STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For MAY2009

  • At The Close by L.A. Little

    ARTICLE SYNOPSIS ...At The Close by L.A. Little The Measure Of A Trader What makes a successful trader? IN 1973, Burton Malkiel published a book titled A Random Walk Down Wall Street, where he argued that asset prices typically exhibit signs of random walk behavior and that we cannot consistently outperform market averages. Independent of the questions raised by this and subsequent works, the idea that should concern you is that it is impossible to consistently outperform the market averages. If that is true, then why are we all wasting our time? Further, is that really true? HOW DO YOU MEASURE SUCCESS? ...

  • Books For Traders by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...Books For Traders by Technical Analysis, Inc. ? Do-It-Yourself Hedge Funds: Everything You Need To Make Millions Right Now ? The Great Depression Ahead: How To Prosper In The Crash Following The Greatest Boom in History ? The Heretics Of Finance ? Intermarket Trading Strategies ? Trade To Win: Proven Strategies To Make Money ? The Zulu Principle: Making Extraordinary Profits From Ordinary Shares...

  • Do Chart Patterns Still Work? Thomas Bulkowski

    ARTICLE SYNOPSIS ...Do Chart Patterns Still Work? Thomas Bulkowski Has the failure rate of chart patterns increased in recent years? IN the last several years, have you found it more difficult to make money in the stock market? Do you get the feeling that indicators are less effective than they used to be in spotting profitable opportunities? I decided to find the answers to those questions with a new study. I spent a week updating a database of chart patterns that I used during research for writing my books, and found an alarming result. In my investigation, I used 13,932 chart patterns spread over the years ...

  • Downside Protection With Double-Digit Returns by John Manley

    ARTICLE SYNOPSIS ...Downside Protection With Double-Digit Returns by John Manley This strategy has potential for double-digit returns with a large built-in hedge. Current market conditions have set up a unique opportunity to build a conservative portfolio that will profit even if the market falls by a certain percent, stays flat, or eventually rises over the remainder of the year. It goes without saying we have witnessed the most violent and dramatic market moves of the last 75 years of late. After falling a whopping 38.5% in 2008, the Standard & Poor's 500 is already down another 21% in the first eight weeks o...

  • Explore Your Options by Tom Gentile

    ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile COLLAR CONFUSION I read some messages from other traders about collars and I'm confused. My understanding is these were a bearish strategy, but above all they're for insurance on your stock. What I don't understand is many forum contributors advise that collars are a bullish strategy! Sure, I want my stock to go up ... but if I've already got stock, then taking out a collar seems impossible to make money in a bullish market (over and above a gain in stock price). If my puts keep expiring worthless, and I have to keep buying my calls back at a higher price ...

  • Futures For You by Carley Garner

    ARTICLE SYNOPSIS ...Futures For You by Carley Garner SPLITTING THE BID? Option traders often talk about "splitting the bid" or "midpoint"; what are they referring to? All markets, whether we are talking about cars, houses, groceries, stocks, currencies, futures, or options, have two prices at any given time. There is a price at which an asset can be purchased and one at which it can be sold. In the world of trading, the difference is known as the bid/ask spread. The spread between the two prices is the compensation that the executor requires to accept the risk involved in making a market. For instance, your ...

  • Getting To Know Options With Dan Passarelli by J. Gopalakrishnan & B. Faber

    ARTICLE SYNOPSIS ...Getting To Know Options With Dan Passarelli by J. Gopalakrishnan & B. Faber If you want to learn more about options, here's a trader who might be able to help you. Dan Passarelli is the author of the book Trading Option Greeks and president of Market Taker Mentoring, Llc (www.MarketTaker.com), which provides personalized one-on-one mentoring for option traders. Passarelli started his trading career on the floor of the Chicago Board Options Exchange (Cboe) as an equity option market maker. He also traded agricultural options and futures on the floor of the Chicago Board of Trade (Cbot). In 200...

  • Letters To S&C by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...Letters To S&C by Technical Analysis, Inc. CLARIFICATION ON DOUBLE 7s STRATEGY Editor, In the January 2009 S&C article, "Three Rules, One Easy Way To Trade Etfs," Figure 2 shows point B and the caption refers to "a new, seven-day low at point B." However, two days earlier, the price bar is lower than the bar pointed to at B (using a magnifying glass). A check of my data shows the same results. Point B, on December 14, 2007, has a low of 50.92, but on December 12, the low is at 50.89, according to data from Yahoo! Finance. Is it possible the arrow is pointing to the next day, or do the auth...

Opening Position by Jayanthi Gopalakrishnan

  • Options On Futures by John Jay Norris

    ARTICLE SYNOPSIS ...Options On Futures by John "Jay" Norris Here's how to identify the appropriate underlying conditions and timing for option strategies. The first two things industry insiders will tell you about options on futures is that more than 80% of them expire worthless, and that selling naked options on a monthly basis is frequently referred to as "picking up dimes in front of a steamroller." Put those together and you get losses more often than not if you buy them or you get paid a meager sum on a regular basis if you sell them, and hope you figure out a better way quickly before you get crushed by t...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright NO STOP-LOSSES IN OPENING-ONLY STRATEGIES? I have heard you say that you don't like using stop-loss orders when you trade the opening-only strategy. Why is that? Most "experts" preach that you must use stops. Can you shed some light on this? --Chico Sure, let me try to explain this often-confusing strategy, or lack thereof. First off, you can check past issues of Stocks & Commodities to get an in-depth idea of what we do each day at the opening of the markets. To summarize, each day, Bright traders place buy orders and sell short orders on hundreds of stock prior to mark...

Traders' Resource: Advisory by Technical Analysis, Inc.

  • Traders' Tips by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...Traders' Tips by Technical Analysis, Inc. All of this month's Traders' Tips are based on Sylvain Vervoort's article in this issue, "Using Initial And Trailing Stops." Code for MetaStock to implement the fixed-percentage stop method is already provided in Vervoort's article elsewhere in this issue. Additional code is presented here as contributed by various software developers. Readers will find our Traders' Tips section in its entirety at the Stocks & Commodities website at www.Traders.com in the Traders' Tips area, from where the code can be copied and pasted into the appropriate progra...

  • True Range, Reward/Risk, And Position Size by Alan M. Binder

    ARTICLE SYNOPSIS ...True Range, Reward/Risk, And Position Size by Alan M. Binder This method uses the concept of value at risk and true range to determine a reward to risk ratio and position size for trading stocks. The process has been reduced to two Excel spreadsheets for ease of calculation. Reward/risk ratio and position size are two variables you need to know before you initiate a trade. Value at risk (Var) will help you calculate these two variables. The Var of an equity position is the amount of money that you can expect to lose during a fixed period within a certain probability. Using the usual measure...

  • Using Initial And Trailing Stops by Sylvain Vervoort

    ARTICLE SYNOPSIS ...Using Initial And Trailing Stops by Sylvain Vervoort In this first of a three-part series, we will look at initial stop methods and compare trailing-stop strategies starting with a fixed-percentage trailing stop. Most people have no problem buying a stock, but selling it is another matter. Selling is best accomplished based on technical analysis signals reaching a price target, breaking a trend, money management, or whatever rules you apply for trading the stock market. But you must also consider a last warning signal. This warning is an initial stop and a trailing-stop signal. In this se...

Working Money: One Of My 10 Biggest Financial Mistakes by Brad Burch

Working Money: The Dumpling Top by Stephen W. Bigalow







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