What is the Z-score? You can use it to identify the types of winning
and losing streaks in a trading system. Once the nature of the streaks
are determined, then you can use different money management approaches
to maximize profitability.
By Mike DeAmicis-Roberts.
Even during the strongest of bull markets, not every investment rises
at the same rate. This range of performance among different investments
has led to money managers developing strategies to dynamically allocate
among a choice of investments. Here, a money manager explains his recent
research into this subject.
By Gary J. Harloff, PhD.
It takes more than twin peaks to make a double top. Here’s a refresher
on the formation.
By Thomas Bulkowski.
What does happiness have to do with being a successful trader? Nothing,
it seems. In fact, for most traders, successful trading and happiness may
actually be in perpetual conflict.
By Adrienne Laris Toghraie.
More sophisticated smoothing techniques can be used to determine market
trend. Better trend recognition can lead to more accurate trading signals.
Here’s how.
By Tim Tillson.
Here’s how to use a spreadsheet as a pattern recognition tool. The
spreadsheet can be used to identify the cup-and-handle formation on daily
closing prices over a given number of days.
By Rick Martinelli.
Thomas Bierovic is president of Synergy Futures, a research, trading,
and education company. He also writes Synergy Fax, a daily advisory
service for futures traders, and he wrote the well-regarded trading manual
A Synergetic Approach to Profitable Trading. His specialty involves “synergizing” a variety of trend-following indicators, directional-movement indicators,
momentum oscillators, Fibonacci retracements, and chart patterns to create
low-risk/high-reward trading methods. STOCKS &
COMMODITIES Editor Thom Hartle spoke with Bierovic
on October 24, 1997, via telephone to talk about his approaches.
By
Thom Hartle.
Here’s a technique based on Tushar Chande’s variable-length moving
average. The indicator is more responsive to market price movements than
a conventional simple or exponential moving average and can be used for
position trading. Take a look.
By Gerald Marisch.
Wall Street Investor, ver 4.0.8 (Comstar Concepts Inc.)
Enhancing Portfolio Value with Covered Call Options (Investment Enhancing
Systems, Inc.)
The Art Of Short Selling (Kathryn F. Staley)
MetaStock ver 6.5 (Equis International)
Jeronimo J2 (Appian Graphics).
The metaphors we use in our lives can be powerful emotional symbols,
and how we view the market is reflected in those metaphors. Change those
metaphors and develop a more successful attitude. Here’s how.
By Ruth
Barrons Roosevelt.
Moving averages, familiar to every technical trader, are used by most
technicians to identify important trends. Here’s a unique twist on using
multiple moving averages as an early warning of trend reversals.
By
Daryl Guppy.
Everyone’s looking for entry trading signals, but what about after
you’re in the trade? Here are different techniques for making a graceful
— and profitable — exit.
By Jeffrey Owen Katz, PhD, and Donna L.
McCormick.
This is more than an article that teaches technical analysis. It’s
also a story about how one professional trader, a New Market Wizard, came
into possession of a rare technical method, and the steps he took to turn
it into a valid trading plan. Here, then, is Robert Krausz’s Basic trading
plan, one of four published in his book, A W.D. Gann Treasure Discovered.
By Robert Krausz, MH, BCHE.
Charles White’s career has ranged broadly from fixed-income portfolio
manager to Commodity Trading Advisor. Today, as one of the three principals
of Tucson Asset Management, White is doing it all as he advises institutional
fixed-income managers as well as maintaining three managed-futures programs,
with approximately $50 million under management. STOCKS &
COMMODITIES Editor Thom Hartle interviewed White via
telephone on November 18, 1997, asking him about issues that are key to
developing trading systems as well as what investors should look for when
deciding on a CTA.
By Thom Hartle.
A centered simple moving average can be used as a reference point when
creating technical analysis indicators. Even though a centered simple moving
average produces a plot much smoother than its related price plot, the
centered moving average technique is generally ignored because it stops
short by half of its period. However, some unique and effective momentum
indicators can be anchored to a point on a centered simple moving average.
Here are the benefits of anchored momentum.
By Rudy Stefenel.
The mirror image of a double top, the double bottom is a more profitable
longer-term play. Find out why.
By Thomas Bulkowski.
Sharpen Your Trading Skills video (John Bollinger)
The Essex Option Trading Seminar video (Essex Trading Co., Ltd.)
Here’s a statistical view of the stock market using the Standard &
Poor’s 500 as the basis for analysis, and a collection of fundamental influences.
By
Gordon W. Neal.
Sometimes, the most puzzling of trading questions can be answered with
the simplest of technical methods. Here, two such methods are combined
for trading: Tushar Chande’s variable indexed dynamic average (VIDYA),
a moving average that automatically adjusts to the current market’s volatility
and is used as a trend indicator, and a classic rule of thumb from early-day
trader W.D. Gann known as the 50% rule is added.
By Gerald Marisch.
Here’s why you should track both fundamentals and technicals for trading
stocks.
By Peter Desnoyers.
Everyone’s looking for entry trading signals, but what about after
you’re in the trade? Last time, Katz and McCormick looked at different
techniques for making a graceful — and profitable — exit. This time,
they’re testing various exit strategies, both separately and in combination,
to determine how well they can improve a trading system.
By Jeffrey
Owen Katz, PhD, and Donna L. McCormick.
Here’s a refresher on the relative strength index, and how to improve
your win-loss ratio.
By Thomas Bulkowski.
Can you create prosperity by sharing resources? Take a look.
By
Adrienne Laris Toghraie.
For commodity and futures traders, the technique of using cycles as
a trading strategy will undoubtedly bring to mind trader and analyst Walter
Bressert. Bressert, who has been in the trading industry for nearly 30
years, was the publisher and editor of the well-regarded newsletter HAL
Commodity Cycles for 12 years. In addition, he wrote The Power Of
Oscillator/Cycle Combinations and is today the president of The Bressert
Group. His work and techniques are now available in the Cycle Trader software.
STOCKS
& COMMODITIES Editor
Thom Hartle spoke to Bressert via telephone on December 22, 1997, about
trading, being in control, cycles, oscillators and the 12 cardinal mistakes
that traders make.
By Thom Hartle.
The stock market isn’t the only asset class available to qualified
investors; for example, there are managed futures and hedge funds. Here’s
an overview of the hedge fund industry, as well as recent performance tables.
By Gary Spitz
Channel Trend (Channel Trend, Inc.)
Option Wizard with backtest (Option Wizard, Inc.)
Option Advisor (Bernie Schaeffer)
Platt’s Analytics Service (Standard & Poor’s/Platt’s)
This technique steps in to assist in the management of the investment
after the investor has determined which securities to purchase and when
to open the position.
By Terrence M. Quinn and Kristin A. Quinn.
Interested in a trend-following method for currency markets? Currency
markets generally exhibit the strongest tendency to trend, a key feature
for trend-followers. Here’s a method that’s both simple and effective to
take advantage of that. Presented here are the rules and steps to develop
a trend-following method for currencies.
By Dennis Meyers, PhD.
The trend of the market is key to most every technical approach available.
But the market doesn’t always trend. Here’s how to use a statistical tool
for determining if the market is in a trend.
By Jack Karczewski.
The moving average, one of the first technical methods that novice
traders study, can be applied to your favorite markets. Here are its strengths
and weaknesses.
By John Sweeney.
There are many ways to view risk. Some measurements treat risk and
reward alike; if a stock is outperforming the market to the upside, there
is an implicit expectation that the stock may also outperform the market
to the downside. This article introduces the concept of comparing how a
stock performs during up movements relative to a benchmark and then, separately,
measuring performance relative to downward movements by the benchmark.
By Gary Anderson.
According to Asoka Selvarajah, markets do make sense ultimately, but
not in a way that most people imagine. To understand the markets, according
to Selvarajah, requires a dash of Pythagorean theory, a smidgen of Newtonian
physics, and even some chaos. Selvarajah, who works for Rabobank International,
one of the largest banks in the world and one of the few European banks
with a triple-A rating, was interviewed by STOCKS &
COMMODITIES Editor Thom Hartle via E-mail over a period
of several weeks in January 1998, discussing systematic trading and development
as well as trading overseas markets.
By Thom Hartle.
Last issue, we saw a demonstration of how an exit strategy can affect
the performance of a trading system. This time, we will discover how to
measure the impact of exiting the market by using trailing-stop techniques.
By Jeffrey Owen Katz, PhD, and Donna L. McCormick
Martin Pring’s Introduction to Technical Analysis on CD-ROM (International
Institute of Economic Research)
Option Tutor ver 2.0 (Financial Trading System)
Spec-Trader+ ver 1.0 (Cavlogix Corporation)
John Murphy Explains Market Analysis, Volume 1: Visual Analysis on
CD-ROM or VHS video (MurphyMorris, Inc.)
The Ultimate Book On Stock Market Timing, Volume 1: Cycles And
Patterns In The Indexes (Raymond A. Merriman)
Hit And Run Trading, The Short Term Traders’ Bible (Jeff Cooper)
Linear regression, a statistical technique that fits a straight line
to data points, can also be a proxy for a market trend. Here’s a trading
system that uses the measured percentage change of the trend of the Treasury
bond market.
By Dennis Meyers, PhD.
Crowd psychology plays a role in the development of market tops and
bottoms. In theory, a bottom forms when the majority of investors are extremely
pessimistic, and a top occurs when the investors are uniformly bullish.
Here’s a review of the past performance of a collection of indicators used
to measure investor sentiment.
By Joe Duarte, M.D.
Support and resistance analysis is a proven method for selecting key
price levels for trading decisions; traders usually perform the analysis
by hand. The automatic charting method and new oscillators presented here
are easy to implement and give a precise comparison of price to these important
levels.
By Mel Widner, PhD.
A simple technical method for exiting a trade is the break of a trendline
on a chart. This article measures the performance of using this strategy
as an exit rule.
By Jeffrey Owen Katz, PhD, and Donna L. McCormick
Gary Spitz, principal of CTA Research Corp., recognized early on the
value of professional money managers in the futures markets as an asset
class for investors. Further research led him to develop an index to track
the performance of Commodity Trading Advisors in ways that reveal those
managers who are consistent performers. STOCKS &
COMMODITIES
Editor Thom Hartle interviewed Spitz via
telephone on February 19, 1998, about his views on what investors should
look for when considering this asset class.
By Thom Hartle.
Designing a profitable trading system is key, but the way that profits
and losses vary can have an impact on your long-term success. Here’s why
looking at how the returns deviate can help you design your own system.
By John Sweeney.
Manage your trades using technical analysis by identifying risk points
as well as setting profit objectives. This Australia-based author shares
some of his favorite techniques.
By Daryl Guppy
Here’s a unique technique to understand the cycles prevalent in the
markets.
By Christopher L. Cagan, PhD
Marlet Center Platinum Edition (Data Broadcasting Corporation)
WinMidas, ver 2.1 (Stokes Fishburne Associates)
Expert Design Studio for AIQ Trading Expert (AIQ Systems)
Successful trading requires a mind balanced between intellect and intuition.
Here are some ideas toward developing a balanced mental approach to trading.
By Adrienne Laris Toghraie.
Here’s one for the first-time developer of a trading system, or someone
who’s thinking about developing a system. Here are the basic steps this
author took to develop a system for the stock market.
By Mark Vakkur,
M.D.
Markets move through phases during which volatility fluctuates. Here’s
how to measure the shifts in volatility and then use that data as a filter
for a trading system.
By Walter T. Downs, PhD.
Traders tend to be more interested in trading short time frames than
long ones, but a longer one can be of value as well. Here’s a simple technical
system based on monthly Eurodollar charts for entry and exit signals.
By
Scott W. Barrie.
Take a look around: Technology is changing the face of trading and
investing before your very eyes. Computers, information acquisition and
trading are all getting faster and faster, sometimes at breath-taking speeds.
The world of tomorrow is here today, in the form of technology. Is there
still room for the classic approaches, such as Dow theory? To find out,
STOCKS
& COMMODITIES Editor
Thom Hartle spoke with Michael Sheimo, author of Cashing In On The Dow,
Stock Market Rules, and Dow Theory Redux, by phone on March
24, 1998. Here’s what this noted author had to say about using this classic
technique today.
By Thom Hartle.
Using simple moving averages may seem like a straightforward approach
to trading, but there are subtle techniques that can improve performance.
By John Sweeney
A W.D. Gann Treasure Discovered (Robert Krausz, MH, BCHE)
ProTA, ver 2.11 (BeeSoft)
Indigo (MicroStar Research & Trading, Inc.)
DTN Chameleon (Data Transmission Network)
Window on Wallstreet Day Trader (Window On WallStreet)
A market does not move in a straight line; instead, its movement travels
across the chart in peaks and valleys, forming a channel in the direction
of the trend. Early identification of the channels can give you important
information, including that the trend has changed direction, what the profit
objectives are and risk points.
By Thom Hartle.
Here’s how to find a new fractional value of capital to invest in every
trade to maximize returns subject to a constraint on drawdown, using a
variation of the optimal money management strategy.
By Leo J. Zamansky,
PhD, and David C. Stendahl.
Last time, Katz and McCormick measured the performance of using this
strategy as an exit rule. This time, we examine the effect of eliminating
entries that would have been taken in instances where the trendline stop
was farther than $1,250 away from the entry price.
By Jeffrey Owen Katz,
PhD, and Donna L. McCormick.
Last month, this author introduced the initial steps that someone,
novice or veteran, should take when developing a stock market system. This
time, he explains the final steps.
By Mark Vakkur, M.D.
John Hill started out in the business of trading commodities in a most
remarkable way when he managed to run $1,000 up to $80,000 in a matter
of three months — and then managed to lose all but $5,000 in a single
day. Some traders would hang up their charts after that, but Hill was determined
to understand what he’d done wrong. It took years of study, but he figured
it out. STOCKS & COMMODITIES Editor
Thom Hartle interviewed Hill via telephone on April 23, 1998, asking him
about Futures Truth, the publication he has produced since the 1970s;
why novices could benefit from mechanical systems; and what details are
important to fairly evaluate the performance of a system.
By Thom Hartle.
Large moves often follow low-volatility environments. Here’s one method
of combining volatility indicators and pattern recognition along with trend-following
methods to capture a breakout in the 1997 gold futures market.
By David
S. Landry.
Take a look at the relationship between changes in earnings per share
for each year and the performance of the market for the following year.
Is there a correlation?
By Randall J. Covill
Stock prices tend to move in trends. When an existing trend ends, a
classic technical pattern known as a triangle often develops. Here’s how
to make use of this pattern in the stock market.
By David Vomund
LIFFE Data ver 1.0 with LIFFEstyle Software (Concept House)
BOLT 3.01 (The Bressert Group)
Many stock traders and investors avoid options because they seem too
complex or risky. Although it is very easy to lose large amounts of money
in a very short time misusing options, investors and traders of all kinds
should at least consider them as one of many tools to exploit market opportunities.
Here’s a primer on using options, with common terms and applications of
options strategies.
By Mark Vakkur, M.D.
Many traders in the stock market are moving to short-term approaches
and taking advantage of today’s technology. Here’s a walk through the basics.
By Mark Conway.
Use statistics to profile patterns of trading behavior as part of an
ongoing training program to help traders maximize their performance.
By
Ari Kiev and Ken Grant.
Here’s how the psychological terms that technicians employ to describe
the markets are transformed into technical tools.
By Walter T. Downs.
Duration, used in fixed-income portfolios to measure risk associated
with changes in interest rates, is applied here to measure the risk of
a stock portfolio.
By George R. Arrington, PhD.
The bull market of the end of the 20th century has been going on for
some time now. How did this happen, and how much longer is it going to
last? To get some answers, we turned to Louise Yamada of Salomon Smith
Barney, whose recent book, Market Magic: Riding The Greatest Bull Market
Of The Century, shed some light on the situation. Yamada, who is senior
technical analyst and director of research at Salomon Smith Barney, is
responsible for sector analysis of the US and global markets. STOCKS
&
COMMODITIES Editor Thom Hartle talked to Yamada via
phone on May 26, 1998, asking her what her long-term views are for the
stock market, inflation and interest rates.
By Thom Hartle
TechniFilter Plus, ver 8.1 for Windows 95.NT (RTR Software)
BioCom Profit (BioComp Systems Inc.)
Visual System Designer ver 3.001 (Digital Enterprises, Ltd.)
PowerAnalyzer from EzTrade (INO Global Markets)
A continuous data series for remodeling a futures trading system can
be created in a number of ways. Here’s a new method that uses a percentage-based
back-adjusted technique to ensure that profits and losses from a trading
system are equivalent over time on a percentage basis.
By Enrico Donner,
PhD.
Good trading is as much a state of mind as it is a set of procedures.
By Scott Brown
Here’s a volatility indicator, presented with simple trend rules for
trading various markets.
By Andrew Abraham.
Here’s how to develop a system using a filter to remove the random
price movement and identify the trend of the Treasury bond market.
By
Dennis Meyers, PhD
Moving averages are a popular way to signal trends. Combine moving
averages and the classic chart analysis of support and resistance for trading
mutual funds.
By Dennis L. Tilley
Henry Pruden, who heads up Golden Gate University’s Institute of Technical
Market Analysis, mixes the classic technical methods with the new and promising
ones. S&C spoke with him to find out what he has to say about technical
analysis making inroads on respectability in academia.
By Thom Hartle
VirtualTrader for TradeStation, ver 2.0 (Titan Trading Analytics)
PC Quote for Windows, ver 6.0 (PC Quote Inc.)
SMARTrader for Windows, ver 2.5 (Stratagem Software International)
CQG for Windows, ver 2.414 (CQG Inc.)
Here’s a review of the changes in the discount rate, and the implications
for investors.
By Steven M. Morris.
Here’s a historical review of the major swings in the stock market
and the Fibonacci relationships.
By Kevin W. Murphy.
This trader walks us through one of her trades, detailing the indicators
she used and the decisions she made.
By Tamalyn V. Crutchfield.
Patterns are one of the oldest forms of technical analysis. Yet, because
patterns can often be subjective, few of us take the time to combine statistical
information with this type of market analysis.
By Walter T. Downs
The cup-with-handle is a chart pattern that identifies stocks preparing
for uptrends. Here are the steps to convert this pattern to a set of rules
for screening your stock database to identify likely candidates.
By
Rick Martinelli and Barry Hyman.
Money manager and author James O’Shaughnessy is best known for the
astute research presented in his books. We spoke to him about what the
individual investor should focus on.
By Thom Hartle.
Is the gold market still an indicator of other trends? Here’s a look
at the past relationships of gold to the dollar, the Consumer Price Index
and the CRB.
By Alex Saitta.
It is important to be flexible in your market forecasts, as this walk
through some recent trends in various markets indicate.
By Michael Kahn
MarkeTrack 98 (Track Data Corp.)
Dual Thrust System (Universal Technical Systems)
GlobalView in the Energy Markets (GlobalView Software Inc.)
Quotes Plus (Quotes Plus Inc.)
OptionVue 5 (OptionVue Systems International)
Trading In The Zone (Mark Douglas)
Currency markets are popular with trend-followers because of the tendency
for currency markets to follow long-term trends. Here’s how to smooth out
the trend and recognize the major turns.
By Dennis Meyers, PhD
Traders following mechanical systems can see situations that may affect
mechanically based signals. Here’s how to include technical signals outside
your basic trading signal.
By Marcello Cattaneo Adorno.
Do classic chart formations such as the head-and-shoulders or the double-bottom/double-top hold up to close scrutiny? Here’s a look.
By Alex Saitta.
Combining a technical indicator with another technical method can be
the start of a viable trading system. Here’s how to combine a technical
indicator with a chart pattern to form one.
By William Q. Smith
Here are different seasonal strategies for trading the Value Line Index
compared with the New York Stock Exchange Composite Index and the Standard
and Poor’s 500.
By James Greenwood.
Perhaps you’ve reached a point of success in your trading when suddenly
you lose interest. Why?
By Adrienne Laris Toghraie.
Trader Courtney Smith has added publisher and editor of Commodity
Traders Consumer Report to his long list of accomplishments. S&C
spoke with him on why traders lose and how to change that.
By Thom Hartle.
A market follows its primary trend in a zigzag form. The trend direction
is easy to see; the real challenge lies in identifying the minor trends.
By Robert B. McKinnon
Meyers Short Term Systems and Indicators, ver 1.5 (Meyers Analytic, LLC)
TeleChart 2000, ver 4.0 for Windows, (Worden Brothers, Inc.)
OmniTrader 3.5, (Nirvana Systems, Inc.)
NeuroShell Trader (Ward Systems Group, Inc.)
OptionTrader 98 Professional Edition (AustinSoft Inc.)
There are two common ways to measure performance: the standard deviation
of returns and the Sharpe ratio. Here’s a third way.
By Dick Stoken.
How can you go about selecting the best strike price for writing an
option?
By Mark Vakkur, M.D.
Combine the exponential moving average with a trend estimate to identify
changes in the direction of the market.
By Dennis Meyers, PhD.
Drawing trendlines may seem simple, but there is a right way and a
wrong way to plotting trendlines.
By Stuart Evens.
Designing a profitable trading system is key, but the way that profits
and losses vary can have an impact on your long-term success.
By John
Sweeney.
When S&C first spoke to hedge fund manager Mark Boucher in 1996,
he shared some of his techniques for analyzing the economy, picking stocks,
and money management. See what he says this time.
By Thom Hartle.
How do you choose which length and type of moving average to use for
chart analysis? Take a look.
By Robert Nikifork.
The moving average convergence/divergence (MACD) is a momentum indicator,
and here, it’s combined with pattern recognition to help you identify exit
points for your system.
By Barbara Star, PhD
MetaStock Professional for Signal and BMI (Equis International)
Bollinger Group Power (AIQ Systems
The Four Biggest Mistakes In Option Trading (Jay Kaeppel)