November 2008 Letters To The Editor
or return to November 2008 Contents
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 email@example.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
THE BEST INDICATORS TO USE?
As it has been for many other investors, the past year has been very challenging for me. I read and reread your magazine, but what I'd like to know is: Is there a handful of indicators you would recommend plotting on a stock or index chart to get a very accurate read of what's happening or what's about to come? There are so many indicators, so I'm asking for the ones you feel give the most accurate readings. Something that helps you prosper 80% of the time or better.
You are correct in that there are a lot of indicators. There's no right or wrong set of indicators to use because it's impossible to know what is about to come. It is how you apply them that makes all the difference. Selecting a set of indicators to use is what takes a lot of time and research. The best route to take is to select a handful of indicators that don't overlap; that is, pick a trending indicator such as a moving average and pick an oscillator such as the MACD. Once you have selected a set of indicators, see how well they have worked in the past. That's the best way to determine whether your set of indicators will work for your type of trading. You may have to change them or keep tweaking them until you get a handful that work in a way that appeals to you; it's really a personal choice and is something that you will have to spend time on to develop. Keep in mind that you may need one set of indicators for trending markets and another set that works well for sideways markets. The interviews we present in our magazine can give you an idea of what other traders use. If you read about something that might be suitable for your style of trading, you can research those particular indicators further through our article archive. The set of indicators you use is what sets you apart from other traders. Happy trading!
INDICATOR DESIGN FOR METASTOCK
I'm a small private investor and I would like assistance with designing two custom indicators to use in MetaStock software.
Could you please let me know to whom I should address my issue: a professional technical analysts association, a financial advisors association, or some other place/company from where I can get somebody to help me with this indicator design?
To create the MetaStock code for a custom indicator, I recommend going directly to MetaStock. They offer a user forum made up of experts in MetaStock software who will be able to assist you. You will find the forum at http://forum.equis.com/. --Editor
TESTING POINT & FIGURE PATTERNS
In your September 2008 issue, in "Testing Point & Figure Patterns," author Mike Carr does not mention the point & figure box size. He does note in a figure that a three-box reversal is in effect, but I could not determine whether a traditional or percentage box size is in use. What size is used?
Also, the triple-top pattern with a 60-day holding period is the most profitable. Is the same definition of profitable transaction -- that is, a stock not going down by more than 5% -- still in effect when determining the average profit for the triple-top pattern 60-day hold statistic?
Mike Carr replies:
The box size is determined by ChartCraft's recommended box sizes. For stocks priced under $5, box size is a quarter point. It's a half-point box from $5.01 to $20; a full point from $20.01 to $100; and a two-point box for stocks priced above $100. To answer your second question, I considered a long transaction a profitable one where the price rises by 5% before there is a 5% decline after the buy signal.
In reference to your interview with Bill Williams and Justine Williams-Lara in your July 2008 issue: On page 58, Bill Williams states, "We've had our best success where we've analyzed the market, tried to figure out what the long-term trend is, and get in and stay in for a while..." But how does Williams define "a while"? Days? Weeks? Months? Assuming this is not daytrading, is he using daily or weekly charts? Stocks or ETFS?
Bill Williams and Justine Williams-Lara reply:
We trade daily charts and can stay in a trade for up to six months if it is a trending market. Essentially, we are in the trade as long as the trend continues; sometimes that means rolling into a new contract month. We do use the larger time frames, such as weekly and monthly charts, to see where the overall trend of the market has been. The methods are used on both the stock and commodity markets. The only exceptions are in the stock market and ETFS, since we may stay even longer if we go into the investment phase of our trading campaign. However, we do have slightly different styles of trading stocks versus trading the commodity markets.
PRAISE FOR HANK PRUDEN
I have been reading/devouring S&C since its inception (I am not a young man) and have rarely read such an insightful and illuminating article as in the September 2008 issue written by Henry "Hank" Pruden discussing the past and future of technical analysis in "The 21st-Century Technician." Truly one of the more remarkable articles written for and published by your magazine. Some people will skip over it, no doubt due to their youth and/or inexperience, and that would be a shame. Though I have never met the man (my loss), he certainly is one of the century's pillars of stock market technical analysis (along the lines of Arthur Merrill, W.D. Gann, Richard D. Wyckoff, J. Welles Wilder, and so many others).
North Bend, WA
Thank you for writing and for reading STOCKS & COMMODITIES for so long!--Editor
I am hoping someone can assist me with a quick question. I have been thinking about taking a course on strategies, in particular on the emini S&P 500 futures. I have come upon one website of interest. I was curious if you could offer an opinion. I always hear about scams and nonworthy trading/strategy platforms, and I wanted to gather some information from an informed source. Any information you can provide would be great.
Jose M. Rodriguez
New York, NY
We generally avoid making product recommendations to individual readers for a variety of reasons, including the fact that we can't know what the individual's needs are for trading, as well as the fact that we aren't familiar with all the products available. Use the search engine at our website (www.traders.com) to see whether we have reviewed a product of interest in our magazine, and try checking the various online user forums for user opinions.
In addition, the Securities Exchange Commission's website at www.sec.gov contains some general advice for purchasing products and services related to investing, and the Better Business Bureau and Attorney General's office in the state where a company of interest operates will have records of any past complaints lodged against a company. For services or products related to the futures industry, there is the Background Affiliation Status Information Center (BASIC) at the National Futures Association's website (www.nfa.futures.org), which holds a repository of disciplinary and other data on many futures firms and salespersons. The information is collected from various contributors, including the NFA, which is the industry-wide self-regulatory organization for the futures marketplace; the US Commodity Futures Trading Commission (CFTC); and many US futures exchanges. Investors can also use BASIC to make a complaint or initiate an arbitration proceeding.
These are just a few resources to mention to help vet a product before purchasing it.--Editor
I subscribe to STOCKS & COMMODITIES for information on technical analysis, as it says at your masthead. I am not interested in one-sided political slam cartoons such as the one by David Brown on page 56 of the September 2008 issue. If I want slanted political opinions I will look elsewhere. If the editors or Brown intended to do a meaningful comparison of the fiscal policies of Presidents Lincoln versus Bush, that has failed. If the editor's or publisher's intent was to take a cheap shot at our current President or Congress, then you may enjoy the pride that comes with landing a cheap shot! How does including cartoons of that nature move your goal of financial education forward?
It should make readers question what other biases you have and attempt to introduce into your content.
Thank you for your comments and feedback. I would like to assure our readers that this magazine does not intend to express any political biases.--Editor
Back to November 2008 Contents
Originally published in the November 2008 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2008, Technical Analysis, Inc.