Figure 1). As the yield on short-term instruments dropped from 14-17% to 8%, fund managers extended the average maturity to a high of 51 days in summer 1980. At this point, a period of four to five months of shortening followed as the average maturity was reduced to a record low of 23 days in December 1980 through January 1981 (needless to say, rates had rocketed back up to 15-20%). From...

  • The electronic bulletin board comes of financial age by Marshall Rens and Federico L. Brown

    ARTICLE SYNOPSIS ...The electronic bulletin board comes of financial age by Marshall Rens and Federico L. Brown If you've never explored one, computer bulletin boards must seem b-o-r-i-n-g -- a bunch of hacker nerds earnestly arguing via their personal computers the merits of Intel's 80386 chip over Motorola's 68020 or engaged in other trivial pursuits. It's a pity, because for the computer owner the bulletin board system (BBS) is heaven on earth--a quick source of thousands of free investment software programs. All yours for the asking. All free, or the next thing to it. If these programs were just games, you co...

  • Volume-adjusted moving averages by Richard W. Arms Jr.

    ARTICLE SYNOPSIS ...Volume-adjusted moving averages by Richard W. Arms Jr. A moving average line is just that. It smoothes price over time, reducing erratic, shorter-term swings to a smoother, more comprehensible line. Any changes in the parameters of the moving average line, such as the time involved, the weighting, the offsetting of the print and so forth, are only attempts to make the smoothing more informative. However, there has been no real change in that the analysis is still dependent on only two factors: the price of the stock, commodity or average being studied, and the time period. This is not to say...







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