December 2007 Letters To The Editor
or return to December 2007 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 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
TRIX: TRIPLE EXPONENTIAL SMOOTHING OSCILLATOR
Editor,I am very interested in the indicator called TRIX, which was first described and presented by your publisher, Jack Hutson, in his July/August 1983 article in STOCKS & COMMODITIES, "Triple Exponential Smoothing Oscillator: Good TRIX." I have a question about its calculation.
At the website StockCharts.com, there is a graph of a TRIX calculation plotted around what I call a zero baseline with values above zero of 10%, 20%, 30%, and 40%, and values below zero of 10%, 20%, and 30%:
My question is simple. How would I plot my own TRIX indicator values for various stocks around a zero baseline by hand? In other words, after doing the TRIX calculations for a given stock using a pen, paper, and handheld calculator, how would I take those values and graph them around a zero baseline? What are the necessary calculations (in layman's terms, since I am not a mathematician or computer programmer)?https://stockcharts.com/school/doku. php?id=chart_school:technical_indicators:trixI have spent a great deal of time researching this question on the Internet and am only asking you as a last resort. Any help will be greatly appreciated.
Mark McGee
STOCKS & COMMODITIES Publisher Jack Hutson replies:
Although it is possible to calculate almost anything by hand, it is not always practical. TRIX is just too complicated to calculate by hand and still have time to trade. If you want to play programmer, I would suggest using a spreadsheet. You'll find a more detailed reference at http://search.traders.com/.
TRADERS.COMEditor,
I am a new subscriber and I have a question regarding accessing information via your website. Does all the information at your website require a fee? What advantages do subscribers have on the website?
Ron Fisher
We offer a Subscribers' Area at our website, www.Traders.com, where subscribers will find the programming code from articles published in the magazine. This can be used for copying and pasting the code into various technical analysis software. We also have example results of two optimized trading systems there. Access requires your subscriber number and last name.
In the free areas of our website, visitors will find content listings and article abstracts for current and past STOCKS & COMMODITIES issues as well as for our online publications, Traders.com Advantage and Working-Money.com. Moreover, many regular features of STOCKS & COMMODITIES are reprinted at our website, such as the Opening Position, Letters To S&C, our Trade News & Products column, our Traders' Tips column, our monthly Futures Liquidity table, and our Websites For Traders column.
Other features available for free at our website include our Traders' Resource database of products and services, our Message-Boards, our Novice Traders' Notebook (which describes some basic charting patterns, formations, indicators, and concepts), several free articles reprinted from STOCKS & COMMODITIES, and our Traders' Glossary of terms.
Past STOCKS & COMMODITIES articles are available as downloadable PDF files for a fee at our Online Store at https://store.traders.com/. --Editor
LEARNING TO TRADEEditor,
I am very interested in becoming a trader. Where can I learn to become one? Do you have to go to college? If not, then what do you recommend?
Jeremy Wallen
While a college degree is not necessary to become a trader, a commitment to study and practice is. (See the article beginning on page 48, "The Trading Plan." See also "Futures For You" on page 98.) Becoming a student of the market takes focus and discipline, just as learning any new subject does, and successful trading entails knowing your strengths and weaknesses and being able to overcome them.
As for the mechanics of trading, basic information about placing trades is available through your brokerage house. You often will find market research tools there as well. Many software packages are available to help you chart the markets and analyze them using technical indicators.
As for learning the craft, you could join a trading center or training center, take a course (though not necessarily at a university), use a tutor, follow a course online or on DVD, or simply read; there are many books available on trading and getting started. Some brokerages offer sites to account-holders for trading practice, and it is highly recommended to use such a facility or simply paper-trade before you put real money into play. Market research, paper-trading, and developing a trading plan according to your preferred time horizon should precede putting money to work. Finally, due to the risk in trading, trading capital should be limited to disposable income.
Visit the Traders' Resource database at our website, https://technical. traders.com/Products/home.asp, for some examples of products, books, courses, seminars, newsletters, consultants, and other services that may help you in your pursuit of trading.
Our annual Readers' Choice Awards for products and services in various categories provide more examples of products and services you may find useful. See our Bonus Issue for the awards listing.
As for learning to implement and improve on your trading methodology and chart-reading skills, we hope you will continue to read STOCKS & COMMODITIES, where each month we present new strategies, discuss indicators and their implementation, and review various products, software, and websites that traders can use. Good luck!--Editor
TRADERS.COM ADVANTAGEEditor,
I am a new subscriber to Traders.com Advantage and want to congratulate you on the quality of the articles there.
The four-week free trial was more than enough to see the benefit of the subscription. I have been a stock and futures trader for years now and am a former subscriber of S&C magazine.
Although I have discovered, created, or enhanced hundreds of various systems or trading tactics, I have found the articles brilliant.
Your statement that each trader should be able to discover at least one idea each time he logs into the publication is no understatement; during my trial period, I discovered three different techniques, and each one amazed me. I have incorporated two of those in my daily trading practice.
So without hesitation, I converted my trial into a two-year subscription to Traders.com Advantage.
Thank you, and keep on with the quality.
Carl Vanhaesendonck
BelgiumThank you for your compliments and for the "plug" for one of our online publications, Traders.com Advantage. Traders.com Advantage offers articles daily or weekly that seek to demonstrate technical analysis concepts in practice, in real markets. It can make a good companion to reading STOCKS & COMMODITIES, since it helps demonstrate some of the techniques that S&C details in its monthly articles.
Readers can find out more about subscribing to Traders.com Advantage or Working-Money.com at our website, www.Traders.com. Some package pricing is also available.--Editor
MACD TECHNICAL TRADINGEditor,
I just subscribed to STOCKS & COMMODITIES, where I found David Penn's articles. As a relatively new trader, I am very impressed with his use of the MACD indicator along with the others he combines it with. I read his last few articles and agree on the value of the system. Of course, the problem with all indicators is they tend to be late in showing the trend, or at least are difficult to interpret prior to the move. Do you have a more current site with in-depth analysis of reversals and breakouts?
I have found the MACD useful when distilling time frames from daily down to 15 minutes and would love to read more about what he has found and ideas to determine directional indicators. My broker has no idea what I am talking about and is of little help.
David Massey
Technical Writer David Penn replies:
The best way to keep track of some of my more current analysis is through Traders.com Advantage, which is one of our online publications that posts articles frequently. I use the same tools in those articles (MACD histogram, stochastics, exponential moving averages, candlestick patterns, and 2B tests), but the examples are more contemporary.
This way, I hope to show the validity of my approach in terms of technical resources, as well as provide some helpful analysis of the markets that traders are studying and trading.
I have found that I get into the market with plenty of time to make profits. "Lag" per se has not been a significant problem. Japanese candlesticks and MACD histogram divergences provide the swiftest signals for me. But even then, I prefer to wait for a confirming close rather than attempt to exploit an early signal that might not actually follow through into a profitable trade.
For more in-depth discussion of my methods, try our other online publication, Working-Money.com, and use the search box to help locate my articles. Thank you for writing.
TRADING THE STARSEditor,
"Trading The Stars" in the October 2007 issue of STOCKS & COMMODITIES was a good article, and with some work on my part, I was able to understand it. The article refers to Steve Nison's DVD. However, as a college student on a fixed budget, I cannot afford that DVD set right now. Could you please give me a list of the candlestick patterns that the DVD talks about for the forex market?
Also, do you plan on writing any more articles about the DVD set?
Charles
Technical Writer David Penn replies:
Thank you for writing.
What is unique about Steve Nison's DVD series, "Profiting In Forex: Using Candlesticks To Catch The Next Move," is the way that Nison explains the same candlestick patterns that we've all heard about and assumed we understood. What I appreciated most about his presentation is that there isn't a great deal of "completely new" material. But the way he emphasizes what is important -- or even critical -- when it comes to accurately analyzing candlestick charts and trading markets based on them was, for me, invaluable. I can say that my attitude toward and appreciation of Japanese candlesticks was both refreshed and enhanced.
Nison's book Japanese Candlestick Charting Techniques is a fine substitute for those who cannot afford the DVD set. You can also visit Nison's website at www.Candlecharts.com for more information on his approach to analyzing charts and trading markets using Japanese candlesticks.
While I don't anticipate writing more about the DVD set, be assured that candlestick analysis will continue to be a major part of the articles I contribute to Traders.com Advantage and Working-Money.com.
TRADING THE STARSEditor,
I just read David Penn's October 2007 article in S&C, "Trading The Stars." On page 37, near the bottom of the page, he says that the open and close in forex are never more than a few pips away from each other. Shouldn't it read the close and the next-period open are never more than a few pips away from each other?
Barry
Technical Writer David Penn replies:
Yes, that is what is meant.
FOREX CHARTSEditor,
On pages 18-20 in your October 2007 issue, in the Forex Focus article "Surviving The Trappings Of Trends," six forex price charts are presented. The title on Figure 1 is, "Euro/dollar between mid-November 2005 to late May 2006." However, the discussion of Figure 1 in the article text mentions several dates between mid-November 2005 and May 15, 2007. Thus, some of these dates are outside the range of dates given in the chart's caption. Furthermore, it's impossible to determine exactly what the text refers to, because the horizontal axes on all the charts do not show any specific dates. Thus, it's impossible to tell just what time period the charts display.
In the future, please show the values plotted on both axes. Without this information, the charts aren't of much value.
Tom Strickland
The chart displayed in Figure 1 does indeed encompass the period mid-November 2005 and late May 2006, as the caption title reads. The article states that this period formed the initial rising leg of the trend that developed later. You can see this if you look at a longer-term chart. The subsequent charts focus on the period marked with the two vertical lines in Figure 1.
Sometimes, as in this case, the author is making a point using a specific strategy, and the time periods of the charts are not significant in that context. --Editor
RESOURCES ON MARKET PROFILE AND MACD HISTOGRAMEditor,
Your interview with Dan Gramza was enlightening and informative.
Can you tell where to find books or DVDs on the subjects of Market Profile and MACD histogram technical analysis? I am new to trading and want to trade currencies.
Kevin Hunter
We have published articles on both topics in the past. Here are several to mention. Others may be located using the search feature at our website, www.Traders.com.
MACD histogram:
Aspray, Thomas [1988]. "MACD Momentum, Part 1," Technical Analysis of STOCKS & COMMODITIES, Volume 6: August.
_____ [1988]. "Individual Stocks And MACD," Technical Analysis of STOCKS & COMMODITIES, Volume 7: February.
Gopalakrishnan, Jayanthi [1999]. "Trading The MACD," Technical Analysis of STOCKS & COMMODITIES, Volume 17: October.
Hartle, Thom [1996]. Interview: "Author And Analyst John Murphy," Technical Analysis of STOCKS & COMMODITIES, Volume 14: December.
Penn, David [2004]. "Bearish Confirmations," Technical Analysis of STOCKS & COMMODITIES, Volume 22: July. Reprinted from Working Money.
_____ [2004]. "Rising All The Way Down," Technical Analysis of STOCKS & COMMODITIES, Volume 22: February. Reprinted from Working Money.
_____ [2004]. "Symmetrical Triangles And The MACDH," Technical Analysis of STOCKS & COMMODITIES, Volume 22: June. Reprinted from Working Money.
Star, Barbara, PhD [1994]. "The MACD Momentum Oscillator," Technical Analysis of STOCKS & COMMODITIES, Volume 12: February.
_____ [1998]. "The MACD Profit Alert," Technical Analysis of STOCKS & COMMODITIES, Volume 16: December.
Market Profile:Drinka, Thomas, Nathan Losey, and Ryan Lauer [2005]. "The Development Of A Futures Trader," Technical Analysis of STOCKS & COMMODITIES, Volume 23: November.
Gopalakrishnan, Jayanthi [1999]. "Market Profile Basics," Technical Analysis of STOCKS & COMMODITIES, Volume 17: December.
Gopalakrishnan, Jayanthi [2000]. "Market Profile Exotics," Technical Analysis of STOCKS & COMMODITIES, Volume 18: January.
Jones, Donald L. [2005]. "Daytrading With Market Value," Technical Analysis of STOCKS & COMMODITIES, Volume 23: May.
_____ [2002]. "The Auction Market Theory," Technical Analysis of STOCKS & COMMODITIES, Volume 20: June.
_____ [2002] "Developing A Model With Auction Market Theory," Technical Analysis of STOCKS & COMMODITIES, Volume 20: November.
_____ [2002] "Auction Market Theory And The Longer Time Frame," Technical Analysis of STOCKS & COMMODITIES, Volume 20: July.
_____ [2004]. "The Market's Second Chance," Technical Analysis of STOCKS & COMMODITIES, Volume 22: November.
Penn, David [2003]. "Bullish Consensus," Technical Analysis of STOCKS & COMMODITIES, Volume 21: November.
Many of the articles have a suggested reading list at the end, which can lead you to some books on the subject. The Chicago Board of Trade (CBOT) is a good source of information on the Market Profile. My interview with Jim Dalton elsewhere in this issue is yet another source of information on Market Profile.--Editor
TRADING TRENDLINE BREAKSEditor,
I read the article "Trading Trendline Breaks, Part 3" by Sylvain Vervoort in the October 2007 S&C and tried to locate part 1. According to a search for the article at your website, it appeared in V.25:7:
https://traderscom.stores.yahoo.net/stcov255trtr.htmlHowever, I have this issue and part 1 is not in it. Now to get the article I have to buy it, and that does not seem right.John Welch
Part 1 of "Trading Trendline Breaks" by Sylvain Vervoort appeared in the July 2007 issue of Technical Analysis of STOCKS & COMMODITIES.
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Originally published in the December 2007 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2007, Technical Analysis, Inc.