STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For OCT1993

  • Creating Indicators With Physics by John F. Ehlers

    ARTICLE SYNOPSIS ...Creating Indicators With Physics by John F. Ehlers Do we limit words or do words limit us? As Stocks & Commodities contributor John Ehlers opines, we can't really describe market activity with terms now used in the technical trading field. He suggests a new approach to looking at the market, using as analogy the physical world and as a result, a way to develop sophisticated new indicators. Every discipline has its jargon. Technical trading is no different. If you doubt that we use jargon, look up the standard definition of ""stochastic"" or ""momentum"" in a dictionary. These definitions ha...

  • Dean Barr On Artificial Intelligence by Thom Hartle

    ARTICLE SYNOPSIS ...Dean Barr On Artificial Intelligence by Thom Hartle Barr explains the differences between expert systems and neural networks and some of the keys to successfully applying neural network technology to trading. He also looks at the future of neural network technology. How did you get started managing money? I started on Wall Street in 1983 in a Merrill Lynch training program. Prior to that, I was fortunate enough to spend a few summers on a trading desk. When I joined Merrill Lynch in 1983, I was shipped off to Europe for about a year, where I learned a great deal about the international mar...

  • Designing Trading Systems For The Stock Market by Roger Altman, Ph.D.

    ARTICLE SYNOPSIS ...Designing Trading Systems For The Stock Market by Roger Altman, Ph.D. System designers are aware that the traditional methods used to select parameter values are prone to overfitting. What, then, can be done about it? Stocks & Commodities Roger Altman presents a method to reduce this problem by using randomized data to produce parameter values for trading systems that have the best chance of duplicating real-time results. Mechanical trading systems attempt to exploit the non random portion of price fluctuations. Generally speaking, such trading methods have two parts: the setup and the trigg...

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

    ARTICLE SYNOPSIS ...LETTERS by Technical Analysis, Inc. COPPOCK'S ORIGINAL FORMULA Editor, Regarding my article ""The Coppock guide"" in the March 1993 issue, astute technicians may have noticed that the described formula varied somewhat from Coppock's original formula, which he explained in a Barron's article published in October 1962. Using Coppock's original rules, the DJIA's 14-month rate of price change is added to the DJIA's 11-month rate of price change, and that total is then used to determine a 10-month weighted moving total. The moving total is calculated by multiplying the sum for the most recent mo...

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

    ARTICLE SYNOPSIS ...LETTERS by Technical Analysis, Inc. STANDARD DEVIATION Editor, In the ""Relative volatility index"" sidebar on pages 64-65 of the June 1993 STOCKS & COMMODITIES, the Excel spreadsheet gives the formulas for the up close volatility and down close volatility in columns E and F. Please define for me STDEVP(D2:D11). I would appreciate a numerical answer. Thank you. ROBERT MAAS - Largo, FL The STDEVP(D2:D11) formula in Excel measures the standard deviation of the closing prices listed in cells D2 through D11. Standard deviation measures the variance about the mean. In our case, we are measurin...

  • Looking For Inefficiently Priced Stocks by Thomas K. Lloyd

    ARTICLE SYNOPSIS ...Looking For Inefficiently Priced Stocks by Thomas K. Lloyd The story is the same everywhere: Find the inefficiency and take advantage of it. This author presents some ideas on how to recognize market inefficiencies by analyzing stock charts and making use of what he calls the inefficient market theory. Every trader knows that the way to trade profitably and easily is to take advantage of the inefficiencies in the marketplace. That means you have to be able to recognize inefficient pricing, have some idea about how badly the price is off, and then time your trade to take advantage of the pric...

  • Overcoming Trading Trauma by Ruth Roosevelt

    ARTICLE SYNOPSIS ...Overcoming Trading Trauma by Ruth Roosevelt Bad experiences can easily become imprinted in our memories. Because we act according to past experience, we tend to repeat our reactions to situations unless we alter our memory of that experience, thus creating a new map for our future actions. Ruth Roosevelt, director of the Wall Street Hypnosis Center, explains how to overcome a difficult trading experience and ensure that the same mistakes will not be inadvertently repeated. Traders often ask me to help them get over an overwhelmingly difficult trading experience. The impression of their exper...

  • Preprocessing Data For Neural Networks by Lou Mendelsohn

    ARTICLE SYNOPSIS ...Preprocessing Data For Neural Networks by Lou Mendelsohn Today's global markets demand new analytical tools for survival and profit as prevailing methods of analysis lose their luster. Here, Stocks & Commodities contributor Lou Mendelsohn explains how an emerging method of synergistic market analysis can be applied to neural networks for financial forecasting and discusses how to select and combine various types of market information and transform the data into a format appropriate for neural network training. With the rise of artificial intelligence technology and the growing interrelated m...

  • Redefining Volatility And Position Risk by C.A. Kase, C.T.A.

    ARTICLE SYNOPSIS ...Redefining Volatility And Position Risk by C.A. Kase, C.T.A. A method on looking at the volatility of intraday price bars using a stop system called the ""dev-stop."" Volatility is the key to understanding market behavior. Volatility is the change in price and thus, by definition, is directly related to price. I normally use true closing range (TCR) as a measure of volatility rather than the annualized price probability that options traders employ. The true closing range is the largest absolute value of three possibilities: (1) high minus low, (2) high minus previous close or (3) low minus p...

  • SIDEBAR: CALCULATING THE DEV- STOP by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...CALCULATING THE DEV- STOP by Technical Analysis, Inc. Calculating the DEV-stop....

  • SIDEBAR: JSA MOVING AVERAGE CALCULATIONS by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...JSA MOVING AVERAGE CALCULATIONS by Technical Analysis, Inc. Calculations for the simple, linear, and exponential moving average, plus the authors new interpretation....

  • SIDEBAR: THE RPI by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...THE RPI by Technical Analysis, Inc. Applying the RPI, restoring pull indicator, which uses current cycle length and volume in its calculations....

  • SIDEBAR: The RSI and the RMI by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...The RSI and the RMI by Technical Analysis, Inc. Formulas and sample spreadsheets for the RSI and RMI....

  • The Importance of Stop Orders by Patrick Cifaldi, C.M.T.

    ARTICLE SYNOPSIS ...The Importance of Stop Orders by Patrick Cifaldi, C.M.T. Some traders view stop orders as an affront to their analytical skills, but they shouldn't. Here are some simple guidelines on using stop orders and saving yourself some painful and costly lessons. Stop orders are a necessary part of trading. Stop orders have price trigger points that modify them from resting orders to be filled at the market if the trigger price is traded at or through during market hours. Stop orders are used to initiate trades, lock in profits and limit losses on existing trades. Of these, sell-stop orders are plac...

  • The JSA Moving Average by George R. Arrington, Ph.D.

    ARTICLE SYNOPSIS ...The JSA Moving Average by George R. Arrington, Ph.D. Presenting the JSA, a unique moving average that could provide an early warning that other technical indicators may have an impending signal. In addition, comparing the JSA with other moving averages raises interesting questions about the information that moving averages in general provide. Most traders use moving averages to identify underlying price trends and to help signal the timing of a trade. In slow- moving markets, the three most common moving averages (simple, linear and exponential) may do just fine. But in fast-moving markets w...

  • Traders' Tips by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...Traders' Tips by Technical Analysis, Inc. TRADESTATION The following formulas for Omega's TradeStation EasyLanguage are for both the double-smoothed stochastics and the stochastics momentum indices as described by William Blau in the January 1993 STOCKS & COMMODITIES....







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