OPENING POSITION
January 2004
As we get ready for the beginning of a new year, we are bombarded with many issues that directly affect the financial markets. Economic numbers for the third quarter showed surprisingly strong numbers, which helped continue the current rally. But at the other end of the spectrum, conflict in Iraq is intensifying, the New York Stock Exchange may undergo restructuring, and last but not least, there's the broadening scandal in the mutual fund industry. Since investing in mutual funds is considered a cheap and effective way to invest, it is disheartening to find that mutual fund managers engage in improper tactics that cost investors money. But that shouldn't be too surprising; there are prices to pay when you shift control of your finances to others.
While it may be considered improper for mutual fund managers to engage in afterhours trading, individual traders do have the opportunity to take advantage of it. However, this can be risky, as you will find out in Anthony Trongone's article "Holding Overnight Positions" starting on page 14. In this feature article the author discusses a trading system that you can use to trade after the markets have closed. Keep in mind that although the system has proven to be successful, the frequency of trades it generates is low. This can be true for both afterhours and trading during regular market hours. Then, in the article "Trading In Tempo With TRIX" by Jongseon Kim, you'll find that there are periods when it's better for you to be out of the market. This applies mostly to intermediate- and long-term traders, but it also shows that it's just best to stay away from a market that may not provide many opportunities. For active traders, it makes more sense to design effective systems that can be used during regular trading hours and accommodate more frequent trades. In our interview this month, we spoke with Mesa Software founder (and STOCKS & COMMODITIES Contributing Editor) John Ehlers. His many years of experience developing trading systems have made him a trusted source for pointers on how to go about building an effective system.
When you have the resources to effectively control your finances, together with the confidence to do so, perhaps you should think about planning your own investments. Even if you opt to place some of them in someone else's hands, your growing knowledge and confidence will put you in a position to make better decisions when it comes to reaching your financial goals.
Here's to a successful trading year!
Jayanthi Gopalakrishnan,
Editor
Originally published in the January 2004 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2003, Technical Analysis, Inc.