Opening Position - March 2005


Trading has come a long way since 1792, when the first contract was traded under the Buttonwood Tree in lower Manhattan Island. Since then, the biggest change has been the accessibility of trading instruments on a global scale. From the comfort of our homes, we can access all kinds of information that makes it possible for us to trade instruments around the world, all through the day and night. But we have reached a stage where the information may be too much to digest.

Take technical analysis, for instance. Technical analysis may not have been around for as long as trading (at least outside of Japan), but with the explosion of the Internet has come the websites that offers technical analysis features. In fact, some of these sites have built up with a dedicated following - which, if you think about it hard enough, may come as no surprise. With the markets acting the way they have been, it's difficult for individuals to stick with the long-term buy and hold strategy. The issue really is, with all the information out there, how do you identify those sites that have what you need? It's not really worth your time to go from one website to another, reading about different strategies, in the hope of finding that one strategy that's going to make your next trade a success.

In this issue of Technical Analysis of STOCKS & COMMODITIES, we interviewed Ashwani Gujral, an India-based technical analyst, about how he uses the Internet to trade on an intraday basis. There's something to be said about being able to limit yourself to just one website and actually make money from it. Read more about his strategy starting on page 64. Some of you may find that a strategy similar to the one discussed may meet your trading goals.

Some of you may prefer to build custom indicators and perform backtests that determine their success rates, optimize the indicators, and measure their performance. In addition, among trading systems, there are a multiple number of options. How do you determine their validity and significance? We hope Damir Wallener's article, "Backtesting And Edgetesting," will provide the answer. The article starts on page 22.

Finally, technical analysis has certainly had a significant impact on many traders. A good number of indicators have been created since technical analysis was introduced. One of the pioneers of technical analysis was Arthur Merrill, who in his lifetime brought useful ideas and techniques to traders, many through his contributions in STOCKS & COMMODITIES since its early days. Art Merrill, who passed away on January 4, 2005, will be remembered fondly, not just as a pioneer but also a mentor, for an example of what a technician could be.
 
 

Jayanthi Gopalakrishnan,
Editor


Originally published in the March 2005 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2005, Technical Analysis, Inc.



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