Letters To The Editor

December 2010 Letters To The Editor

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

BARRY TAYLOR PAINT BAR STUDY

Editor,
I recently read the article “Can The US Dollar Rally Last?” by Donald Pendergast Jr. in the October 2010 S&C, and I am interested in the Barry Taylor ProAm paint bar study for TradeStation that he referenced in the article.

I have been unable to find this study in the TradeStation EasyLanguage library. Could Mr. Pendergast either shed more light on this study, supply the EasyLanguage code, or provide any suggestions on how to access this study through TradeStation?
—DB

The Barry Taylor ProAm is available for TradeStation, which you can purchase directly from the developer at https://emini-watch.com/. You will see it listed under “Products.”—Editor

THE LANGUAGE OF MONEY

Editor,
The July 2010 S&C article by Walter Downs, “The Language Of Money,” raised a couple of questions in my reading of that article.

First, on page 25, the author extrapolates an 8% gain per trade over 30 trades, resulting in a projected profit of $1,006. This equation seems more suitable investing in, say, an 8% fixed percentage bond fund rather than in fixed fractional trading with a 120% up trade, with 40% down trades. The profit values shown in Figure 1 all seem to be calculated this way.

Second, the author poses the question, “If I make $100 25% of the time, what is the probability I will make $25?” He states one possibility: You earn $25 or better 75% of the time. This implies you would make $100 only 1% of the time. Can the author explain where the 1% comes from?

Finally, he concludes that “...you can see that you would earn at least $25 100% of the time.” It seems to me that in fixed fractional trading, 100% probability of success is highly unlikely at any value of dollars returned.
—Tom Phillips
San Francisco, CA

Walter Downs replies:
Remember that you are gaining an average of 8% per trade, not 8% yearly like with the bond fund. Plan on 30 or 40 trades per year; it adds up quickly.

As to your second question, figure that $100 is the most you can make. In this scenario, $1.00 is equal to 1%, so you would earn $1.00 99% of the time, $2.00 98% of the time, and so on. Thus, $25 or more 75% of the time (100-25 = 75). To earn $100 would be 100-99 = 1 or 1%. (It may have been more correct to have said “a 1% chance to earn $99.”)

As to your last point, I agree it is highly improbable that any strategy can truly win 100% of the time. This approach was to ascertain a ballpark figure of what we might be able to attain.

CODE FOR METATRADER?

Editor,
You often offer programming code for various different platforms/software, which is great service to readers. Is there any place I can find it for MetaTrader?
—Chris

Custom code for implementing techniques in commercial technical analysis software is contributed voluntarily either by an article’s author or by the software developer. MetaQuotes Software, developer of MetaTrader, has occasionally contributed code to our magazine in the past (see the Traders’ Tips section of the August 2008 and October 2008 issues of S&C). We could contact MetaTrader to inquire about publishing custom MetaTrader code again, but we also suggest you contact MetaTrader’s support to request the custom code you need.

By the way, readers will notice a change in the Traders’ Tips section beginning with the January 2011 issue, as we plan to present a more compact version of the section without putting actual code on the printed page. Complete contributions, however, will be available at our website.—Editor

STOCK-PICKING SITES

Editor,
Last year, S&C listed two websites that tracked or ranked stock-picking websites. Would you please remind me of those two websites?
—Jeff

Unfortunately, we can’t put our finger on what you might be referring to. Perhaps you are thinking of two resources we listed for ratings of trading systems. Those resources were Futurestruth.com and Collective2.com.—Editor

ARTICLES BY SYLVAIN VERVOORT?

Editor,
I am a subscriber and really like Stocks & Commodities. I save every issue.

Lately I have been reading more by Sylvain Vervoort and trying out his techniques in TradeStation.

Since I already have all the back issues of S&C, could you tell me in which issues Sylvain Vervoort’s articles have appeared?
—Phil

Sylvain Vervoort’s articles have appeared in the following issues of Stocks & Commodities:

You can also use the search engine at our website, www.traders.com, or at our Online Store, https://store.traders.com, to help locate articles.

Some of Vervoort’s articles in S&C have been the topic of our Traders’ Tips section, so you also may be interested in seeking out those particular Traders’ Tips.—Editor

RATING ADVISORY SERVICES

Editor,
I am an amateur trader and a reader of your magazine. I am looking for a new option-trading advisory service. As you know, there are many services advertised on the Internet. The question is how to evaluate these services. I looked at one site that tracks option traders but it did not track the service I was interested in. Are you aware of any other organizations either on or off the web that follow and rate option advisory services?
—Christopher Verdi

A general Internet search returns several option advisory services you could check out. We also have a list of advisory services in the Traders’ Resource database at our website, www.traders.com, and a few option services are listed there. However, this is a list containing information provided by the vendor, not a ranking or rating.

I recommend you do your due diligence when it comes to evaluating the various services that are available. It is always best to talk to other users of advisory services and get their opinions of those services.

Whichever way you choose to go, remember that nobody knows your goals, objectives, and limitations better than you do.—Editor

Originally published in the December 2010 issue of
Technical Analysis of Stocks & Commodities magazine.
All rights reserved. © Copyright 2010, Technical Analysis, Inc.