February 2007 Letters To The Editor

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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

SWING CHART

Editor,

I just read "Searching For (Trading) Certainty" by Aaron Lynch (December 2006 S&C) and would like to know how to reconstruct the chart in Figure 2, "Filtering for noise." Can you help?

L.N. Johnson
Kansas City, MO

This type of chart is known as a kagi chart, and several software packages offer it as a charting type. (The more typical options for charts are line, bar, or candlesticks.) The chart in Figure 2 was created using ProfitSource.com.--Editor


BUY STOPS/SELL STOPS

Editor,

You used the terms "buy-stop" and "sell-stop" in the article "Trading In The Middle Zone" by Anthony Trongone. Please explain how these work. Could not find the terms in your glossary. Thank you.

Rich Plate

Here's the definition under "stop" in our Traders' Glossary:

Stops-- Buy stops are orders that are placed at a predetermined price over the current price of the market. The order becomes a "buy at the market" order if the market is at or above to the price of the stop order. Sell stops are orders that are placed with a predetermined price below the current price. Sell-stop orders become "Sell at the market" orders if the market trades at or below the price of the stop order.

We have published many articles on using stops if you wish to check the Online Store at our website.--Editor


TRADING IN THE MIDDLE ZONE

Editor,

Regarding "Trading In The Middle Zone" by Anthony Trongone (December 2006), I am left with several questions. How were the targets set that resulted in the average gains/losses reported? How were the stop-loss targets set? Were time-stops employed? It seems difficult to implement this technique and expect similar results in the absence of some discussion of an exit strategy. An example with a candlestick chart would have been helpful. Thanks.

Henry
Augusta, GA

Anthony Trongone replies:

If the specific dynamics of the opening price direction and opening range were satisfied, the target price was set using a 1/2% difference from each new day, using the opening price of the cues. A stop-loss was set using the 10:35 price -- the target price. A stop-buy was set using the 10:35 price plus the target price. If there was a trade, it was offset at 14:55.


METASTOCK CODE FOR AUTOMATIC TRENDLINES?

Editor,
So why is MetaStock the bastard at the family party in this amazing article ("Building Automatic Trendlines" by Giorgos Siligardos, November 2006 S&C)? Why is there no MetaStock code in the article or on the website?!

Jeffrey Cilley
Marina Del Rey, CA

We received several letters from readers asking for MetaStock code for this article or wondering why there was no Traders' Tip from MetaStock in the November 2006 issue.

We contacted MetaStock Support about the possibility of obtaining MetaStock code for the November 2006 article "Building Automatic Trendlines" by Giorgos Siligardos, which was the topic of our Traders' Tips section in that issue.

MetaStock representative and Traders' Tips contributor William Golson replied that the looping logic the author used to create his automated trendlines was not reproduceable in the MetaStock formula language, and this was the reason for MetaStock's absence in that issue's Traders' Tips section. However, he points out that on page 42 of that issue, Siligardos states he is using MetaStock and an add-on module that he developed to make the charts. Golson stated that this module is likely a custom DLL that performs the calculations MetaStock's formula language cannot do in this instance. He recommends that MetaStock users wanting to plot this indicator try out Siligardos' add-on. Golson also reassures us that MetaStock will continue to contribute Traders' Tips to this magazine whenever the topic lends itself.

So, in answer to your question, they are always invited to the family party, but sometimes they are not able to attend.

As for Siligardos' add-on, we have made it available for download from our website, www.Traders.com, in the Subscriber Area (https://technical. traders.com/sub/sublog.asp). Look for the file under the "November 2006" issue heading. Access to the Subscriber Area requires logging in using your subscriber number, which is found on the magazine mailing label.--Editor


METASTOCK CODE FOR ADAPTIVE PRICE ZONE

Editor,

Could you please tell me if there was an error in the MetaStock code presented in the September 2006 article "Trading With An Adaptive Price Zone" by Lee Leibfarth? I am getting the error message that the range is out of bounds. Here is the code I'm referring to: 

Name: Instantaneous Trendline
Formula:
x:=Input("time periods", 2, 200, 20);
y:=Input("band percentage",0.1, 50, 1.4);
dsema:=Mov(Mov(C,x,E),x,E);
shift:=Mov(Mov(H-L,x,E),x,E);
dsema+(y*shift);
dsema-(y*shift);
Vito Ramondetta

We contacted Equis International about your question. They verified that the code is correct and works, and that you have the correct code. However, the support technician pointed out that you may need to set your numeral separator to use the comma as the separator, since you are in Australia. This could account for your errors. Please try that and see if it solves your problem. --Editor


METAQUOTES FORMULAS

Editor,

I really enjoy your magazine. I am wondering about the MetaQuotes formulas that you included in your Traders' Tips section. Is the code the same for MetaTrader 4?

In addition, do you have any plans to review VantagePoint's software?

Reg Ekiss
Calgary, Canada

As for MetaTrader 4, it is a product of MetaQuotes Software Corp. See https://www.metaquotes.net/metatrader.

As for VantagePoint, look for a review of it elsewhere in this issue.--Editor


TRADESTATION CODE FOR RSI CROSSES

Editor,

I was wondering whether the TradeStation code for the article "Forex Focus: Going Beyond 70 And 30 In Forex" by Jamie Saettele (August 2006 S&C) is available for download.

Donald

Unfortunately, the TradeStation code for this article is not available for download at our website. Perhaps TradeStation could provide it.--Editor


MARKET DATA SPREADSHEET?

Editor,

I recently started trading stocks, and your magazine is a great help. I am looking for a spreadsheet that will give the closing price of any stock along with the day's high and low for the last 20- to 30-day period. Could you tell me if there is a website or any software that offers a spreadsheet format?

Elias Majid
Douglasville, GA

There are several websites that provide the type of data format you are looking for. The first one that comes to mind is Yahoo! Finance. You can download data in a spreadsheet format.--Editor


SOFTWARE SUGGESTIONS?

Editor,

I am new to the North American stock market, but I am strongly interested in stocks, being an active investor in the Indian stock market. I have been reading a couple of your issues.

Could you guide me toward some reliable technical software that also comes with personal one-on-one assistance during the initial phase of learning to trade? I am also new to using technical software. I understand the technicals and its terminology, but I have never used trading software.

Mayur Mehta

There are many technical analysis software products on the market. I recommend that you visit some technical analysis educational websites to get an idea of how to apply them. You can browse for these in the Traders' Resource area of our website, www.Traders.com, which offers some lists of products and their features.--Editor


ENTROPIC ANALYSIS

Editor,

I have a question about the sidebar "Calculating the probability of an up/down move in a time series" in Ron McEwan's November 2006 article "Entropic Analysis Of Equity Prices."

The sidebar defines RMS as the root mean square equation (sumsq(period)/count(period))^0.5.

However, you don't show anywhere what the variable period is. What is the period supposed to be? In the spreadsheet shown next to the equation, one could assume the period is 5 since you have a delay of 5 datapoints, but if the period was 5, then the value for RMS would be constant, and in the spreadsheet, it doesn't appear to be constant.

Could you help with this and please define the period used?
Bogs

The period used is 30. If you need further discussion, you can contact Ron McEwan, the author of the article, at Rmac@juno.com.--Editor


SHORTING MOVING AVERAGE PULLBACKS

Editor,

I just wanted to let you know that as a STOCKS & COMMODITIES reader, I really enjoyed Steve Palmquist's article on shorting moving average pullbacks ("Beyond Setups," November 2006). I would like to see more articles like that, especially ones that teach traders how to chose from among the many tools we all have in our toolkits.

Jonathan Miles

Back to February 2007 Contents

Originally published in the February 2007 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2007, Technical Analysis, Inc.