NOV 1998 STOCKS & COMMODITIES Magazine

Article Archive For NOV1998

Be Rich or Be Right? CTCR's Courtney Smith by Thom Hartle

ARTICLE SYNOPSIS ...Trader Courtney Smith has added publisher and editor of Commodity Traders Consumer Report to his long list of accomplishments. S&C spoke with him on why traders lose and how to change that. So when did you start in the business? I started trading in the early 1970s, around the time that the International Monetary Market started up on the Chicago Mercantile Exchange (CME). In fact, some of my early trades involved making a market in currency spreads. I was one of the few people looking at the carrying charges in the currencies, and I made a market from off the floor. It was a bit tough beca...

AUTHOR: Thom HartleDATE: NOV1998SUBJECT: Interview

Combining Patterns with Indicators by William Q. Smith

ARTICLE SYNOPSIS ...Combining a technical indicator with another technical method can be the start of a viable trading system. Here's how to combine a technical indicator with a chart pattern to form one. Pattern recognition and trend-following can be combined to form a useful trading system. The particular pattern being reviewed is the triangle chart pattern, while the trend indicator is the 20-day exponential moving average (EMA). Both techniques can be used as a basis for an entry rule for trading opportunities. For an exit rule, we will rely on a trailing stop based on the parabolic indicator. With that in ...

AUTHOR: William Q. SmithDATE: NOV1998SUBJECT: Trading Techniques

Enhancing the Raff Regression Channel by Robert B. McKinnon

ARTICLE SYNOPSIS ...A market follows its primary trend in a zigzag form. The trend direction is easy to see; the real challenge lies in identifying the minor trends. Price channels are a technique used to discover the outer boundaries of the market's action concerning a trend. One simple method is to draw a trendline along the lows and a parallel line along the highs and project both lines forward. A more scientific method is the regression channel, which was introduced by Gilbert Raff in the October 1991 STOCKS & COMMODITIES. The regression channel defines the primary trend by using a linear regression line wi...

AUTHOR: Robert B. McKinnonDATE: NOV1998SUBJECT: Indicators

Mechanical Trading System and the Art of . . . by Marcello Cattaneo Adorno

ARTICLE SYNOPSIS ...Traders following mechanical systems can see situations that may affect mechanically based signals. Here's how to include technical signals outside your basic trading signal. What makes it more difficult still is that often the intuitive hunch not to follow a signal proves to be correct, therefore transforming what was originally intended to be a mechanical trading program into what can best be described as a discretionary trading program based on technical indicators. While this approach, depending on the trader's talent and experience, may actually lead to excellent results, it will lack t...

AUTHOR: Marcello Cattaneo AdornoDATE: NOV1998SUBJECT: Trading Techniques

Midlife Trading by Adrienne Laris Toghraie

ARTICLE SYNOPSIS ...Perhaps you've reached a point of success in your trading when suddenly you lose interest. Why? "Nothing's wrong. I'm doing fine. Really." Jon responded to my questions in such a way that his answers were encouraging -- but if everything was fine, why was he calling me with such urgency? On paper, everything was fine. He had come a long way from his early days as a young and wild-eyed trader. He and his family lived in a beautiful home in the Chicago suburbs, his children were preparing to go off to college, he had a solid marriage, and he had plenty of money in the bank. Who could have a pr...

AUTHOR: Adrienne Laris ToghraieDATE: NOV1998SUBJECT: Trading Psychology

Reversal Formations: Predictive Power? by Alex Saitta

ARTICLE SYNOPSIS ...Do classic chart formations such as the head-and-shoulders or the double-bottom/double-top hold up to close scrutiny? Here's a look. A few years ago, I read a Federal Reserve Bank report entitled "Head-and-shoulders: Not just a flaky pattern." The authors of the piece had rigorously tested the profitability of a trading strategy based on the head-and-shoulders pattern in the foreign exchange market. The results indicated the head-and-shoulders had some predictive power for the German mark and the yen. I was taken by the study's objective approach to what has always been looked upon as a subj...

AUTHOR: Alex SaittaDATE: NOV1998SUBJECT: Basic Techniques

Seasonal Stock Index Trades by James Greenwood

ARTICLE SYNOPSIS ...Here are different seasonal strategies for trading the Value Line Index compared with the New York Stock Exchange Composite Index and the Standard and Poor's 500. Most stock market traders are familiar with the January effect, which is the tendency for smaller issues to outperform blue chips at the turn of the year. But January is certainly not the only time the stock market exhibits seasonal tendencies with the potential to be exploited in trading strategies. In fact, with the January effect apparently fading in recent years as it becomes better known, this may be a particularly good time t...

AUTHOR: James GreenwoodDATE: NOV1998SUBJECT: Market Timing

The British Pound, Cubed by Dennis Meyers, Ph.D.

ARTICLE SYNOPSIS ...Currency markets are popular with trend-followers because of the tendency for currency markets to follow long-term trends. Here's how to smooth out the trend and recognize the major turns. The British pound (BP) is a major currency traded worldwide by corporations, institutions, banks, commodity funds and futures traders. The BP is traded 24 hours a day, and most of the world's largest banks make a two-sided market in the British pound and its associated derivatives. Small traders, however, are constrained to trade the BP futures on the Chicago Mercantile Exchange (CME). The BP futures are t...

AUTHOR: Dennis Meyers, Ph.D.DATE: NOV1998SUBJECT: New Techniques

AUTHOR: Technical Analysis, Inc.DATE: NOV1998SUBJECT: Traders' Tips

V16:11: Letters

ARTICLE SYNOPSIS ...TRADING THE TREND Editor, In his September 1998 article ("Trading the trend"), Andrew Abraham states in the second paragraph that "the calculation uses a 21-period weighted average of the true range, giving higher weight to the true range of the most recent bar." What does he mean by the second part of that sentence? The idea of qualifying trends in this manner appeals greatly to me, even though it may take a considerable effort to keep track of all the mathematics on a daily basis for perhaps two contracts each of 40 commodities. Being able to use a volatility indicator in a charting progra...

AUTHOR: Technical Analysis, Inc.DATE: NOV1998SUBJECT: Letters To S&C