A new twist on the venerable stochastic formula was presented in a January
1991 article, “Double-smoothed stochastics,” by William Blau. Here,
he expounds on stochastic double smoothing in a somewhat different form that
emphasizes momentum characteristics.
By William Blau.
Gold has its own cycles. How best to comprehend them? Gold cycles can be
best understood when analyzed and compared to the Dow Jones Industrial Average
(DJIA). Here’s why.
By Richard C. Forest.
Presenting the use of Liquidity Data Bank (otherwise known as Market Profile)
to analyze the futures market by studying commercial activity.
By Donald L. Jones.
STOCKS & COMMODITIES interviewed Wall Street veteran Phil Roth and spoke
to him about the differences between institutional and retail emphases and
his method of selecting stocks.
By Thom Hartle.
Here’s an indicator using the yield for high-grade corporate bonds
and the yield for the DJIA to predict the stock market.
By Jay Kaeppel.
As applied to market action, momentum is generally confined to
some limited role such as measuring the relationship between moving averages.
But momentum can be much more.
By Michael Oliver and Gary Esayian.
Point and figure charting, a technique for following stocks and commodities,
may be simplistic but still offers the keys to success: trend identification,
price objectives and money management, all of which it provides.
By Gary Van Powell.
Price and volume is important for technical analysis of markets. Here’s
how noted author and technician Martin Pring present two of his favorite
ways of looking at volume.
By Martin Pring.
Ever considered spectral wave analysis to determine cycles in the stock
market?
By Denis Ridley, PhD.
Assessing the risk in a security is an essential part of the investment
process. Here, then, are the advantages and disadvantages of two common risk
measures: variance and beta. Further, Lloyd Silver introduces a relatively
unknown, yet effective, risk measure called lower partial moment and finishes
with a method of comparing securities.
By Lloyd Silver.
QuoteExpress 3.2
Professional Breakout System, version 3.11
Trading the Four-Year Presidential Election Year Cycles
Nasdaq Handbook.
Overbought/oversold indicators are popular among traders for identifying
market turns. The relative strength index (RSI) is one such popular indicator.
Here, Roger Altman presents his work on modifying the index to smooth the
indicator’s sensitivity to momentum and the benefits that result.
By Roger Altman.
Laszlo Birinyi of Birinyi Associates is a most unusual technician, one who
is critical of most technical methods. Birinyi, a former director of Salomon
Brothers and currently one of Wall $treet Week’s 10 technical
elves, spoke with STOCKS & COMMODITIES about his work on researching
indicators, the importance of historical analysis and his work on money flow
analysis.
By Thom Hartle.
You can trade markets by combining congestion phase analysis with candlestick
charting patterns. This technique, a form of pattern recognition, can be
used to profit from stocks, commodities and futures.
By Holliston Hill Hurd.
Use point & figure and relative strength to identify strong and weak
stocks.
By Michael J. Moody and Harold B. Parker.
Investment survival depends on an investor’s ability to adapt to the
market. Is it possible to develop a strategy that performs under all conditions,
whether inflation or deflation, recession or prosperity? K.D. Angle, publisher
of “The Timing Device” newsletter, says yes.
By K.D. Angle.
Hitherto a rarity, cycles analysis can now be used in intraday trading.
Veteran STOCKS & COMMODITIES contributor John Ehlers explains how.
By John F. Ehlers.
Risk control is an essential part of trading successfully. Effective risk
management requires not only the careful monitoring of risk exposure, but
a strategy to minimize losses as well. Understanding how to control risk
exposure allows the trader, beginner or veteran, to continue trading even
when the inevitable losses occur. This author offers guidelines for risk
control.
By George R. Arrington.
Can indicators be improved upon by looking at them using different time
frames to smooth and combine?
By Gilbert Raff.
R.J. O’Brien research director and market letter writer Thomas Cronin
marks his first appearance in STOCKS & COMMODITIES with some trade possibilities
in options based on the difference between the closing price of the last
trading day for the S&P futures and the opening price the next day of
the S&P index.
By Thomas Cronin.
Money Management Strategies for Futures Traders
CandlePower 3.1 (N-Squared Systems).
Trend-following methods typically utilize moving averages of closing price
data for buy and sell signals. Often the signals turn out to be false due
to short-term market fluctuations. Here, longtime STOCKS & COMMODITIES
contributor Anthony W. Warren, correcting one of the major drawbacks of moving
averages, introduces a trend-following method that smoothes the data for
trend identification and measures short-term price fluctuations to establish
statistical boundaries. The following article will teach you how to use a
zero-lag filter of the closing price data to create trading bands. The trading
bands are used with a long term price filter for trading the intermediate
trend of the stock market.
By Anthony W. Warren, PhD.
Institutional investment strategist and researcher Steve Leuthold brings
almost 30 years of investment experience to his positions as chairman of
the Leuthold Group, an investment research organization, and chairman of
Leuthold & Anderson, an investment management firm. The Leuthold Group,
which has more than 300 professional clients, publishes several monthly newsletters
and produces Quantitative Themes, a value and growth stock screening
product. Leuthold, who is the author of The Myths of Inflation and Investing,
is also general partner in Leuthold Weeden and Associates, which is the developer
of AdvantHedge, a quantitative short selling program. STOCKS & COMMODITIES
spoke with Leuthold on December 18, 1992.
By Thom Hartle.
Although it has been mined for many years, one of the richest veins in technical
analysis remains the sentiment area. Here, money manager and market analyst
John Bollinger discusses one such indicator.
By John Bollinger.
Seasoned traders know the importance of risk management. If you risk too
little, you never win much. If you risk too much, you eventually run to ruin.
The optimum, of course, is somewhere in the middle. Here, Ed Seykota of Technical
Tools and Dave Druz of Tactical Investment Management, using subject matter
and materials that they have used in lectures and workshops around the US,
present a method to measure risk and return.
By Ed Seykota and Dave Druz.
One of the best megaphones of market action is the Coppock guide, a long-term
price momentum indicator that effectively filters out short-term and intermediate-term
market swings to issue a clear message on the market’s underlying long-term
trend. Tim Hayes of Ned Davis Research reports on the success of this indicator.
By Tim Hayes.
Is it feasible to use advance-decline data for trading the Oex contract?
By Stuart Meibuhr.
The price relationship between delivery months of a futures contract or
between different futures contracts often change. And of course, where there
is change opportunity arises for traders. Here, commodity trading advisor
Thomas Cronin explains how to trade spreads.
By Thomas Cronin.
Today’s broad selection of different types of mutual funds allows
traders to allocate assets based on your own expectations of changes in the
stock market, interest rates and currencies. Newsletter publisher Joe Duarte
presents his methods to increase gains in a portfolio by including currency-based
mutual funds as a choice for instruments.
By Joe Duarte.
Here, we’re reminded that the stochastics indicator is just a guide
to understanding the trend for trading.
By David Lundgren.
The Elements of Successful Trading (Simon & Schuster)
Mathematics of Technical Analysis (John Wiley & Sons)
Design, Testing, and Optimization of Trading Systems (Probus Publishing).
Which is more effective as a signal filter, the average directional movement
index (Adx), the indicator developed by J. Welles Wilder to measure market
trend intensity, or the unsmoothed version, the directional index (Dx)? Adam
White, the editor of the “Technical Traders Bulletin,” measures
the performance of a breakout trading system using the Adx or the Dx as signal
filters.
By Adam White.
Investor’s Business Daily columnist Leo Fasciocco came by
his expertise in the market the way STOCKS & COMMODITIES has always emphasized
research, research, research. As a financial journalist first for the Philadelphia
Evening Bulletin and then U.K. wire service Reuters (with a detour working
for the Chicago Board of Trade), Fasciocco joined Investor’s Daily (as
it was called then) at the very beginning, where he has been writing the
regular market column since. STOCKS & COMMODITIES spoke with Leo Fasciocco
on topics such as relative strength, earnings per share rank, technical points
on stocks, industries and the market itself.
By Thom Hartle.
Price and volume is a never-ending fount of ideas for judging the market’s
current technical condition. Here, newsletter publisher Anthony Macek combines
the magnitude and direction of price change with volume to produce a technical
indicator.
By Anthony J. Macek.
STOCKS & COMMODITIES contributor Joe Luisi presents a strategy for using
a graph of your profits and losses to pick either trend-following or a trading
range trading system.
By Joe Luisi.
Can the much-ballyhooed candlestick method be helpful in intraday trading?
To find out, Gary Wagner and Brad Matheny went through one day’s trading
via candlesticks for one contract and came up with some intriguing results.
By Gary S. Wagner and Bradley L. Matheny.
Here, Barbara Star takes a 1985 STOCKS & COMMODITIES article by John
Navarte called “Reading between the lines” and uses it as the basis
for a tutorial on oscillators for trading.
By Barbara Star .
Unsuccessful small speculators tend to waste time and money trying to reinvent
the wheel of investment rather than trying the tried and true trading techniques.
What works is simple: Trade with the trend, cut losses short and let profits
run. Here, STOCKS & COMMODITIES contributor Curtis Arnold assumes that
you accept those investment tenets and aspire to adhere to them. If you do,
you will greatly benefit from this lesson on the correct placement of stop-loss
orders.
By Curtis Arnold.
In this article, STOCKS & COMMODITIES contributor John Kean uses a neural
network to look for predictable patterns between Treasury bond yields and
two of the driving forces behind the bond market, inflation and government
deficits.
By John Kean.
First Alert, version 2.0 (Roberts-Slade Inc.)
Mathematica, version 2.0 (Wolfram Research Inc.)
Oppenheimer & Co. senior vice president and chief quantitative portfolio
strategist Paul Rabbitt has a number of credits after his name, among which
are contributing forecaster for Standard & Poor’s Consensus Forecasts
and regular contributing analyst for Cnbc. But Rabbitt is unusual in that
he chose to put a successful and profitable career on hold to return to graduate
school, writing his thesis on technical analysis and doing along the way
detailed statistical research on more than a hundred indicators. STOCKS & COMMODITIES
spoke with Rabbitt on topics ranging from his thesis to his thoughts on the
perfect system to the quantitative stock ranking system.
By Thom Hartle.
Here, a relative strength index (RSI) tutorial clarifies the basics of the
time-honored indicator. The tutorial also introduces new variants that STOCKS & COMMODITIES
contributors Tushar Chande and Stanley Kroll call net momentum oscillator
and the stochastic RSI, which are better at flagging overbought and oversold
conditions than RSI itself. Also introduced and examined is a variable-length
RSI called the dynamic momentum index (Dmi), which we will index to market
volatility. The new variants, Chande explains, extend the scope and power
of momentum indices, as we will see.
By Tushar Chande and Stanley Kroll.
During the training phase of a neural network, the system spends extensive
time trying to decide what input information is important to contributing
to the output forecast or prediction. It is natural to want to feed as much
input into the neural network as is required to solve the problem, but the
information you need to solve a problem may not be the format or information
your neural network needs or wants. Here, Connie Brown of Cmb Global Investments
describes a few learning problems of neural networks with a discussion of
common causes and solutions to help put your neural network back on track.
By Connie Brown.
Will combining two negatively correlated forecasts of price data produce
a more accurate forecast? Denis Ridley says yes. It’s called “antithetic
forecasting,” as he explains here.
By Denis Ridley, PhD.
You are what you believe and that includes your trading beliefs. Your unconscious
mind is the final arbiter of whether you will succeed as a trader. Ruth Roosevelt,
director of the Wall Street Hypnosis Center, explains how to understand your
unspoken beliefs and use them to achieve trading success.
By Ruth Roosevelt.
This month, Barbara Star uses a 1986 STOCKS & COMMODITIES article by
Howard Waxenberg titled “Technical analysis of volume” as a basis
for a tutorial on volume-based indicators.
By Barbara Star, PhD .
As interest in using neural nets for trading the markets has grown, so has
interest in the products being offered. Kean discusses @Brain, Brainmaker
Standard and Brainmaker Professional and looks at how well they do the job.
By John Kean.
Neural Networks in Finance and Investing
Pattern Probability Strategy version 2.0
Nava Patterns 2.0
Option Pro version 1.0
@Brain BrainMaker Standard, BrainMaker Professional.
Trading bands and the commodity channel index, two popular indicators, are
used together here by D.W. Davies, who publishes the “Chameleon” financial
newsletter. Davies analyzes price direction using trading bands built around
moving averages with different time periods as a form of cyclical analysis
and uses the commodity channel index as a timing tool with the cyclical analysis
to assist in generating trading opportunities.
By D.W. Davies.
As an options market analyst with a quarter century in the securities business,
Jim Yates takes us back to when the listed options markets first began. Yates
is president of Dyr Associates, an investment research firm that publishes
daily and weekly reports analyzing the option market and its stock market
implications. The reports are read by more than 10,000 brokers at more than
30 firms. Not only that, Dyr’s market and sector analysis is presented
on Cnbc every week. Yates, author of The Option Strategy Spectrum,
helped develop and is a consultant to the CBOE Options Institute, where over
the years he taught more than 4,000 investment professionals.
By Thom Hartle.
Traders who follow Gann and Elliott wave analysis use ratios of past price
movement as guidelines for possible turning points in the future. Here, Robert
Miner of Gann/Elliott Educators gives you the spreadsheet custom formulas
for you to calculate price objectives based on ratios of previous price moves.
By Robert Miner.
This author modifies the basic relative strength index to measure volatility
instead of daily net price change to generate trading signals.
By Donald Dorsey.
Behold the moving average. Everyone takes it for granted without really
thinking about it. But Colin Alexander, publisher of the Wellspring newsletter
and hotline, thinks we should take a closer look.
By Colin Alexander.
For those of you who have complained that you have to be a rocket scientist
to understand what we run in STOCKS & COMMODITIES, here’s a rocket
scientist to explain it to you.
By Marlowe D. Cassetti.
Negative thinking gives you negative results and that holds true for your
trading beliefs. Ruth Roosevelt, director of the Wall Street Hypnosis Center,
explains how to take your negative and limiting trading beliefs and convert
them to positive and profitable ones.
By Ruth Roosevelt.
All About Futures
Introduction to Neural Networks
DynaMind Developer 3.0 (NeuroDynamX).
Each day, stock market analysts calculate the number of stocks closing up
versus the number of stocks closing down, resulting in the advance-decline
line. This simple arithmetic exercise can help confirm the underlying trend
or point to deteriorating market conditions. However, changes in the market
have altered the perceptions of one analyst in particular on how to calculate
the A-D line. Here’s how former Financial News Network market analyst
Frank Barbera now looks at the daily A-D line.
By Frank Barbera Jr., CMT.
John Bollinger, C.F.A., CMT, former market analyst for Cnbc/Fnn, president
and founder of Bollinger Capital Management, author of the “Capital
Growth Letter” a market letter for the average investor employing a
technically driven asset allocation approach began as a cameraman for the
movies before he switched to the quickly expanding world of computerized
investing. From there, he went on to form investment techniques for which
he gained renown, including the Bollinger Bands, in which moving standard
deviations are used to plot trading bands around a moving average. STOCKS & COMMODITIES
spoke with Bollinger on topics ranging from those trading bands to his philosophies
on going long and going short.
By Thom Hartle.
How hourly data from the Chicago Board of Trade’s Liquidity Data Bank
can help day traders manage their positions.
By Donald L. Jones & Christopher J. Young.
Gold. In the past, it inspired rushes and revolutions, passion and poetry,
but in recent times gold mutual funds have been distinctly lackluster. The
emotion that the precious metal inspired may have dwindled, but gold mutual
fund investors can still make money.
By Jay Kaeppel.
What does it take to trade successfully? Here are some guidelines for using
technical analysis to pick stocks, focusing on bar charts.
By Thomas K. Lloyd.
Breadth momentum analysis takes momentum analysis, traditionally gleaned
from price and volume, a step further by examining a particular market in
closer detail. Market analyst Martin Pring delves into three categories of
breadth momentum indicators in this excerpt from his new book, Martin
Pring on Market Momentum.
By Martin J. Pring.
Fear limits your focus, and this is particularly true in trading. In this,
her third article for STOCKS & COMMODITIES on trading psychology, Ruth
Roosevelt, director of the Wall Street Hypnosis Center, explores fear in
trading and how to overcome it.
By Ruth Roosevelt.
Sometimes we forget that indicators long considered standard contain parameters
that can be adjusted to become more responsive to various trading needs.
Here, Barbara Star presents four variations of the classic relative strength
index: one that provides readings on only the most recent data; one that
incorporates volume; one that substitutes the average price for the close;
and one that combines two days of price action. This month, she uses Greg
Morris’s article, “Facelift for an old favorite,” as a basis
for this tutorial. For ease of use, custom formulas for MetaStock are provided.
By Barbara Star, PhD .
Spreadsheet Link
Book: Trading for a Living
MetaStock Real Time 3.5.
Successful trading is built upon using a dependable trading method. What
is a good trading method? It is simply a set of rules that cover the important
aspects of trading, such as trend identification, entry and exit plans. Here,
trader and author Curtis Arnold provides guidelines for developing your own
trading method.
By Curtis Arnold.
Jack Schwager, director of futures research for Prudential Securities, coprincipal
of Wizard Trading and author of Market Wizards, The New Market Wizards and
A Complete Guide to the Futures Markets, needs little introduction
to the readers of STOCKS & COMMODITIES. It was he who, with the original Market
Wizards, brought to the limelight some of the most successful traders
in the field and persuaded them to explain the secrets to their success.
Schwager, who has been in the futures field since 1971, began as a fundamentalist,
only to slowly change allegiance as he gained more knowledge. Here, STOCKS & COMMODITIES
interviews the interviewer, covering along the way observations on trading
methods, why taking a loss is no big deal, what the goal for a new trader
should be and why patience is key above all.
By Thom Hartle.
Happily, today’s spreadsheets enable traders and investors to measure
the relationships between any times series of data. In this article, a linear
regression technique is explained for analyzing the relationship between
interest rates, the yield on the S&P 500 and the S&P 500 price/earnings
ratio.
By Jack Karczewski.
Here’s how to combine price and relative strength index patterns for
trading signals.
By John Knaggs.
Developing a winning attitude for trading may be easier than you think if
you start with some basic physical adjustments to the way you relate to your
workstation. In this month’s article on trading psychology, Ruth Roosevelt,
director of the Wall Street Hypnosis Center, examines how to correct habits
that may be inhibiting your ability to achieve.
By Ruth Roosevelt.
Trading methods often use different length filters for generating trades,
both entries and exits. The most common filters are moving averages with
different lookback periods. Here, you’ll apply different filter lengths
to candlestick charts by using different period lengths of candlestick charts
for confirmation of bullish and bearish patterns.
By Gary S. Wagner and Bradley L. Matheny.
Proceedings of the Second International Conference on Artificial Intelligence
Applications on Wall Street
Complete Personal Seminar Series
The Serious Investor’s Tax Survival Guide
The Do-It-Yourself Guide to Investment Information
Aiq TradingExpert
ModelWare Professional Version 2.0
SuperCharts version 1.03.
How would the Martingale trading technique work with a trading system that
does not assume that the market is a random walk but instead relies on its
own system parameters to determine stop-loss points, entry and exit prices?
Further, how would these strategies work with a standalone system with a
win probability that is not 50/50?
By Roger Altman, PhD.
Here’s a simple indicator of trend strength. It goes like this: A
value of +10 signals an uptrend; a value of -10 signals a downtrend. STOCKS & COMMODITIES
Contributing Editor Tushar Chande uses this simple rating system to help
answer the eternal traders’ question: Is the market trending?
By Tushar Chande.
Combining two classic indicators, the commodity channel index (CCI) and
Bollinger bands, can be a potent timing tool for options trading. This author
was inspired by John Bollinger’s article “Bollinger Bands” from
the 1993 S&C Bonus Issue to develop a way of using the CCI to confirm
Bollinger bands’ trading opportunities. His technique uses a new variation
of the CCI, the dual CCI. Here’s how to put the technique to work.
By D.W. Davies.
How do you participate in the price movement of the international stock
markets using an overseas mutual fund?
By Joe Duarte.
Contrary to popular opinion, dreams can come true. For every trader who’s
wished that he or she could just stay home and trade, there’s one trader
who succeeded in doing so. Linda Bradford Raschke began her trading career
in 1980 on the floor of the Pacific Coast Stock Exchange before moving to
the Philadelphia Stock Exchange. After six years of trading on the floor
there, Raschke left to trade her own account from home. Eventually, her focus
evolved into developing reliable technical patterns for generating trades
and then following 20 different markets and waiting for the most lucrative
trades to come to her. She has always been a consistently profitable trader
using her research. So how does she do it?
By Thom Hartle.
Former Amex trader John Lohman delves into an inflation indicator that leads
the Consumer Price Index (CPI) by about six months.
By John A. Lohman.
Extensive research has been conducted about the application of neural networks
to financial forecasting in today’s globalized trading environment.
What makes this particular use of artificial intelligence so attractive to
financial analysts and traders? Here, Lou Mendelsohn of Mendelsohn Enterprises
highlights some of those issues and establishes goals for training neural
networks.
By Lou Mendelsohn.
What is a perfect trader and is such a condition desirable? Does such a
creature exist? Psychologist Van K. Tharp of Investment Psychology Consulting
says not and further, you’re far more likely to succeed if you don’t
try to be perfect.
By Van K. Tharp, PhD, and Jennifer Benson.
Book: Trade Up: How to Become a CTA
Book: Mesa and Trading Market Cycles
Book: Trading Asia-Pacific Financial Futures Markets
Book: Interest Rate Futures and Options
Book: Stock Index Options
Software: Stock Prophet
Software: Enhanced Chartist for the Mac v2.
System designers are aware that the traditional methods used to select parameter
values are prone to overfitting. What, then, can be done about it? Here’s
a method to reduce this problem by using randomized data to produce parameter
values for trading systems that have the best chance of duplicating real-time
results.
By Roger Altman, PhD.
Presenting the Jsa, a unique moving average that could provide an early
warning that other technical indicators may have an impending signal. In
addition, comparing the Jsa with other moving averages raises interesting
questions about the information that moving averages in general provide.
By George R. Arrington, PhD.
Some traders view stop orders as an affront to their analytical skills,
but they shouldn’t. Here are some simple guidelines on using stop orders
and saving yourself some painful and costly lessons.
By Patrick Cifaldi, CMT.
Do we limit words or do words limit us? As STOCKS & COMMODITIES contributor
John Ehlers opines, we can’t really describe market activity with terms
now used in the technical trading field. He suggests a new approach to looking
at the market, using as analogy the physical world and as a result, a way
to develop sophisticated new indicators.
By John F. Ehlers.
A method on looking at the volatility of intraday price bars using a stop
system called the “dev-stop.”
By C.A. Kase, CTA.
The story is the same everywhere: Find the inefficiency and take advantage
of it. This author presents some ideas on how to recognize market inefficiencies
by analyzing stock charts and making use of what he calls the inefficient
market theory.
By Thomas K. Lloyd.
Today’s global markets demand new analytical tools for survival and
profit as prevailing methods of analysis lose their luster. Here, STOCKS & COMMODITIES
contributor Lou Mendelsohn explains how an emerging method of analysis synergistic
market analysis can be applied to neural networks for financial forecasting
and discusses how to select and combine various types of market information
and transform the data into a format appropriate for neural network training.
By Lou Mendelsohn.
Bad experiences can easily become imprinted in our memories. Because we
act according to past experience, we tend to repeat our reactions to situations
unless we alter our memory of that experience, thus creating a new map for
our future actions. Ruth Roosevelt, director of the Wall Street Hypnosis
Center, explains how to overcome a difficult trading experience and ensure
that the same mistakes will not be inadvertently repeated.
By Ruth Roosevelt.
DTN Wall Street Director
Signal 3.0 with SignalReports
Getting Started in Stocks
Financial Futures and Options.
Three trend-following indicators swing charts, random walks and moving averages
are compared as separate mechanical trading methods.
By J.R. Davis.
Today’s spreadsheets offer investors the ability to develop customized
economic and investment monitors. Here’s one take on the use of a spreadsheet
for managing money.
By Sidney I. Gravitz.
Traders are always searching for methods with which to manage risk through
the use of stop-loss orders. One method that has been proposed for determining
stops is by using a mechanical formula based on the parabolic indicator,
also known as the stop and reverse (SAR). How does it work?
By Thom Hartle.
Why do traders trade? Is it for the potential profit? Is for the love of
the hunt? Or is it simply for the challenge? Jack Schwager, who interviewed
Tom Basso, president of Trendstat, for his book The New Market Wizards,
dubbed the trader “Mr. Serenity” for his approach to trading, managing
to be profitable while maintaining peace of mind. Basso, who has $65 million
under management, has a trading philosophy that more individuals should embrace:
simply, enjoy what you do. STOCKS & COMMODITIES interviewed Basso on
topics ranging from risk management to diversification and knowing your own
trading style.
By Thom Hartle.
Stock option traders and futures option traders may think they’re
already outsmarting stock and futures traders by trading options against
their stock or futures positions, but Larry McMillan, author of Options
As a Strategic Investment, suggests you take another look: Substituting
options for a position in the underlying instrument may be the more efficient
alternative. This article presents a simple way to compare alternative options
strategies. See what you could be doing.
By Lawrence G. McMillan.
The application of neural networks to financial forecasting has quickly
become a hot topic in today’s globalized trading environment. With
extensive technical, intermarket and fundamental data available for analysis,
neural networks are well suited to pattern recognition and quantifying relationships
between interrelated markets. However, neural networks are not easy to develop.
Here, S&C contributor Lou Mendelsohn examines the best ways to train
and test neural networks for maximum performance.
By Lou Mendelsohn.
Most traders search for entry signals for trading systems and use a reversal
of the entry signal for exits. Sounds simple enough, right? But what about
developing exit strategies separate from your entry method? Here, technical
analyst Adam White discusses an exit signal called the CHL/LLF based on two
types of indicators for exiting trades.
By Adam White.
Advanced Get 5.0
Advanced Total Investor 3.0
N-Train 1.1
HNeT Discovery Package 1.3
Mesa 4
The Money Engine Market Timing for the Nineties
Personal Stock Technician 1.01.
A Markov chain, the concept of which was developed in 1906 by Russian mathematician
A.A. Markov, is a mathematical tool that traders might use to predict future
prices changes on the basis of past price changes.
By George R. Arrington, PhD.
In the August 1992 issue of STOCKS & COMMODITIES, Chande introduced
the concept of market thrust as a method by which to overcome the limitations
of the Arms index. Since then, variations have been suggested on the theme,
and here, he offers the variation of a cumulative market thrust line, in
which market thrust is cumulated to calculate a volumetric advance-decline
line by including the effect of up and down volume.
By Tushar S. Chande.
The options market is often thought of as a simple directional play: Buy
a call option if you’re bullish or buy a put option if you’re
bearish. But options can also be used to manage a position. Here’s
a real-life example of a trade that started as a simple long future position,
became a synthetic call option, mutated to a long derivative strangle and
(finally!) ended up as a dynamic put ratio backspread.
By Richard Gard.
So which indices do you think most reliably lead the market? To find out,
Tim Hayes, who was also interviewed in the August 1991 issue of STOCKS & COMMODITIES,
examined 14 indicators for their market forecasting ability, beginning early
in the 20th century. The indicators that he studied ranged far in variety
and included the categories of economics, market breadth and interest rates.
Of the 14, two were judged to have performed the best in leading the market
within these categories. What were they?
By Tim Hayes.
The moving average is well known and much used in the field of technical
analysis, but it also has a flaw: its lack of flexibility. But it need not
be fatal. Thomas Hutchinson and Peter Zhang of Mms International present
variations of moving averages to combat the lack of flexibility in simple
moving averages and linearly weighted moving averages by introducing the
general weighted moving average (GWMA).
By Thomas Hutchinson and Peter G. Zhang, PhD.
Victor Sperandeo, money manager, economist and co-author of the popular Trader
Vic: Secrets of a Wall Street Master and author of a second book due
out this winter, is more than just a successful trader. A trading and investing
success who by his own admission never went beyond high school, Sperandeo
worked and studied at the school of hard knocks (otherwise known as Wall
Street) for his string of successes. How did he do it? What’s the
secret? As usual, it comes out to hard work and study, lots and lots of
studying. To find out the details, STOCKS & COMMODITIES interviewed
Vic Sperandeo to get his view of the markets, how they work and tips on
how to trade successfully.
By Thom Hartle.
With this offering, Mendelsohn concludes his examination of neural networks
for financial forecasting in today’s globalized trading environment.
Here, Mendelsohn concentrates on implementation issues and discusses how
neural networks should be utilized as part of an overall trading strategy.
Finally, he takes a brief look at the future of artificial intelligence technologies
to implement synergistic market analysis.
By Lou Mendelsohn.
Black or White 1.0 (Troy Staman)
Wave Wi$e Market Spreadsheet (Jerome Technology Inc.)
Freestyle Trader 1.13 (Ondossagon Software)
Guide to Business Numeracy.