December 2005 Letters To The Editor
The editors of S&C invite readers to submit their opinions and information on subjects relating to technical analysis and this magazine. This column is our means of communication with our readers. Is there something you would like to know more (or less) about? Tell us about it. Without a source of new ideas and subjects coming from our readers, this magazine would not exist.
Address your correspondence to: Editor, STOCKS & COMMODITIES, 4757 California Ave. SW, Seattle, WA 98116-4499, or E-mail to editor@traders.com. All letters become the property of Technical Analysis, Inc. Letter-writers must include their full name and address for verification. Letters may be edited for length or clarity. The opinions expressed in this column do not necessarily represent those of the magazine. -Editor
TREND-FOLLOWING TECHNIQUES FOR LONG-TERM INVESTING
Editor,
Most articles I have read in your magazine deal with short-term trading. Do you have any articles about trend following for longer-term stock trades? For example, I think Richard Donchian created the 20-day channel technique.
Ed Page
via email
You are correct in that most of our articles focus on short-term trading. However, we do from time to time include articles on long-term trading. In fact, we have published articles specifically on the Donchian channel. I would recommend that you search our archives at our website, www.Traders.com. In addition, our online publication Working Money at Working-Money.com includes more articles on longer-term trading and investing. It might be worth your while to browse those articles.-Editor
EFFECTS OF DIVERSIFICATION
Editor,
I read an article in your magazine in which you looked at the effects of diversification based on the number of stocks in your portfolio. I think the article said that statistically, 10 gives you as much diversification as 100. I can't seem to find the article. Any ideas?
Tommy Schrock
via email
Try "Diversification And Your Portfolio" by Phil Abel published in the October 2003 STOCKS & COMMODITIES. If you don't have that issue nor our S&C on CD, which is a complete archive of our articles on CD, you can purchase the individual article through the Online Store at our website at www.Traders.com.-Editor
STOCHASTICS RAW VALUE AND WILLIAMS %R
Editor,
I design and write a lot of my own technical indicators, and one day, as I was studying Williams %R (10-day), I discovered that his %R was nothing more than (and please correct me if I'm wrong) the raw value from the stochastics formula developed by George Lane. Can this be so, despite the fact that so much has been made of the Williams %R indicator? If you can't answer this question, can you direct me to someone who can? Thank you for your time.
Michael Duffy
via email
You're correct - the stochastic %K line is similar to the Williams %R. The main difference between the two is in the way they are plotted: the Williams %R is plotted with negative values. Another difference is that the stochastic is smoothed, whereas the %R isn't. -Editor
FOREX ANALYSIS SOFTWARE
Editor,
Thank you for the great FX issue (S&C, October 2005)! I hope you add a forex section to the magazine all the time. (Maybe you could even add "& FX" to the magazine's name...)
Could you tell me where I could get an independent comparison (pros and cons) of the MetaStock and TradeStation program features (including their FX market features)?
Anthony D'Angelo
via email
Thanks for your comments and question. You might be happy to know we have begun a regular column in the magazine called "Forex Focus."
Regarding product feature comparisons, we do not compare products when we review them for the magazine; we look at only one product per review. However, we have published individual reviews of both MetaStock and TradeStation. You can download the reviews from our Online Store at our website, www.Traders.com. -Editor
FOREX BROKERAGES
Editor,
I find it disappointing that in your listing of forex brokerages on pages 90-91 of the October 2005 S&C in the Traders' Resource section, there is probably only one broker listed - Interactive Brokers - that does not maintain a trading desk to take trades against their customers. There are three others that I am aware of - Oanda, Coesfx, and Hotspotfx - that are conveniently not listed. This omission indicates that your magazine is serving the interests of retail brokers ahead of individual traders.
Unlike futures, options, or stocks, many forex brokers can wreck an otherwise good trading system. No one trading successfully in the eminis, options, or stocks is put on manual execution when they do well. This is par for the course with many retail brokers.
The lack of regulation and loose rules in the forex brokerage market will no doubt change in the future. Your failure to list the brokerages that give the individual trader a level playing field reflects on the agenda of the magazine.
Rich Sacks
via email
Thank you for your feedback. As a directory format, our forex listing and every other category in our Traders' Resource database at our website were prepared from information submitted to us by the companies in the listing. For the most part, the entries in our Traders' Resource database are submitted and updated by the companies in the database themselves through an interface at our website. We try to encourage as many companies and service providers as possible to include their information in our database in the appropriate category, but not all respond or we do not reach them all. The disclaimer printed at the end of the Traders' Resource section explains this.
The goal of our Traders' Resource database is to try to collect and disseminate information, and we regret that the listing does not include every company, though omissions aren't intentional.
Incidentally, we reviewed the AbleSys product eAscTrend 6.0 AOE with Coesfx in that same issue. I have had a forex account at a retail brokerage for years. I have kept close tabs on commissions and was excited to learn that Coesfx might charge a flat rate for its commission structure. However, the last time I checked their website, there wasn't much information on the subject.
We appreciate your email. -Jason Hutson, S&C staff
CODE FOR HYBRID INDICATOR?
Editor,
I am a subscriber to your magazine and am interested in an indicator mentioned in William Rafter's September 2005 article, "Two Moving Function Hybrids."
I was hoping you might be able to provide the code for this indicator for use in some of the major technical analysis programs, particularly MetaStock or eSignal. If you could supply this code or let me know where I can find this, I would appreciate it.
Jerry Samet
via email
Sorry, we can't provide code since we are not able to dedicate our time to writing code for various software, so please check with the developers of eSignal or MetaStock for code for their software, or check the support area of their website for code that may have been posted. In addition, see William Rafter's follow-up article published in the November 2005 issue of S&C, which you will find at the end of the Traders' Tips section on pages 83 and 95. Author William Rafter himself works in the software that he developed and sells, Financial Data Calculator, so he does not develop code for other software. -Editor
TOP 10 TRADING SYSTEMS
Editor,
Could you please inform me how your "Top 10: Trading Systems" list is ranked? Does it have anything to do with actual performance or feedback from users, or is it only based on how often a particular system has been viewed on your website? Or does it use different criteria altogether?
Peter, via email
You are referring to the Traders' Resource area of our website, which we also print in part in the magazine each month. We include a top 10 list called "Top 10 Viewed."
To answer your question, the "top 10" companies listed there are only determined by the highest number of clicks to the listing at the Traders' Resource website. Each company is listed in order of clicks received. This provides some indication as to which products or services other readers are interested in or are looking at. As stated beneath the box, it is not an editorial rating or ranking.
One publication that follows, tracks, and reports the results of trading systems as an independent third party is Futures Truth at FuturesTruth.org. The publication follows systems for long periods to give a good indication of how some of the individual commercial systems perform over different market cycles. They report system results and performance percentages. -Editor
WALL STREET ANALYST SOFTWARE
Editor,
A few years back, you published a review of a software program called Wall Street Analyst version 2.1 (STOCKS & COMMODITIES, September 1996). Well, I purchased the program then and I loved it, as did everyone else in our investment club. We invest in stocks and commodities and found this program to be very helpful and very affordable for us small investors.
Since then, we have upgraded our computer four times and none of us can locate the Wall Street Analysis program. We have tried to go to the Omega Research website but it only refers to the TradeStation software. If you can tell us where we can find and purchase either the old version (2.1) or any new version of Wall Street Analyst, we all would be grateful. If this program is no longer available, could you refer us to another program with similar abilities and cost? Thank you for your help.
Larry Foster
via email
Omega Research became TradeStation Group, Inc., and no longer offers this program. Check our Traders' Resource database of products and services at our website, www.Traders.com, for similar software features. Otherwise, perhaps someone reading this can offer a suggestion. -Editor
TRUE STRENGTH INDEX
Editor,
Regarding Mark Phillips' article, "Less Is More" (STOCKS & COMMODITIES, June 2005), I would like to ask if it would be possible to get a sample Excel file, since I didn't understand how to implement the formula for the TSI.
Nir Elfer, via email
Most recently, we published a letter from Perry Kaufman in the November 2005 S&C in which Kaufman provided some TradeStation code to implement true strength index (TSI). As for an Excel implementation, we published a sidebar on calculating the true strength index (TSI) along with an Excel spreadsheet example in the January 1993 STOCKS & COMMODITIES. This article is available for download from the Online Store at our website, www.Traders.com (listed as V. 11:1 (11-18): Sidebar: True Strength Index).
If you're interested in learning more about the TSI, you can always check out William Blau's original 1991 article on the true strength index, published in the November 1991 S&C. This article was listed at the end of Phillips' June 2005 article and is also available through our Online Store. -Editor
DEMAND INDEX
Editor,
I'm searching for an indicator called the James Sibbet indicator (that is, the demand index). If you have it, can you tell me the price for the full formula?
Toffoli C., via email
The demand index, which is used in identifying accumulation or distribution in stocks and commodities, was developed quite some years ago, and we published an article on it with a mathematical formula in 1986 with a follow-up article on its counterpart, the demand oscillator, in 1989:
Aspray, Thomas E. [1986]. "Fine-Tuning The Demand Index," Technical
Analysis of STOCKS & COMMODITIES, Volume 4: April.
_____ [1989]. "Demand Oscillator Momentum," Technical Analysis of
STOCKS & COMMODITIES, Volume 7: September.
These articles are available for download from the Online Store at our website, www.Traders.com. In addition, MetaStock and other software may bundle the indicator. -Editor
ERRATA: TRADERTECH.COM
Editor,
We appreciate the writeup of our product in your September 2005 Trade News & Products section, but unfortunately, the screenshot you pictured under the paragraph is not of our website, which is www.tradertech.com.
Marsha Jardoonath
Tradertech.com
Editor: We regret this error. Here's the correct screenshot:
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