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• Behavioral Force by David Schimel, M.D.

  ARTICLE SYNOPSIS ...Behavioral Force by David Schimel, M.D. Here's a new tool that can help you predict stock price movements. Evidence now exists to refute the long-held belief that stock price variations are random and unpredictable. Numerous studies have shown that the collective reactions of investors to price variations create a powerful behavioral force that affects stock price movement. Using this as a premise, we conducted an extensive study and developed an algorithm to measure the behavioral force. We present the findings here. BEHAVIORAL FORCE Price movement results from the collective behavior of ...

AUTHOR: David Schimel, M.D.DATE: SEP2002SUBJECT: Trading Psychology

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• Better Trading With Risk Control by Daryl Guppy

  ARTICLE SYNOPSIS ...Better Trading With Risk Control by Daryl Guppy How do you improve your trading results? Risk management, of course. Understanding how the tools of technical analysis work and how they are applied makes a big difference to your initial trading results. A novice trader will see his or her trading improve quickly at first, but then it all seems to bog down. This becomes even more pronounced when markets become skittery or take on a bearish slant. Despite this performance decline, of course everyone wants to aim for a 90% success rate. Is this achieved through reading, coursework, and better tr...

AUTHOR: Daryl GuppyDATE: SEP2002SUBJECT: Money Management

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• Books For Traders

  ARTICLE SYNOPSIS ...Books For Traders The Procrastinator's Guide To Financial Security: How Anyone Over 40 Can Still Build A Strong Portfolio -- And Retire Comfortably (306 pages, $24.95 hardcover, 2001, ISBN 0814406211), by David F. Teitelbaum, published by AMACOM. Have you spent your earning years focused more on consumption than on saving? Or maybe, like most people over 40, you just can't believe you've hit middle age with so little money to show for it. This book gives you a crash course in the fundamentals of money management, budgeting, saving, and investing. You can't rely solely on company pension plan...

AUTHOR: Technical Analysis, Inc.DATE: SEP2002SUBJECT: Books for Traders

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• Cueing Off Support And Resistance Levels by Thom Hartle

  ARTICLE SYNOPSIS ...Cueing Off Support And Resistance Levels by Thom Hartle Tracking previous highs and lows and analyzing price action can provide clear indications of trend direction. Early in your trading career, you probably learned that you should buy at support and sell at resistance. Support is usually described as a previous point at which the market stopped going down, and resistance as the most recenthigh point at which the market stopped going up. A more definitive approach states that resistance is the previous week's high and support is the previous week's low. If you use trading signals for entry ...

AUTHOR: Thom HartleDATE: SEP2002SUBJECT: Charting

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• Exits: The Forgotten Component by Roy M. Sidewitz

  ARTICLE SYNOPSIS ...Exits: The Forgotten Component by Roy M. Sidewitz In many ways, a consistently successful exit strategy is more difficult to implement than an entry strategy. Often, entry points are so emphasized that exits, which may be even more critical to overall trading success than entries, are sometimes overlooked. This is because when you are contemplating an exit, you are already in the trade; the emotions of fear and greed make getting out of it more difficult. A missed entry is just one missed opportunity out of many, but a missed exit could easily result in a dramatically diminished trading acco...

AUTHOR: Roy M. Sidewitz, Ph.DDATE: SEP2002SUBJECT: Money Management

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Explore Your Options by Tom Gentile

AUTHOR: Tom GentileDATE: SEP2002SUBJECT: Options

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• Improve Your System With The Profitability Rule by Michael Harris

  ARTICLE SYNOPSIS ...Improve Your System With The Profitability Rule by Michael Harris What are the capabilities and limitations of your trading system or investment strategy? You can ensure your system or strategy has a high probability of meeting your profit objectives by using this simple model as a measure of profitability. Most traders spend time trying to develop mechanical trading systems and often end up lost in a maze of indicators and techniques that produce dismal results. They may not fully understand the fundamental tradeoffs present in trading system design, or even worse, underestimate the influen...

AUTHOR: Michael HarrisDATE: SEP2002SUBJECT: System Design

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• Interview: David Stendahl by Jayanthi Gopalakrishnan

  ARTICLE SYNOPSIS ...Interview: David Stendahl by Jayanthi Gopalakrishnan David Stendahl is an author, a sometime contributor to STOCKS & COMMODITIES, and an authority in the field of portfolio construction and system design. He has lectured at numerous national and international conferences and written articles on evaluation and money management techniques. Stendahl also cocreated various performance analysis software packages, including Performance Summary Plus (now incorporated into TradeStation). Currently, Stendahl comanages Landmark Asset Management, an investment firm that specializes in investing in the g...

AUTHOR: Jayanthi GopalakrishnanDATE: SEP2002SUBJECT: Interview

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• Letters To S&C

  ARTICLE SYNOPSIS ...Letters To S&C PRICE TARGETS Editor, I thoroughly enjoy your mag and can't wait for the next issue each month. How does one place price targets on any stock? What charts patterns give the best probability of price predictions? Is there a book on the subject dedicated to target setting/interpretation? YACOOB KADWA, via e-mail According to Don Bright's Q&A column in the June 2001 STOCKS & COMMODITIES, "That is something the world would like to know," and he points out that the price-target predictions by analysts are usually not accurate. However, we have explored techniques for projecting...

AUTHOR: Technical Analysis, Inc.DATE: SEP2002SUBJECT: Letters To S&C

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Opening Position by Jayanthi Gopalakrishnan

AUTHOR: Jayanthi GopalakrishnanDATE: SEP2002SUBJECT: Opening Position

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• Position Sizing For Optimal Results by Bo Yoder

  ARTICLE SYNOPSIS ...Position Sizing For Optimal Results by Bo Yoder Carefully choosing position sizes can lead to consistent returns. Position sizing is a facet of trading that is often misunderstood and has the potential to dramatically affect your returns. After all the indicators have indicated, the support or resistance levels have been established, and the signal to buy or sell has flashed, one last question remains: How many shares? A rule of thumb is to risk no more than 5% of your account on any single trade. For intraday traders, between 1% and 2% of cash equity is often recommended. For a trader with ...

AUTHOR: Bo YoderDATE: SEP2002

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• Q&A by Don Bright

  ARTICLE SYNOPSIS ...Q&A by Don Bright SEASONAL STOCKS Are you aware of any actual study on seasonal tendencies among stock sectors? I've heard the general market "sell in May and go away" and "buy tech stocks in the fall and sell in the spring" clichés, but I wonder what the facts are. I've heard that airline stocks are seasonal, for example. There are probably other generalities, which may or may not be rooted in fact. -- Steve Butler There are many adages in the stocktrading world, and yes, most are true -- some of the time. I suggest you pick up a copy of the Hirsch Organization's Stock Trader's Almanac, whic...

AUTHOR: Don BrightDATE: SEP2002SUBJECT: Q&A

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• Riding The Kondratieff Wave by Tim Elrod

  ARTICLE SYNOPSIS ...Riding The Kondratieff Wave by Tim Elrod Here's a glance at an often overlooked cycle theory. I first found out about Kondratieff's long wave theory in college. I was sitting in a library courtyard at University of California (Berkeley), and it occurred to me that there was as much mysticism and wonder in business as there was in religion or philosophy. I also concluded that the foundation of economics was suspect, a relic of the caretaker class of journalists, academics, and government bureaucrats. Maybe supply and demand worked randomly in the short term but to really see the market, expla...

AUTHOR: Tim ElrodDATE: SEP2002SUBJECT: Cycles

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Traders' Resource: Advisory Services

AUTHOR: Technical Analysis, Inc.DATE: SEP2002SUBJECT: Traders' Resource

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• Traders' Tips

  ARTICLE SYNOPSIS ...Traders' Tips This month's Traders' Tips include code from: TradeStation: Support and Resistance Levels Equis: Support and Resistance Levels Neuroshell Trader: Fuzzy Patterns, Support and Resistance Levels WealthLab: Support and Resistance Levels, Fuzzy Patterns TickQuest: Support and Resistance Levels Investor/RT: Support and Resistance Levels TradingSolutions: Support and Resistance Levels WaveWi$e: Support and Resistance Levels...

AUTHOR: Technical Analysis, Inc.DATE: SEP2002SUBJECT: Traders' Tips

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• Trading Fuzzy Patterns by Marge Sherald

  ARTICLE SYNOPSIS ...Trading Fuzzy Patterns by Marge Sherald Here's how you can apply fuzzy logic and increase your profits. Ask around and you'll discover that every trader has a chart pattern he or she swears by, one that will indicate what the next big move in the market will be. But ask those traders to precisely define their patterns, and you'll find that although each pattern looks similar, they do not exactly match any set definition. This makes pattern recognition an ambiguous or "fuzzy" task, which may be why fuzzy logic is beginning to be used by traders to recognize chart patterns. Fuzzy logic is not...

AUTHOR: Marge SheraldDATE: SEP2002SUBJECT: Artificial Intelligence

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• Trading The Elliott Wave by Rudy Teseo

  ARTICLE SYNOPSIS ...Trading The Elliott Wave by Rudy Teseo Setting up Elliott wave projections on a spreadsheet can help you make your trading decisions. So far we have covered wave theory (part I), wave patterns (part II), and channels (part III). It will be helpful to have those previous articles handy for reference. Finally, we will discuss the detailed procedures for trading the wave. Elliott wave (EW) analysis is probably one of the most flexible systems you will find. You can be 100% bullish and only trade the motive waves in uptrends and the corrective waves in downtrends; you can be 100% bearish and onl...

AUTHOR: Rudy TeseoDATE: SEP2002SUBJECT: Novice Traders' Notebook

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• Websites For Traders: FXtrek.com by David Penn

  ARTICLE SYNOPSIS ...Websites For Traders: FXtrek.com by David Penn FXtrek.com bills itself as a "one stop for foreign exchange traders," and for those who consider themselves just a step or two away from real-life forex trading, it's a stop worth making. Little more than a year old (FXtrek.com was launched in April 2001), the website -- with its FXtrek.com University, mini- and regular demo accounts, live picks, neural net forecast, and IntelliCharts -- provides the means for a seamless journey for the would-be forex trader from neophyte to master dealer. "Master dealer"?! Why not? FXtrek.com makes no bones about...

AUTHOR: David PennDATE: SEP2002SUBJECT: Websites For Traders

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• Websites For Traders: InvestAvenue.com by David Penn

  ARTICLE SYNOPSIS ...Websites For Traders: InvestAvenue.com by David Penn Full disclosure: I browse Invest Avenue.com -- a financial website with insights from a variety of fundamentally and technically oriented money managers and analysts -- every day. As in every single day. So it should come as no surprise when I suggest that it is one of the best financial websites for those looking for clues to the behavior of markets around the world. If, as far as you are concerned, markets are markets, wherever they are, and you are willing to pursue the best opportunities wherever they may be, then InvestAvenue.com should ...

AUTHOR: David PennDATE: SEP2002SUBJECT: Websites For Traders

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• Working Money: Dojis And Gaps by Stephen Bigalow

  ARTICLE SYNOPSIS ...Working Money: Dojis And Gaps by Stephen Bigalow Power up your profits by combining these formations. Traders who use the candlestick technique say to take notice when a doji appears. The doji is one of the most revealing signals in candlestick analysis, and clearly indicates when the bulls and bears are at equilibrium or in a state of indecision. A doji that appears after the bulk of an extended trend may signal the end of the trend. This alert alone creates a multitude of investment opportunities....

AUTHOR: Stephen W. BigalowDATE: SEP2002SUBJECT: Candlestick Corner

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• Working Money: Driving Miss Dollar by David Penn

  ARTICLE SYNOPSIS ...Working Money: Driving Miss Dollar by David Penn What does the decline in the dollar say about stocks? Consider the two "dollars" in Figure 1. The first "dollar" represents a retail chain that sells a variety of products at a price of $1.00 or less. This chain -- which runs stores named Dollar Express, Dollar Bills, Only One Dollar, and Only $One -- is ranked particularly high in Investor's Business Daily's stock tables, garnering particularly good marks for industry group relative strength and sales, profit margins, and return on equity. According to IBD, people are accumulating the stock as ...

AUTHOR: David PennDATE: SEP2002SUBJECT: Market Update

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• Working Money: Heavy (Precious) Metals by Jeff Dufour

  ARTICLE SYNOPSIS ...Working Money: Heavy (Precious) Metals by Jeff Dufour The whys, whens, and hows of investing in gold and other precious metals. After a long lapse from the consciousness of the investing public, gold is glittering again. Earlier in 2002, the price of gold broke the $300/oz. threshold for the first time since 1999. Precious metals mining stocks and gold-laden mutual funds have soared, even as the Standard & Poor's 500 continues to lag. Yet precious metals -- gold in particular -- are one of the least understood and most controversial investments around. Once thought of as the only true storehou...

AUTHOR: Jeff DufourDATE: SEP2002SUBJECT: Investing