CANDLESTICK CODE IN EASYLANGUAGE
Editor,After the November 1999 issue of STOCKS & COMMODITIES came out with my article, "Coding Candlesticks," and the accompanying sidebar, "Candle code construction with MetaStock," many traders asked about the TradeStation/SuperCharts variant of the candlestick code. Well, trader Valeriy Lazarenko has developed the EasyLanguage code for indicators discussed in my article. It will be posted at https://www.forexclub.ru.
See Traders' Tips in this issue for this EasyLanguage code. It will also be posted at our own Website at https://www.traders.com/Documentation/FEEDbk_docs/TradersTips/TradersTips.html. Thanks for sharing this code with readers. -- EditorViktor Likhovidov
PROGRAM CODE
Editor,I thoroughly enjoy the articles in each issue of STOCKS & COMMODITIES and learn new techniques each month. However, I find getting copies of your custom program codes very frustrating. For example, in the sidebar "Candle code construction with MetaStock" on page 44 of the November 1999 issue, the author presents a very complex program that is very difficult to enter accurately from the keyboard. I have a scanner and an OCR program, which I have unsuccessfully tried to use for conversion to a text file for importing into MetaStock. The conversion does not work well because a sans serif font is used, because there is a background tint, and in several cases I have found errors in the printed code.
There are ways that these program codes can be made more readily available to your fans. You should publish no code without it being available at your Website (the best solution), or at least print the code in a manner that makes it easier to scan accurately by using a font such as OCR A and without a background tint. You have a great magazine, and addressing this issue will make it even better.
Charles K. Phillips, via E-mail
Thank you for your suggestions. See also the next letter. -- Editor
FORMULAS
Editor,I think it would be helpful if you could make formulas included in articles available at your Website. A case in point: the MetaStock code given in the November 1999 article "Coding Candlesticks." (I'm not referring to your Traders' Tips section.) It would make it easier for those of us who wanted to try the author's technique. It would be much easier to download or copy and paste the text from your Website than it would be to copy this long formula line by line.
Claud Baruch, via E-mail
Thank you for writing. We will offer long code and formulas from articles at our Website in a special subscriber area at https://technical.traders.com/sub/sublogin.asp. Login will require your subscriber number and last name. Your subscriber number can be found at the top of your magazine label before the dollar sign. -- Editor
BILL WILLIAMS' NEW TRADING DIMENSION
Editor,I am reading Bill Williams' latest book, New Trading Dimension. Is there anyone out there who has already encoded how to spot the up/down fractal, alligator, 3/34 oscillator, and accelerator oscillator discussed in the book and who is willing to send them to me? Many thanks.
I'd suggest posting your question to the new message boards at our Website, www.traders.com. Good luck! -- EditorMarco Guglielmo, via E-mail
BOOKS ON MONEY MANAGEMENT
Editor,I remember reading an article a couple of months ago about money management and its effects on trading in an issue. I have gone back through my stack of magazines and cannot seem to find it. The reason for my writing is that I would like some advice on a good book relating to this topic. I think the article I read listed several books, but I just can't find it.
If you have any recommendations on the above topic, please drop me a quick line. It would be greatly appreciated.
By the way, I love the magazine and can say that I have learned a tremendous amount since I have been a subscriber. I really like the interviews. Keep up the great work.
Perhaps you are thinking of "Exploiting Positions With Money Management" by Daryl Guppy in the September 1999 STOCKS & COMMODITIES. At the end of the article on page 32 of that issue, a lengthy reading list was provided. -- EditorTodd Schmidtke, via E-mail
VISUALLY IMPAIRED
Editor,I am looking for a resource for equipment that will allow a visually impaired individual to watch the movements of the futures markets during the day. Is there any monitor available that will magnify the charts?
Gail McDowell, via E-mail
Windows offers accessibility options that improve visibility. In Windows, select Start/Settings/Control panel/Accessibility options/Display/Settings. Adjust size and contrast as desired. -- Editor
ERRONEOUS DATA
Editor,I have been reading your magazine for the last several months following my entry into the technical analysis world via the computer. I am a retired stockbroker who never got to utilize the full capabilities of analysis programs because computers weren't as powerful as they are now.
My data vendor has been sending me data that doesn't match what I see from other sources, such as Barron's or The Wall Street Journal, both of which I subscribe to and access online as well. This is especially true of currencies, volume, and most disastrously, the indices such as OEX, NDX, and to some extent, TRIN. I have been loading that kind of data into Excel for 15 years on a weekly basis, and when the historical data I entered is compared with that of my data vendor's, I get some glaring discrepancies. My vendor tells me there is no problem at their end. The errors I find most difficult to accept are volume errors, especially market advancing/declining volume, TRIN, and total daily market volumes.
Is this a concern you have heard before? Is there possibility of error when using the Internet for the downloads? Are the software programs sometimes to blame for the erroneous data through their translations routines or protocols?
From my perspective, if this is common but not paid attention to, there are likely to be some interesting and possibly negative consequences for the market given the number of people joining the Internet investing and technical analysis programs used in investment decision-making and execution. Any light you can throw on these questions would be greatly appreciated.
There are great differences in the quality of the data supplied by data vendors. Once your vendor tells you it doesn't have a problem with bad data, though, it may be time to move on. -- EditorDavid Payne, via E-mail
DATA PROVIDERS
Editor,Is the world of data providers as complex as their product offerings suggest? If it were, then your readers, I think, would benefit from an article explaining the business model of this industry. (An industry model describes how a product is produced and moved to market. The model identifies each link in the chain of suppliers.) If not, perhaps a short answer in this column would help me improve my selection by enabling me to better match their services to my needs.
An announcement by my historical data providers that my product would be dropped and a coincident breakdown at my real-time quote service provokes this letter. The technical support people at the real-time service were reportedly overwhelmed by unforeseen problems when they changed their datafeed source. Why? The immediate problem was, of course, a system shutdown. The latent problems, however, caused by symbology differences took me out of the market for most of August and September. I know now that I must improve my understanding of the workings of the data provider industry. I suspect other traders may feel the same.
If I missed previous STOCKS & COMMODITIES articles shedding light of this subject, please let me know.
We haven't done a thorough review and comparison of real-time data vendors. Personally, I compare two or more feeds using the trial periods most vendors offer.Chuck O'Malley, via E-mailAs for the business model, be aware that many former software vendors have jumped into the data business as an additional revenue source. You may do best sticking to experienced data vendors. -- Editor
MACD HISTOGRAM
Editor,Do you know of any software that will sort stocks by MACD histogram high and low turning points? I use TC2000 software but there is no way to write my own formulas to look for those points.
Art Klein, via E-mail
We don't know off-hand; perhaps someone reading this can suggest something. This question may also be a good candidate for the message boards at our Website, www.traders.com. -- Editor
THE IMPORTANCE OF EXIT STRATEGY
Editor,Following up on Troy Cornelison's November 1999 letter to S&C on the importance of having an exit strategy, I would recommend that those with an interest in exit strategies read It's When You Sell That Counts by Donald L. Cassidy (Irwin Professional Publishing), even though it targets the layman stock trader and not particularly the technical trader.
Stewart Winograd
Omaha, NE
STOCHASTICS
Editor,I've been a STOCKS & COMMODITIES reader since the beginning of this year and I find very good articles in your magazine. Congratulations on your good work!
I'm a novice trader in the currencies market. I'm monitoring the pair USD/CHF and have backtested over the last several weeks the stochastic oscillator with a five-day period for fast %K and a three-day period for %D. I've attached an Excel spreadsheet and graph with series 1 representing the %K and series 2 representing the %D [not shown--Ed.]. As you can see, I have detected a bullish divergence (between July 22, 1999, and September 2, 1999, 42 days) and a bearish divergence (August 27, 1999, and September 14, 1999, 18 days).
My first question is, in the bullish divergence (both below the 20 line), the %K and %D climb up twice above the 80 line. Does this invalidate the bullish divergence criteria? Likewise, during the bearish divergence (both above the 80 line), the %K and %D dip below the 20 line. Does this fact violate the interpretation of a correct bearish divergence?
For my second question, in the bearish divergence in my example, I see 18 days from one point to another, and in the bullish divergence, there are 42 days! Are these time-distance points acceptable in George Lane's theory and practice?
José Bertão, via E-mail
Stu Evens replies:Thanks for your interest in my September 1999 stochastics article. I will try to answer your two questions as best I can, although my response should not be construed as investment advice.
I hope I didn't give the impression in my article that stochastics is 100% effective as a trading method. In my experience, I have found that it is not. The market will ultimately do what it wants, and indicators will not always be correct in pointing out market direction. We, as technicians, should use indicators as just one more piece of evidence to help decide whether to make a particular trade.
In researching the stochastics indicator for my article, I did not find anything in the literature to suggest that the %K or %D rising above 80 while forming a bullish divergence negated the significance, if any, of that bullish divergence. The same applies to the %K and %D falling below 20 while forming a bearish divergence. This does not mean that this is not the case, only that I'm not aware of it, nor did I come across it while preparing the article.
Regarding your second question, I also am not aware of, and didn't come across in the literature, the minimum or maximum time requirements or constraints with regard to formation of the peaks within the divergences or between the divergences themselves. Again, this is not to imply that there might not be some significance; I just don't know of any.
In looking over the spreadsheet and graph you provided, I didn't see any closing prices. Remember, the divergences are the peaks/valleys of the indicator relative to the closing price's peaks/valleys. In my view, it's acceptable to use or interpret an indicator differently than the indicator's originator did; the only important question is, Does it make money? Thus, there's no single, correct way to use an indicator.
Good luck, and thanks for writing.
STOCHASTICS
Editor,I am researching technical analysis and trading systems. I found the September 1999 article by Stuart Evens on stochastics useful, easy to follow, and comprehensive.
I have a couple of questions about the buy-and-hold strategy discussed. How long does the system allow you to hold these stocks? Are there any particular rules that can be followed as to how long you should hold your position? I am not a MetaStock user myself; does MetaStock handle and systemize the buy and hold strategy?
I would appreciate your comments.
Herlina Dihardjo, via E-mail
School of Information & Technology
Bond University, Australia
The rules for this system specify holding periods dictated by the long and short reversing entries, so no generalization about length is possible. And the buy-and-hold strategy is a standard comparison that MetaStock provides. -- Editor
CHALLENGING PURSUIT OF TRADING
Editor,Your Opening Position in the October 1999 issue is both practical and profound, a combination not easily achieved in a brief column. In workshops I've presented at trading conferences, I've often remarked that successful traders are courageous, self-disciplined, highly motivated, and fiercely independent, and that they attain those stellar qualities because, as the adage states, "suffering builds character." Trading is an awfully tough business, but for so many of us, there's absolutely nothing else we'd rather be doing.
Tom Bierovic, via E-mail
PSYCHOLOGY OF TRADING
Editor,Just wanted to let you know how thoughtful and well written your October 1999 Opening Position column was.
One of the major turning points in my trading career was when I disassociated myself from considering that my self-worth was dependent on my winning or losing a trade. It's really just another job, albeit a little different from what most people do for a living.
Again, thanks for a great column.
Jim Cox, via E-mail
EASYLANGUAGE FOR OPENING GAP
Editor,The TradeStation code given in the November 1999 Traders' Tips column for "Trading the Opening Gap" doesn't seem to work. Could you check into this and let me know what changes I need to make to make it work?
John Theo, via E-mail
Gaston Sanchez of Omega Research replies:The EasyLanguage code given in the November 1999 Traders' Tips was written by the author of the "Trading the Opening Gap" article, Stéphane Reverre. The EasyLanguage was written in a manner that utilizes functionality introduced in the 2000i product line, which is the most current version of TradeStation.
EasyLanguage that was written for TradeStation 4.0 will work in 2000i. EasyLanguage that is written for 2000i will also work in version 4.0 if it does not utilize any of the enhancements that were implemented for 2000i.
In regard to the EasyLanguage published in the November Traders' Tips, in order for it to work for those users who have not yet upgraded, a simple change needs to be made. Wherever a color is referenced in the plot statement, the color and the preceding comma should be removed. A total of four lines need to be modified. Here, I will show the EasyLanguage the way it was originally published and the updated EasyLanguage for 4.0 users:
EasyLanguage originally published in November 1999 Traders' Tips:
inputs: Gap_Up(1), Gap_Down(1); variables: gap(0);gap = 100 * (open - close[1])/close[1];if gap >= gap_up then begin if close <= open then plot1(high, "UpGap", blue) else plot1(high, "UpGap", red); end;if gap <= -gap_down then begin if close >= open then plot2(low, "dngap", blue) else plot2(low, "DnGap", red); end;Revised EasyLanguage for 4.0 users:Inputs: Gap_Up(1), Gap_Down(1); variables: gap(0);gap = 100 * (open - close[1])/close[1];if gap >= gap_up then begin if close <= open then plot1(high, "UpGap") else plot1(high, "UpGap"); end;if gap <= -gap_down then begin if close >= open then plot2(low, "dngap") else plot2(low, "DnGap"); end;
MASS INDEX
Editor,Regarding "Detecting New Trends Early" by David Steckler in the November 1999 STOCKS & COMMODITIES, if I use MetaStock to display stocks and the mass index, I find that the mass index goes through the 26.5 trigger level about two weeks before what it gives in the article.
Dwight Cook, via E-mail
Several others have E-mailed me with the same observation. The only explanation I can offer is that MetaStock calculates the formulas differently than Omega Research (I created the charts in TradeStation using their canned mass index and money flow indicators). No additional smoothing was involved, beyond the smoothing done in the indicators themselves. -- Editor
ERRATA: DETECTING NEW TRENDS
On page 62 of the November 1999 STOCKS & COMMODITIES, one of the annotations on Figure 2 in "Detecting New Trends Early" is misplaced. The text in the article correctly states that the money flow breakout signal and mass index signal both were triggered on the same day. The annotation in Figure 2, however, shows "confirmation and entry" pointing to the price breakout bar five days later. The arrow above the word "confirmation" pointing to the price bar is the location of the error -- the "confirmation and entry" annotation should point to where the mass index crosses the trigger line.In addition, the sidebar was not clear that the two moving averages of the close are to be used in conjunction with the mass index. They determine trend. In Donald Dorsey's original formulation, once the mass index indicated a possible trend reversal, you would trade against the direction of the two moving averages. That is, you would buy the market if the first moving average were below the second, and you'd sell if the first moving average were above the second. We regret the lack of clarity. --Editor
ERRATA: DECEMBER 1999 INTERVIEW
Due to an oversight, the contact information for our December 1999 interview subject, Jonathan Hoenig, was inadvertently omitted. Here it is: CapitalistPig, 222 W Ontario, Suite 210, Chicago, IL 60610, 312 642- 6674, fax 312 642-6763. Our apologies to both Jon Hoenig and our readers.