{"title":"Volume 6 (1988)","description":"\u003cp\u003eBrowse Volume 6 articles by issue:\u003c\/p\u003e\u003cdiv style=\"display:flex;flex-wrap:wrap;gap:12px;\"\u003e\n\u003ca href=\"\/collections\/articles-volume-6\/issue-01?sort_by=title-ascending#ProductGridContainer\" style=\"margin-right:16px;\"\u003eChapter 1 January\u003c\/a\u003e\u003ca href=\"\/collections\/articles-volume-6\/issue-02?sort_by=title-ascending#ProductGridContainer\" style=\"margin-right:16px;\"\u003eChapter 2 February\u003c\/a\u003e\u003ca href=\"\/collections\/articles-volume-6\/issue-03?sort_by=title-ascending#ProductGridContainer\" style=\"margin-right:16px;\"\u003eChapter 3 March\u003c\/a\u003e\u003ca href=\"\/collections\/articles-volume-6\/issue-04?sort_by=title-ascending#ProductGridContainer\" style=\"margin-right:16px;\"\u003eChapter 4 April\u003c\/a\u003e\u003ca href=\"\/collections\/articles-volume-6\/issue-05?sort_by=title-ascending#ProductGridContainer\" style=\"margin-right:16px;\"\u003eChapter 5 May\u003c\/a\u003e\u003ca href=\"\/collections\/articles-volume-6\/issue-06?sort_by=title-ascending#ProductGridContainer\" style=\"margin-right:16px;\"\u003eChapter 6 June\u003c\/a\u003e\u003ca href=\"\/collections\/articles-volume-6\/issue-07?sort_by=title-ascending#ProductGridContainer\" style=\"margin-right:16px;\"\u003eChapter 7 July\u003c\/a\u003e\u003ca href=\"\/collections\/articles-volume-6\/issue-08?sort_by=title-ascending#ProductGridContainer\" style=\"margin-right:16px;\"\u003eChapter 8 August\u003c\/a\u003e\u003ca href=\"\/collections\/articles-volume-6\/issue-09?sort_by=title-ascending#ProductGridContainer\" style=\"margin-right:16px;\"\u003eChapter 9 September\u003c\/a\u003e\u003ca href=\"\/collections\/articles-volume-6\/issue-10?sort_by=title-ascending#ProductGridContainer\" style=\"margin-right:16px;\"\u003eChapter 10 October\u003c\/a\u003e\u003ca href=\"\/collections\/articles-volume-6\/issue-11?sort_by=title-ascending#ProductGridContainer\" style=\"margin-right:16px;\"\u003eChapter 11 November\u003c\/a\u003e\u003ca href=\"\/collections\/articles-volume-6\/issue-12?sort_by=title-ascending#ProductGridContainer\" style=\"margin-right:16px;\"\u003eChapter 12 December\u003c\/a\u003e\n\u003c\/div\u003e\n\n\n\n\n\n\n","products":[{"product_id":"v06-c01-comptrd-pdf","title":"V.6:1 (11-13): The Compulsive Trader Part 1 by Van K Tharp, Ph.D.","description":"The Compulsive Trader\nPart 1\nby Van K Tharp, Ph.D.\u003cbr\u003e\u003cbr\u003eCompulsiveness is perhaps the most serious of all trading problems. I have evaluated psychological\nprofiles on thousands of commodity and option traders. Despite the fact that about 50% of the traders I\nhave evaluated make money in the futures markets, I would still describe about 5%-10% of my sample as\nbeing compulsive gamblers.\u003cbr\u003e\u003cbr\u003eAt least once a month I get a phone call from someone who has lost $250,000 or more in the markets and\nwho is wondering how I can help. They typically say, \"My wife would kill me if I spent any more money\non investment-related stuff.\" It is obvious to me from the conversation that, despite their large losses and\ntheir reluctance to obtain help of any kind, they are still active in the market.\u003cbr\u003e\u003cbr\u003eAs a result of these experiences, I became determined to gather more information about the compulsive\ntrader. I visited several local chapters of Gambler's Anonymous (G.A.) and found several members whose\nprimary area of compulsive gambling was speculative trading. One gentleman, an active commodity\nbroker, was very nervous and refused to be interviewed. Another person mysteriously came into some\nmoney and dropped out of G.A. (probably to again play the markets). After several visits to various\nchapters, I was able to find a member who had lost his wealth to the markets and who was eager to share\nhis story with me in order to help others. His story, told to me in April 1987, is the first of two articles\nexploring the problem of compulsive trading.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133773836657,"sku":"\\V06\\C01\\COMPTRD.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_1a18c8ec-3945-4450-bf5a-1b70928ba091.jpg?v=1739652150"},{"product_id":"v06-c01-intro-pdf","title":"V.6:1 (23-23): Introductions by Arthur A. Merrill","description":"Introductions\nby Arthur A. Merrill\u003cbr\u003e\u003cbr\u003eStocks tend to fly together, rising in bull markets and declining in bear markets. For this reason,\nanalysts have been searching many years for indicators of the future of the overall stock market.\u003cbr\u003e\u003cbr\u003eIt isn't easy to find a leader for the market, since the stock market itself is a leading indicator of the future\nof business. An indicator of stock prices is an indicator of an indicator, or an indicator of the second\ndegree.\u003cbr\u003e\u003cbr\u003eUnlike the research of the alchemists, though, analysts have been successful in finding many stock\nindicators. Some of their findings are truly useful; others flare out like a rocket and disappear.\u003cbr\u003e\u003cbr\u003eThis column will concentrate on indicators, their use and their performance records. Some of the\nindicators we plan to cover in this column, and the reasons for using them, are provided in the following\nlist. If your favorite indicator isn't included here, or if you have some specific questions concerning\nindicators, write to me in care of Stocks \u0026amp; Commodities.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133775442289,"sku":"\\V06\\C01\\INTRO.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_97ae87b9-415a-4a06-a595-0ef47f48666a.jpg?v=1739652153"},{"product_id":"v06-c01-making-pdf","title":"V.6:1 (18-19): Making spreadsheets part of your trading system Part I by Jim Summers, Ph.D.","description":"Making spreadsheets part of your trading system\nPart I\nby Jim Summers, Ph.D.\u003cbr\u003e\u003cbr\u003eThis column will be all about using Lotus 1-2-3, Release 2.0 as a trading tool. Given the number of\nprograms written for technical analysis fundamental analysis, and portfolio management, why would\nanybody want to use Lotus 1-2-3 for this purpose? The answer is simplemost traders are not\nprogrammers, but they want the control and-the customization power that programming can provide.\nLotus 1-2-3 gives both. Lotus 1-2-3 helped me develop a trading system and a historical testing system to\nevaluate indicators. What I wanted to do fits me exactly. You can do the same.\u003cbr\u003e\u003cbr\u003eRefining trading systems\u003cbr\u003e\u003cbr\u003eArticles in Stocks \u0026amp; Commodities often describe some new angle on a technical indicator. Invariably, this\nnew twist is not part of my off-the-shelf charting package. However, the system looks intriguing, so I set\nup Lotus 1-2-3 to test the system against my data, and add in a few bells and whistles of my own to\nfurther improve performance.\u003cbr\u003e\u003cbr\u003eFor example, Gregory L. Morris, \"Trend of the Trend\" in the February 1987 issue of Stocks \u0026amp;\nCommodities, presented an indicator which was both interesting to me and very susceptible to Lotus\n1-2-3 testing. The continuing series of articles by Steven Kille and Thomas Drinkawhich rank the\nprofitability of indicators when applied to various futures contractsprovides another opportunity to test\nand refine their findings. Just proving they are correct is not enough. I want to be able to add my\nrefinements to their system. A similar procedure is used in more rigorously testing the many indicators\nwhich are available in my charting package.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133775475057,"sku":"\\V06\\C01\\MAKING.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_b17c038d-a83b-48ae-923e-80bab51607b4.jpg?v=1739652155"},{"product_id":"v06-c01-marketm-pdf","title":"V.6:1 (24-27): Market Maker by John Sweeney","description":"Market Maker\nby John Sweeney\u003cbr\u003e\u003cbr\u003eInmark Development Corporation\u003cbr\u003e\u003cbr\u003e139 Fulton St., Suite 810\u003cbr\u003e\u003cbr\u003eNew York, NY 10038\u003cbr\u003e\u003cbr\u003eProduct: Analytical package for stocks, futures\u003cbr\u003e\u003cbr\u003ePrice: $495\u003cbr\u003e\u003cbr\u003eEquipment: IBM PC\/XT\/AT or 100% compatible; 512K RAM, 2 floppies or floppy with hard drive;\nCGA, EGA, Hercules and other graphics; Epson MX\/FX\/LX or Okidata w\/plus and play ROMs;\nHayes Smartmodem 300\/ 1200 or equivalent, and DOS 2.0\u003cbr\u003e\u003cbr\u003eRatings:\u003cbr\u003e\u003cbr\u003eLevel of Analysis: Intermediate\u003cbr\u003e\u003cbr\u003eEase of Use: A\u003cbr\u003e\u003cbr\u003eError Handling: A\u003cbr\u003e\u003cbr\u003eCustomer Service: B+\u003cbr\u003e\u003cbr\u003eDocumentation: B+\u003cbr\u003e\u003cbr\u003eReliability: A\u003cbr\u003e\u003cbr\u003eBringing out another analytical package takes courage these days. How many are there? A bunch,\nright? How can you tell the difference between them all? Do any of them do anything swell for your\nprofits? Besides which, they all usually cost a fortune, right?\u003cbr\u003e\u003cbr\u003eRelax! Herein, we'll use Market Maker, a new package from Inmark Development to try to make sense of\nthe tradeoffs in this genre. Market Maker is a good vehicle for this because it deals well with all the\nproblems you find in this level of work (see Figure 1), and it is positioned squarely in what I call the\n\"intermediate\" range of current technical analysis. That is, it presents canned studies for use on your data\nbut has limited or no abilities for generating unique, personal indicators, doing optimization, evaluating\ntrading strategies or doing independent statistical analysis.\u003cbr\u003e\u003cbr\u003eBefore I launch into this, let me say that we don't present every package we receive. We try to take the\nfew that appear competitive with the best on the market (Figure 2). Market Maker easily got on my list\nbecause it is extremely fast and easy to set up and use.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133775507825,"sku":"\\V06\\C01\\MARKETM.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_95f59b14-b103-40a5-bf70-020c3381e84a.jpg?v=1739652158"},{"product_id":"v06-c01-mrktpro-pdf","title":"V.6:1 (34-36): Market Profile Part 2 by Thomas P. Drinka, Ph.D. and Robert L. McNutt","description":"Market Profile\nPart 2\nby Thomas P. Drinka, Ph.D. and Robert L. McNutt\u003cbr\u003e\u003cbr\u003eThe market is composed of time, price and volume. Each day, the marketin attempting to facilitate\ntradedevelops a price range delineated by the daily high and low and a Value Area where most of the\nprices congregate. Volume is generated by the interaction of time and price.\u003cbr\u003e\u003cbr\u003eA \"brief time\/price relationship\" is established when price does not remain in a particular range for a long\ntime period. In this case, the market does not accept a particular price or price area and moves away from\nit.\u003cbr\u003e\u003cbr\u003eAn \"extended time\/price relationship\" is established when price remains in a range for a long period of\ntime during the trading day. In this case, the market accepts a particular price or price area and establishes\nvalue by trading within that area.\u003cbr\u003e\u003cbr\u003eThe fundamental approach to trading is predicated on the notion thatunder the prevailing market\nconditionsthe current price can diverge from market value. This divergence creates market opportunity.\nThe key is knowing when current market price diverges from value and being able to judge whether price\nwill move to value or value to price. The Chicago Board of Trade Market Profile identifies the Value\nArea within a day's range and allows a trader to take advantage of a divergence of price and value.\u003cbr\u003e\u003cbr\u003eUsually, the Value Area is established as the market uses price probes which move, alternately, too high\nand too low in order to create Time\/Price Opportunities or TPOs that seek the trading activity of market\nparticipants. These price probes have an impact on the quantity supplied and demanded: As price moves\nup, the quantity supplied is stimulated and the quantity demanded is dampened. As price moves down,\nthe quantity supplied is dampened and the quantity demanded is stimulated. In this fashion, price\nconsolidation is promoted and a Value Area is established within which most trades occur.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133775540593,"sku":"\\V06\\C01\\MRKTPRO.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_3e7a3565-ac08-4cd0-89e1-fa0d6ff19802.jpg?v=1739652160"},{"product_id":"v06-c01-tradopt-pdf","title":"V.6:1 (14-17): Trading options volatility by John Nelson and Stephen Kreis","description":"Trading options volatility\nby John Nelson and Stephen Kreis\u003cbr\u003e\u003cbr\u003eThe objective in trading options is generally a rather straightforward onebuy the premiums low and\nsell them high. For many traders there is no need to make \"option action\" any more complicated than\nthat. Other option investors like to take a more in-depth look at the factors that affect the premium level\nto develop their trading strategies.\u003cbr\u003e\u003cbr\u003eVolatility is the most important factor affecting option premiums. In fact, some traders only take\npositions based on volatility, and are always neutral with respect to price. Knowing volatility and\nsuccessful options trading go hand in hand.\u003cbr\u003e\u003cbr\u003eVolatility describes how fast and how much prices change. A price series with high volatility is one\nwhich has large and fast price movements. A low volatility price series has small and infrequent price\nchanges.\u003cbr\u003e\u003cbr\u003eIn Figure 1, price series A is more volatile because the price changes are much larger than price series B.\nWhen looking at volatility, the actual price level and direction are not important. What is important is the\nsize and rate of price change.\u003cbr\u003e\u003cbr\u003eWhat does this mean to the option trader? An option with a higher volatility will have higher\npremiumspricesthan an option with lower volatility. When futures prices are moving around a lot, as\nin prices series A, there is a higher probability that an option will become in the moneyrise above its\nstrike price. Therefore, option sellers demand higher premiums to compensate for the greater risk of\nending up with a losing position. Options buyers are willing to pay more, because their positions will be\nmore likely winners in a moving market.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133775573361,"sku":"\\V06\\C01\\TRADOPT.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_05e37575-9af8-454c-864b-189e9524d2a1.jpg?v=1739652162"},{"product_id":"v06-c01-trdprim-pdf","title":"V.6:1 (40-41): Trading primary markets by Allen D. Hanson","description":"Trading primary markets\nby Allen D. Hanson\u003cbr\u003e\u003cbr\u003eFew traders understand the difference between primary futures markets and those that are often called\n\"secondary\" markets. Sometimes it is not easy to tell the difference between them. As a new futures\ncontract develops it gains status through volume (the number of contracts traded during a session) and\nopen interest (the number of contracts that haven't been closed). Commercial participation grows and\nsoon a specific industry is relying on this futures market as a prime source for its cash pricing. During the\ntransition from a secondary to a primary market, however, there is a period where there is no clear\ndistinction between the two classifications.\u003cbr\u003e\u003cbr\u003eObvious primary futures markets in the United States include wheat, soybeans, corn, silver and other\nheavily traded commodities where dealers rely on futures quotes to price the cash commodity. Obvious\nsecondary futures markets include the stock indices and other financials where the cash market is actually\nthe primary marketthe futures market follows the cash, but does not actually set the cash price. There\nare literally dozens of futures contracts that are halfway in between. They are not influential enough to be\nprimary markets, but they do influence the trade to some extent as secondary markets.\u003cbr\u003e\u003cbr\u003eThe Commodity Exchange (COMEX) in New York is regarded by many investors as a primary market in\nprecious metals. Many gold and silver dealers rely on the COMEX for their inventory pricing and they\nbase cash transactions on COMEX quotes. The use of a particular futures market by industry executives\nto establish price is the key to classification as a true primary market. The United States government,\nhowever, selected the London Gold Fix to price the new U.S. Eagle coin to the dealer trade. Regardless\nof the reason, the COMEX became a secondary market in this particular case despite the tremendous\ninfluence COMEX has had worldwide in the pricing of precious metals.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133775606129,"sku":"\\V06\\C01\\TRDPRIM.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_c0a7d2d4-6ba0-40c2-89c6-be5d34948ab6.jpg?v=1739652164"},{"product_id":"v06-c01-trenp-pdf","title":"V.6:1 (31-33): Trends and price channels by Heidi Schmidt","description":"Trends and price channels\nby Heidi Schmidt\u003cbr\u003e\u003cbr\u003eFor the beginner, it is important to know that technical analysis is based on the belief that current\nmarket prices are related to prices that occurred previously. In other words, technical analysis is the\nopposite of the random walk theory, which states that prices are not related to each other from one day to\nthe next. Thus, the technician analyzes past price (or yield) activity hoping to glean from it the future\ndirection of prices. Technical analysis does not attempt to establish a mathematical model of market\nactivity, such as an econometric model, but rather studies the symmetry of historical market price moves,\nto formulate price projections.\u003cbr\u003e\u003cbr\u003eThere is no single tool more important to the technical analyst than the identification of trend.\nIdentification of trend is the heart of market symmetry, for business activity is known to occur in cycles\nand the correct and timely identification of a change in trend, marking the change in the business cycle,\ncan be very profitable. Price channels are the chartist's tool for using trend to their advantage.\u003cbr\u003e\u003cbr\u003eDow Theory is credited by most technicians as being the \"grandaddy\" of technical analysis and it is Dow\nTheory upon which the \"bible\" of technical analysis is based: Edwards and Magee's Technical Analysis of\nStock Trends, first published in 1948. A basic tenet of Dow Theory is that price moves tend to occur in\ntrends. By Dow definition, an up-trend in price, a bull market, is defined by successively higher highs\ncoupled with successively higher lows. A down-trend in price, a bear market, is defined by successively\nlower highs coupled with successively lower lows.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133775638897,"sku":"\\V06\\C01\\TRENP.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_61b847cc-723c-48e6-b50d-1b1d1d504f83.jpg?v=1739652167"},{"product_id":"v06-c01-volanls-pdf","title":"V.6:1 (37-39): Volume analysis Part 1 by John C. Lawlor","description":"Volume analysis\nPart 1\nby John C. Lawlor\u003cbr\u003e\u003cbr\u003eHistorically, volume has had only modest use as a technical analysis factor, even though volume, or\nthe magnitude of volume, is a most respected market force. Every day, the 15 most active stocks are\nlisteda subtle tribute to volume. Most technicians, when referring to price relationships, state that a\nlarge move in price should be on increased volume.\u003cbr\u003e\u003cbr\u003eCumulative Volume (CV) as treated in a recent article in Stocks \u0026amp; Commodities (June 1986), is one basic\nmeasure of volume. The first important requirement for studying CV is to co-plot it with price. The scale\nfor CV must be properly proportioned so that price and CV will tend to track together for portions of the\nchart. In addition, the option must be available to vary the CV scale, and to vary the point where price\nand CV are tied together (coincident). This provides the option of studying divergence over any portion\nof the chart.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133776261489,"sku":"\\V06\\C01\\VOLANLS.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_82e2d3a8-eb06-43ca-97fe-8a3d45977e34.jpg?v=1739652169"},{"product_id":"v06-c01-volcm-pdf","title":"V.6:1 (20-22): Volume Called the Market by R. Stuart Thomson","description":"Volume Called the Market\nby R. Stuart Thomson\u003cbr\u003e\u003cbr\u003eBy going back to October 1986 we can better understand the market explosion that occurred in January\n1987, thanks to our cumulative volume (CV) charts. (See \"Cumulative Volume\" in the June 1986 issue of\nStocks \u0026amp; Commodities.)\u003cbr\u003e\u003cbr\u003eStarting in October 1986 and with some slow-down in December as the impact of the new Tax Reform\nAct reared its ugly head, the technical picture steadily improved. Figure 1 shows how the Dow Jones\nIndustrials' cumulative volume broke out to a new high in September 1986, quickly retreated to a higher\nlow that same month, broke out to a sustained new high in October, and then made another new high in\nDecember. Once the year-end finally arrived, the market was ready to spring into action.\u003cbr\u003e\u003cbr\u003eThe S\u0026amp;P Transports had failed to confirm new DJIA highs for months, and persisted in drifting lower\nfrom April to July 1986. That was the bottom (Figure 2). Finally, in October, the S\u0026amp;P Transports\ncumulative volume broke out to a new high right in tune with the action of the DJIA cumulative volume.\u003cbr\u003e\u003cbr\u003eOne of the technical indicators that stubbornly refused to confirm the new 1986 DJIA highs was the\nNYSE Advance\/ Decline Index (Figure 3). It made a high in April 1986, drifted lower into August,\nrallied into November, and then made a final low on December 31, 1986. While it was failing to confirm\nthe Dow Industrials during all this time, one is struck by how shallow the pull-back actually was, and,\nfinally, when the turn came, it only took 21 trading sessions to go from its low for the year 1986 to a new\nhigh in early February 1987.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133776687473,"sku":"\\V06\\C01\\VOLCM.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_eb30717f-341e-4ac8-9a28-a0bacd1e63f7.jpg?v=1739652171"},{"product_id":"v06-c01-whichmm-pdf","title":"V.6:1 (28-30): Which Money Manager? by Charles Milmoe","description":"Which Money Manager?\nby Charles Milmoe\u003cbr\u003e\u003cbr\u003eNone can answer the question absolutely, but there is a method of determining if your money manager\nhas even a chance of making money for you next year. It requires a small amount of high school math and\na desire to select a manager intelligently rather than emotionally.\u003cbr\u003e\u003cbr\u003eMany people select futures advisors based upon emotion (greed and fear); but, the failure rate in futures\ntrading is so high that the prudent use of the following formula can help you objectively select and\nevaluate a futures and futures options money manager.\u003cbr\u003e\u003cbr\u003eThe first requirement is that the advisor or the system has been profitable for at least three years. Most\nmajor brokerage firms insist on this, however, sometimes even they make exceptions. But you, as an\nindividual investor, should never make an exception to this rule. If you like a particular advisor and\/or a\ntrading idea, have the patience to watch until the track record is at least three years old. You will protect\nyourself from many financial disasters by exercising this patience. This patience also will contribute\nsubstantially to your future success once you actually invest with a money manager.\u003cbr\u003e\u003cbr\u003eThe second consideration should be that the track record has been profitable during both an inflationary\nperiod ( 1970 1980) and a deflationary period (1981 - present). Purely technical system advisors may\nsuggest this should not be a factor, but analysis shows how poorly many trend followers have done in the\npast four years. Either their systems aren't purely technical and have a bullish bias, or their systems need\nslowly developing trends to be profitable. However, prices often fall precipitously without gradual\nwarning periods.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133776720241,"sku":"\\V06\\C01\\WHICHMM.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_885f8df4-00a4-4b07-9ee0-2bfebaa87d4b.jpg?v=1739652173"},{"product_id":"v06-c01-winws-pdf","title":"V.6:1 (33-33): Winning on Wall Street by John Sweeney","description":"Winning on Wall Street\nby John Sweeney\u003cbr\u003e\u003cbr\u003eAuthor: Martin Zweig\u003cbr\u003e\u003cbr\u003ePublisher: Warner Books\u003cbr\u003e\u003cbr\u003e666 Fifth Avenue\u003cbr\u003e\u003cbr\u003eNew York, NY 10103\u003cbr\u003e\u003cbr\u003ePrice: $20\u003cbr\u003e\u003cbr\u003eThis is a good book. It has a very reasonable approach to trading the market, or even individual stocks.\nIt's a compendium of experience-generated trading guidelines and indicators which should well serve a\nnew trader or someone with fewer than five years of market study. It's frank (\"Had I stayed with it, I\nwould have made 50 points ... But that's only a fantasy.\"), focused (\"There is nothing wrong with bonds.\nMy specialty happens to be stocks.\") and straightforward (\"Buy strength, sell weakness, and stay in gear\nwith the market.\").\u003cbr\u003e\u003cbr\u003eIf detail is your thing, there are umpteen indicators described in detail, both fundamental and technical.\nOne or two (such as the Zweig Sentiment Indicator) are not disclosedyou're given the elements and the\nidea and left to create a similar indicator on your own. The indicators that are disclosed are well worked\nout in worksheets and displayed in graphs. In broad categories, the indicators used are monetary,\nmomentum, sentiment and seasonal. From my standpoint, this hits the high points without overdosing.\u003cbr\u003e\u003cbr\u003eThere is a promotional function to the book which is most prominent in Chapter 11, \"How to Pick the\nWinners.\" The answer is to search for \"strong growth in company earnings and sales; a reasonable\nprice-to-earnings ratio; buying by corporate insiders; and reasonably strong price action...\" You can do\nthis by hand or use the Zweig Security Screen, which apparently searches about 3,000 stocks for proper\ncharacteristics.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133776753009,"sku":"\\V06\\C01\\WINWS.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_685b5a9b-678d-4e93-80ca-c2a0926d78c4.jpg?v=1739652176"},{"product_id":"v06-c02-cumulat-pdf","title":"V.6:2 (67-69): Cumulative Volume and momentum Part 2 by John C. Lawlor","description":"Cumulative Volume and momentum\nPart 2\nby John C. Lawlor\u003cbr\u003e\u003cbr\u003ePrice is so obvious that we all expect it to tell us everything. For example, if our stock gains $1 on the\nday, we feel good. However, what we really do is multiply that $1 by, say, the 500 shares we own and, of\ncourse, we feel $500 richer. It is truly the number of shares we own that makes us feel good. Volume,\nthen, makes the difference, not just the price or the price change.\u003cbr\u003e\u003cbr\u003eSome technical analysts talk erroneously about price momentum. Momentum is defined as \"the force of a\nmoving body\" or \"momentum = mass velocity.\" Consider a Fiat and a Mack truck moving down the\nhighway at 50 mph. If they strike a stationary object, which will have the greatest effect? Which has the\ngreater momentum due to its greater mass? Which will generate the greater force? If we think about the\nChicago Bears' Refrigerator Perry hitting the line at full speed, we really understand momentum.\u003cbr\u003e\u003cbr\u003eThinking about market forces then, volume represents the mass of momentum and is causative of price\nchange. Price is simply a number indicating change alone. Measuring and evaluating volume can reveal\nand confirm price changes.\u003cbr\u003e\u003cbr\u003eIn the first installment of this article (Stocks \u0026amp; Commodities, January 1988), I presented charts where\nCumulative Volume (CV) was overlaid on price to show the moving relationship of both. In addition, the\n200-day moving average of price (200DMA) was placed on the chart to show how it normally is a\nmoving line of resistance or line of support for price. The charts showed only one additional CV\ncharacteristic called a channel trend.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133776785777,"sku":"\\V06\\C02\\CUMULAT.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_a6fba5f2-15f3-4a8c-b827-75ca89298889.jpg?v=1739652179"},{"product_id":"v06-c02-mktprot-pdf","title":"V.6:2 (59-61): Market Profile and trends Part 3 by Thomas Drinka, Ph.D. and Robert L. McNutt","description":"Market Profile and trends\nPart 3\nby Thomas Drinka, Ph.D. and Robert L. McNutt\u003cbr\u003e\u003cbr\u003eThe key to market opportunity is knowing when current market price diverges from value and being\nable to judge whether price will move to value or value to price. A divergence of price and value can\noccur during the trading session-as well as over many days-and may generate a trend.\u003cbr\u003e\u003cbr\u003eTrends can be used to evaluate the speed at which the market is moving through time and, knowing the\nmarket's speed, even a trader far from the pits can judge the amount of response time for trading.\u003cbr\u003e\u003cbr\u003eThere are three types of trends, each defined by their timespan. As the market-in attempting to facilitate\ntrade-seeks the activity of market participants through the use of price probes, the current price may\ndiverge from value. Then, one of two occurrences results: Either market participants reject the divergent\nprice and price returns to value or market participants accept the price as fair and value is generated at\nnew price levels by attracting volume.\u003cbr\u003e\u003cbr\u003eIn the first case, the divergence results in a price trend-a price movement that occurs during only one\nhalf-hour time period. In the second case, the divergence results in a value trend-a price movement that\noccurs during two half-hour time periods. As price moves through time and attracts volume, the price\nmovement slows and this suggests a continuation of the trend.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133776818545,"sku":"\\V06\\C02\\MKTPROT.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_98ce7d53-93ed-4881-99ef-43be66c133eb.jpg?v=1739652181"},{"product_id":"v06-c02-money-pdf","title":"V.6:2 (79-81): Money flow analysis by Steven B. Goldstein and Michael N. Kahn","description":"Money flow analysis\nby Steven B. Goldstein and Michael N. Kahn\u003cbr\u003e\u003cbr\u003eIn 1976, Joe Granville documented several theories of stock market price and volume movements in\nGranville's New Strategy of Daily Stock Market Timing for Maximum Profit. The book explained the\ncalculation and interpretation of on-balance volume, a market analysis technique that compares volume\non up days to volume on down days.\u003cbr\u003e\u003cbr\u003eHis theory was that, as stock prices move higher in a rising market, volume on days that prices increase\nshould be higher than volume on days when prices decline. Conversely, volume on down days should be\ngreater than volume on up days when price is falling. The cumulative sum of up volume less down\nvolume should move in the same direction as price. If it does not, a divergence exists that may be a\ntrading opportunity because prices tend to correct in the direction of on-balance volume.\u003cbr\u003e\u003cbr\u003eWhile Granville has fallen out of favor, the theory of on-balance or cumulative volume has not. (See\nStocks \u0026amp; Commodities, \"Volume analysis,\" January 1988.) A fair number of market technicians still\nreligiously calculate on-balance volumes. The problems with on-balance volume are that only end-of-day\nfigures are used in the calculation and the calculation does not differentiate between a 1% move in a\nsecurity or market on a given day and a 2% move. The weights are determined by volume, not price\nmovement.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133776851313,"sku":"\\V06\\C02\\MONEY.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_6de91a6d-4402-443c-841d-4e547e040cd1.jpg?v=1739652183"},{"product_id":"v06-c02-night-pdf","title":"V.6:2 (62-64): Night trading: the impact on technical charts by Heidi Schmidt","description":"Night trading: the impact on technical charts\nby Heidi Schmidt\u003cbr\u003e\u003cbr\u003eThe new night trading session at the Chicago Board of Trade (CBOT) is causing worry among\ntechnical chartists. Should technical analysts adopt the new child at first sight and incorporate the data\ninto their painstakingly kept charts and indicators? What if the session is declared a flop and halted \nwill pristine charts be forever blemished?\u003cbr\u003e\u003cbr\u003eChartists have two choices: incorporate the new session into the daily trading range and merely continue\ntheir current charts or keep two sets of charts until the success\/impact of the new night session is better\nunderstood (Figure 1). The following examination of the new night session may help clarify which path\nis best to take.\u003cbr\u003e\u003cbr\u003eBeginning on April 30, 1987, T-bond and T-note futures and options started to trade during a night\nsession running from 6 p.m. to 9 p.m. Central time. CBOT defines the daily trading session as starting\nwith the previous night's session. The last trade if the night session is termed the \"suspension\" of trading.\u003cbr\u003e\u003cbr\u003eThe next morning, the \"resumption\" of trading occurs with the usual trading hours, 8 a.m. to 2 p.m.\nCentral time, and finishes the session. The day's close is still calculated at 2 p.m., but the daily high and\nlow take into account the previous evening's activity. Originally, there was no night trading conducted on\nSunday evenings, and Monday had no night trading incorporated into its trading ranges. However, based\non the initial success of the night sessions, Commodity Futures Trading Commission approved Sunday\nnight sessions beginning on September 13, 1987.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133776884081,"sku":"\\V06\\C02\\NIGHT.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_d1168240-502f-4a21-a739-cc162f388a6b.jpg?v=1739652186"},{"product_id":"v06-c02-optplus-pdf","title":"V.6:2 (70-72): Optionvue Plus by John Sweeney","description":"Optionvue Plus\nby John Sweeney\u003cbr\u003e\u003cbr\u003eOptions Software International\u003cbr\u003e\u003cbr\u003e175 E. Hawthorn Parkway, Suite 180\u003cbr\u003e\u003cbr\u003eVernon Hills, IL 60061\u003cbr\u003e\u003cbr\u003e(312) 816-6610\u003cbr\u003e\u003cbr\u003eProduct: Options analysis package for stocks, equity indices, convertible securities and COMEX gold.\u003cbr\u003e\u003cbr\u003ePrice: $695\u003cbr\u003e\u003cbr\u003eEquipment: IBM-PC or compatible, DOS 2.0+,192K memory, two floppies or one floppy and one\nhard disk.\u003cbr\u003e\u003cbr\u003eRatings:\u003cbr\u003e\u003cbr\u003eLevel of Analysis: Advanced\u003cbr\u003e\u003cbr\u003eEase of Use: A\u003cbr\u003e\u003cbr\u003eCustomer Service: B\u003cbr\u003e\u003cbr\u003eDocumentation: B+\u003cbr\u003e\u003cbr\u003eError Handling: A\u003cbr\u003e\u003cbr\u003eAccuracy: A\u003cbr\u003e\u003cbr\u003eOverall: B+\u003cbr\u003e\u003cbr\u003eAn odd thing about many options packages is that they don't often exploit the major points in options'\nfavor: their flexibility. As a general rule, I believe options aren't a great deal for the investing public.\nThey are expensive (perhaps a reflection of the true underlying risks of the market) and commissions are\nhigh. In their favor is their ability to manage a position as it evolves, to move the position up\/down in\nprice or in\/out in time.\u003cbr\u003e\u003cbr\u003eOptionvue Plus, in contrast, seems designed to exploit, rather than ignore, these opportunities. Its\nanalytical flexibility extends across time, price and volatility by which I mean that all three variables\nare easily and conveniently manipulated.\u003cbr\u003e\u003cbr\u003eAuthor Len Yates' philosophy, Succeeding with Options, Technical Analysis of Stocks \u0026amp; Commodities,\nSeptember and October 1986) is generally to use options' decaying value in conservative strategies which\ncan be expected to yield above-average returns over time, though they are not positioned for explosive\nspeculative gains. That philosophy is implemented in Optionvue Plus, version 1.9.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133776916849,"sku":"\\V06\\C02\\OPTPLUS.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_1aef0c3c-be03-42f4-9970-2df8eaea989b.jpg?v=1739652188"},{"product_id":"v06-c02-pelleti-pdf","title":"V.6:2 (46-50): Pelletier on PDI","description":"Pelletier on PDI\u003cbr\u003e\u003cbr\u003eBob Pelletier is a distant but favorite figure to us at Stocks \u0026amp; Commodities. He's distant, residing in\nFlorida while we are in Seattle. He's a favorite because for years he has supplied us with data and\nsoftware for trading.\u003cbr\u003e\u003cbr\u003eWe've watched CSI grow from a small package that could run on Apples and Commodore 64's to a\nfull-service data vendor for major institutions. To us the interesting thing was that Bob himself, with the\nhelp of a band of programmers, was constantly developing new indicators and technical trading tools. His monthly newsletter often read like a trader's instruction manual.\u003cbr\u003e\u003cbr\u003eThis creativity seems to have reached its apogee when Bob's indicator, PDI (Probable Direction\nIndicator), was published. Then version II was published, then version III. These, together with CSI Stop\nand CSI Trend, were proprietary indicators that Bob made available as an add-on product to the data\nservice. Their distinctive feature was the use of probabilistic estimates of future price behavior. The\nprobabilities used were gathered from the time series itself, not an arbitrary \"parameter. \" An added\nlevel of sophistication was that the weighting accorded to any one estimate was adjusted as it performed\n or failed to perform well.\u003cbr\u003e\u003cbr\u003ePDI itself acts like an extraordinarily sensitive overbought\/oversold indicator (Figure 1), one which\nsometimes catches major moves well and other times bounces both with and against trends.\u003cbr\u003e\u003cbr\u003eNone of this material is disclosed so that you or I can learn from it or study it. You must play with it long\nenough to learn what the indicator is saying. However, the little that was disclosed persistently piqued\nour interest. We called Bob determined to pry all we could out of him. Here's the result.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133776949617,"sku":"\\V06\\C02\\PELLETI.PDF","price":4.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_ca4d321f-e8d9-4f7f-950c-c5c4cede4e84.jpg?v=1739652190"},{"product_id":"v06-c02-spike-pdf","title":"V.6:2 (65-66): Spike protection by John McCormick","description":"Spike protection\nby John McCormick\u003cbr\u003e\u003cbr\u003eYou've just spent four hours perfecting the spreadsheet that conveys an idea which blossomed\nfull-blown in your imagination at 1 a.m. You know that you would never again be able to duplicate this\nperfect means of analyzing stock movements, and you are certain that fame and fortune are assured by the\nwork you've just completed.\u003cbr\u003e\u003cbr\u003eRealizing that you haven't backed up any copies of your precious work, you reach for a diskette. After\ninserting the backup disk and striking the \"save\" key, you begin to relax. Just then, the lights in the room\nbrighten momentarily as the air conditioner shuts off. To your horror, you see the precious spreadsheet\nscrambled to garbage on your monitor and the disk drive goes wild.\u003cbr\u003e\u003cbr\u003eYou have just experienced a power spike, a brief surge of high voltage in your power supply.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133777375601,"sku":"\\V06\\C02\\SPIKE.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_98cd0c4d-8a9a-4152-874c-6c8363380117.jpg?v=1739652193"},{"product_id":"v06-c02-student-pdf","title":"V.6:2 (73-74): Students select a winning portfolio by Michael Scott","description":"Students select a winning portfolio\nby Michael Scott\u003cbr\u003e\u003cbr\u003eCan high school seniors on a college prep track outperform leading investment advisors and mutual\nfund managers? Based on the following evidence, the answer must be an unqualified \"yes.\" The\nunderlying reason for this classroom success is that college prep students are bright, perceptive, objective\nand follow instructions carefully. I suspect they also have implicit faith in a good instructor.\u003cbr\u003e\u003cbr\u003eThis investment experiment was the outgrowth of a unit on American capitalism in a senior social\nproblems class. I felt that college prep students should be exposed to the financial page of a good daily\nnewspaper and learn how to read it intelligently. One hour was devoted to explaining the symbols and\nterms of the New York Stock Exchange listing. At the end of the class period, I asked the students if they\nwould like a short course on how to select a sound stock with promising potential for growth. The answer\nwas an enthusiastic and overwhelming affirmative, and thus we started our experiment in the stock\nmarket.\u003cbr\u003e\u003cbr\u003eIn an experiment of this nature it is important to set simple and limited criteria to ensure uniformity and a\nmeasure of objectivity. I told the students I could justify only two 50-minute class periods for this\nassignment. Therefore, they would have to listen carefully to a 35-minute explanation of the criteria and\ndevote the balance of the time to selecting one stock they felt best met the criteria. They were to wrap up\nthe assignment by recording their data and submitting their individual stock selections to me.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133777408369,"sku":"\\V06\\C02\\STUDENT.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_1cb12a6f-9250-42eb-9ac3-03f3e7c03e67.jpg?v=1739652195"},{"product_id":"v06-c02-taming-pdf","title":"V.6:2 (77-78): Taming the indicators by Arthur A. Merrill","description":"Taming the indicators\nby Arthur A. Merrill\u003cbr\u003e\u003cbr\u003eAn indicator is often difficult to read because of its wild fluctuations. It may appear optimistic and\nthen dive into bearish territory. Then it might reverse again and turn bullish. Frustrating!\u003cbr\u003e\u003cbr\u003eA wild indicator is usually tamed by a moving average or an exponential average. These techniques\n\"smooth\" the data for us.\u003cbr\u003e\u003cbr\u003eThe most common smoothing method is a simple moving average. This method is easily described by an\nexample: a five-week average is the average of the last five weekly data points. In the following week, a\nnew average is calculated by deleting the first week's value and adding the new data point.\u003cbr\u003e\u003cbr\u003eThe degree of smoothing is determined by the length of the moving average. A five-week moving\naverage has a moderate smoothing effect (Figure 1); a 52-week moving average is very sedate (Figure 2).","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133777473905,"sku":"\\V06\\C02\\TAMING.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_ab898954-f05d-4823-b861-62f741b19d4f.jpg?v=1739652198"},{"product_id":"v06-c02-trdngew-pdf","title":"V.6:2 (51-54): Trading with Elliott Wave and Gann by David Lamarr","description":"Trading with Elliott Wave and Gann\nby David Lamarr\u003cbr\u003e\u003cbr\u003eWave confusion. This is the best way to describe my introduction to the Elliott Wave Principle more\nthan four years ago. I read the books, started keeping an hourly chart updated by hand and had reasonable\nexpectations as to the results of my interpretive skills. Initially, I was able to readily identify bottoms and\ntops several days after their occurrence and be whipsawed whenever I thought I precisely knew what the\nwave count was.\u003cbr\u003e\u003cbr\u003eI slowly improved my wave count skills to the point that when I identified a particular wave count, it was\nusually correct. The problem still was determining how to label many of the waves.\u003cbr\u003e\u003cbr\u003eElliott waves provide price targets based on the ratios of .618, .5, .382 and, more recently, .236. These\nprice targets are helpful but difficult to trade with a strong sense of certainty. I discovered the Elliott\nwave analysis is highly dependent on the individual's ability to recognize and identify \"price patterns.\"\nOne strong point of Elliott wave analysis is that it does let you know when you're wrongi.e., when a\nparticular retracement is penetrated look for support at the next retracement level.\u003cbr\u003e\u003cbr\u003eIntellectually, it's relatively easy to develop a trading strategy. If a .382 retracement appears to halt\ndownward price movement, then buy. If this level is penetrated, exit the position quickly. Repeat the\nprocess with a .5 retracement. If necessary, repeat with a .618 retracement. The two losses will be small\nand the third trade should provide good profits that more than cover the first two losses. Emotionally,\nthough, I feel this is unworkable for the majority of traders, including myself.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133777539441,"sku":"\\V06\\C02\\TRDNGEW.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_6d35c96c-1a89-418b-ae24-159c1f5fea21.jpg?v=1739652200"},{"product_id":"v06-c02-wave-pdf","title":"V.6:2 (55-58): Wave Market Analysis Part I by Bryce T. Gilmore","description":"Wave Market Analysis\nPart I\nby Bryce T. Gilmore\u003cbr\u003e\u003cbr\u003eAs Perry J. Kaufman says in his book Commodity Trading Systems and Methods: \"Speculation is a\nsophisticated business, and to be successful at it you must make it your business. To compete with a\nprofessional speculator you must anticipate the next move better or be more accurate in predicting prices\nfrom current newsnot the one printed in today's newspaper but the one that has yet to be published.\u003cbr\u003e\u003cbr\u003e\"Pattern recognition over short intervals is a study of behavioral science. Within the commodities\nmarkets speculators and commercial traders will react in a similar manner over and over again given\nsimilar circumstances. After many years these patterns may vary or become more complex, but they exist\nand can be used to anticipate subsequent price moves. The exclusive use of patterns will divorce you\nfrom any long-term supply-and-demand factors, since the short-term move may be contrary to the\nultimate direction of prices.\"\u003cbr\u003e\u003cbr\u003eMy philosophy for trading relies on these words of wisdom. To be successful we must study the past and\ndetermine which patterns were reliable in most cases to cause a reaction or complete change of trend to\nthe prices of a particular option.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133777572209,"sku":"\\V06\\C02\\WAVE.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_7d5a9f00-0b5a-42d1-b472-2f5927a99d9d.jpg?v=1739652202"},{"product_id":"v06-c02-wilder-pdf","title":"V.6:2 (75-76): Wilder's Directional Movement Index System Part 2 by Jim Summers, Ph.D.","description":"Wilder's Directional Movement Index System\nPart 2\nby Jim Summers, Ph.D.\u003cbr\u003e\u003cbr\u003eAs I noted in the last issue, I need both a charting program and Lotus 1-2-3 to trade with discipline and\nconfidence, along with maintaining my emotional health. My first major programming task for Lotus\n1-2-3 came about when I recognized the limits of charting software.\u003cbr\u003e\u003cbr\u003eThe first indicator we'll systemize is J. Welles Wilder Jr.'s Directional Movement Index (DMI). However,\nonly when we understand what the indicator is supposed to do does it make sense to test it or incorporate\nit into our trading plans. Thus, actual Lotus 1-2-3 work will have to wait.\u003cbr\u003e\u003cbr\u003eScholarship\u003cbr\u003e\u003cbr\u003eYou may wonder why I chose Wilder's DMI. After all the DMI is available in nearly every technical\nanalysis package. The reasons for this choice are a good example of the value of scholarship.\u003cbr\u003e\u003cbr\u003eBriefly described, the charted portion of the DMI system consists of three lines. The ADX, or average\ndirectional movement index, is supposed to tell us if a trend is in effect or not. The other two lines\n+DI14 and -DI14, the up and down 14-day average of directional movementare supposed to be issuing\nbuy or sell signals when they cross one another. Figure 1 illustrates the two DI lines on the December\n1986 S\u0026amp;P 500 contract.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133777604977,"sku":"\\V06\\C02\\WILDER.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_2d060ba3-b7ec-4512-b74b-cb2486cadc22.jpg?v=1739652205"},{"product_id":"v06-c03-blackph-pdf","title":"V.6:3 (110-111): Black phantasy in P by Stephen Edwards","description":"Black phantasy in P\nby Stephen Edwards\u003cbr\u003e\u003cbr\u003eWhat a pip is P.I.P., thought Peter Parsifal on Friday. Peter was head financial \"rocket scientist\" for\nSmith, Wesson, Winchester and Colt, Inc. P.I.P. was the Portfolio Insurance Program that was Peter's\npersonal project. On Friday, as the market plunged 100 points, Peter's program printed out options sales\nwith punctilious precision. Assets of Smith, Wesson's clients were preserved. Peter's bosses patted Peter's\nback and offered him a partnership.\u003cbr\u003e\u003cbr\u003e\"If it wasn't for your invention, it might have been Black Friday around here,\" they opined. Puffed with\npride, Peter rushed out and purchased a Porsche as a present for his own precious passion flower, Sylvia.\u003cbr\u003e\u003cbr\u003ePeter had a good weekend, celebrating his success, driving the Porsche and basking in Sylvia's gratitude.\nAs a result, Peter was rather late to work on Monday. Mr. Colt didn't seem to mind.\u003cbr\u003e\u003cbr\u003e\"Boy, am I glad we have that computer online,\" said Mr. Colt, \"The market's down 287 points already. I\ndon't know how we'd cope without your whiz-kid program.\"\u003cbr\u003e\u003cbr\u003e\"287 points?\" Peter sputtered.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133777834353,"sku":"\\V06\\C03\\BLACKPH.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_8bc2bdf5-ad47-4a3a-aed9-c2a3dc7cd91f.jpg?v=1739652207"},{"product_id":"v06-c03-curvlin-pdf","title":"V.6:3 (112-114): Curvilinear chart analysis by D.O. Christian Reiger","description":"Curvilinear chart analysis\nby D.O. Christian Reiger\u003cbr\u003e\u003cbr\u003eNothing in the universe moves in an unswerving line least of all futures prices. Why then, should\nstraight lines dominate our technical analysis of charts? In the following examples, you'll see how the\ncurvilinear analysis of price evolution in several futures markets can answer some of the knotty questions\nthat technical traders face.\u003cbr\u003e\u003cbr\u003eIn particular, this analytical system provides an answer as to why price trends reverse where they do \nsometimes out of nowhere and at unfathomable times. The system also gives insight into chart formations\nso as to better time trades. Additionally, it demonstrates relationships between past prices and patterns\nand future ones the essential premise of the validity of technical analysis.\u003cbr\u003e\u003cbr\u003eThe apparatus used in the construction of these curves is the French curve of the drafting profession. You\ncan make your own French curve with Figure 1, which also shows the four ways (a-d) the curve is\npositioned when plotting curves. For instance, on ensuing charts, the notation refers to curved line \"A\"\ndrawn with the French curve in the (c) position. As a straight line must be drawn on at least two points to\nbe valid, a curve must be drawn on a least three points to have predictive value.\u003cbr\u003e\u003cbr\u003eThe first basic method for plotting curves is to draw them on a series of market highs or market lows in\nareas of price congestion such as accumulation patterns, distribution patterns and bull or bear trends. As\nwith straight line analysis, curved ones along the tops of such formations would indicate resistance and\nthose along the bottom, support.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133777932657,"sku":"\\V06\\C03\\CURVLIN.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_5950cc0b-e7bc-4e2b-88b1-fcc2de5557bc.jpg?v=1739652209"},{"product_id":"v06-c03-fitting-pdf","title":"V.6:3 (93-96): Fitting your \"social style\" into trading by Herbert Friedman, Ph.D.","description":"Fitting your \"social style\" into trading\nby Herbert Friedman, Ph.D.\u003cbr\u003e\u003cbr\u003eWhen it comes to investing, each of us must develop his or her own methodology and manner of\napproaching the markets. To a large degree, our ability to do this determines our investment success. For\nexample, many commodity traders have lamented the gap between knowing what will happen and having\nthe discipline or desire to execute successfully. Commodity traders also often comment on how their\nemotional or mental mistakes can be extremely expensive.\u003cbr\u003e\u003cbr\u003eWhether this gap between your ideas and your bottomline is the result of an emotional response which\nworks against you or difficulty in decision-making, to trade successfully requires all aspects of your\ninvestment behavior at their peak . For many traders, the psychological aspects are just as crucial to\nmonitor as the technical or fundamental.\u003cbr\u003e\u003cbr\u003eThe easiest and best system to understand yourself in terms of decision-making and behavior under stress\nis the \"social style\" model that has been used for years as a means of teaching successful management\npractices. The beauty of social styles is that it is a simple, easy-to-understand model that can give you\ninsight into your normal mode of functioning. Understanding yourself in terms of this model can give you\ninvaluable hints for managing yourself. In trading, this increased self-management skill can lead to\nincreased profits.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133777965425,"sku":"\\V06\\C03\\FITTING.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_1985e33a-bbd0-497a-b55a-0c2d9d8e8e63.jpg?v=1739652211"},{"product_id":"v06-c03-macros-pdf","title":"V.6:3 (89-89): Introduction to macros Part 3 by Jim Summers, Ph.D.","description":"Introduction to macros\nPart 3\nby Jim Summers, Ph.D.\u003cbr\u003e\u003cbr\u003eIn the previous column, I discussed the advantages of using Lotus 1-2-3 in the management of an\nindicator as complex as the Directional Movement Index (DMI). In this column and hereafter, we shall\nmove into the meat of our subjectlearning how to use Lotus 1-2-3 to test indicators, refine them and\nincorporate them into your own trading system. The major building block is the macro, so let's begin with\nit.\u003cbr\u003e\u003cbr\u003eMacros\u003cbr\u003e\u003cbr\u003eIn simple terms, a macro is nothing more than a means of automating keystrokes and cursor movement.\nThis was basically what Lotus 1-2-3, Release 1A, contained. Now, Release 2.0 provides what is called a\nCommand language. The Command language actually allows you to perform a high percentage of\nfunctions completely independent of cursor movement. While this is our eventual goal, let's first get a\nhandle on what macros can do at the keystroke level.\u003cbr\u003e\u003cbr\u003eAll that is required to set up a macro is to put a letter of the alphabet in a column with a '\\ in front of it.\nFor example, '\\x would be the commands for a macro named\\x. The apostrophe in '\\x is a formatting\ncommand and will not be visible on the screen, but is necessary. Leave it out and you get a repeating \\x\npattern: \\x\\x\\x\\x.... You can use other letters if you choose, but I always use '\\x for test macros to avoid\nconfusion with other macros.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133777998193,"sku":"\\V06\\C03\\MACROS.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_e09e4938-0167-4c58-89b6-0c81b0f6a35b.jpg?v=1739652213"},{"product_id":"v06-c03-mktpro-pdf","title":"V.6:3 (102-106): Market profile Part 4 by Thomas Drinka, Ph.D. and Robert L. McNutt","description":"Market profile\nPart 4\nby Thomas Drinka, Ph.D. and Robert L. McNutt\u003cbr\u003e\u003cbr\u003ePreviously, we considered the manner in which the market utilizes price probes and rotation during the\ntrading day to promote trade. Depending on the response of other-time-frame traders, these probes result\nin one of six possible daily profiles. Similarly, market rotations occur from one day to the next and over\nthe longer term. The primary purpose of this article is to demonstrate how the Chicago Board of Trade's\ndaily volume summaryknown as the Liquidity Data Bankand a long-term auction activity chart can\nbe utilized to analyze rotations that occur day to day and over the longer term.\u003cbr\u003e\u003cbr\u003eThe Liquidity Data Bank is transmitted several hours after the close and shows the volume of every\ncontract traded at the exchange. These data are taken from the second Board of Trade Clearing\nCorporation reconciliation, which includes 70%-80% of all CBOT cleared transactions.\u003cbr\u003e\u003cbr\u003eFigure 1 is a Market Profile, a 30-minute bar chart and the Liquidity Data Bank volume summary of\nCBOT September 1987 U.S. Treasury bond futures for August 20, 1987. The volume summary's\nhorizontal bars are the percent of total daily contract volume conducted at each price traded within the\ndaily price range of the contract. The dark portion of the horizontal bar is the percent of each total daily\ncontract volume conducted by commercial clearing members (known as CTI2 in the Profile).\u003cbr\u003e\u003cbr\u003eAt the time of this writing, the activity of other-time-frame traders at the Chicago Board of Trade usually\nranges between 10% and 60% of total volume. The greater the percentage of total daily contract volume\nthat commercial clearing members represent, the greater is the potential for them to change the market's\nstructure.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133778030961,"sku":"\\V06\\C03\\MKTPRO.PDF","price":4.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_136014cc-18e8-4a6f-adb1-0f94ba04d3c2.jpg?v=1739652216"},{"product_id":"v06-c03-movinga-pdf","title":"V.6:3 (90-92): Moving averages made simple by Heidi Schmidt","description":"Moving averages made simple\nby Heidi Schmidt\u003cbr\u003e\u003cbr\u003eOnce a beginning chartist successfully learns trend identification and channel drawing (Stocks \u0026amp;\nCommodities, January 1988), moving averages are often the next technical tool to master. Moving\naverages may be used on price or yield to generate a simple trading system or to confirm an opinion from\nthe charts. Moving averages \"smooth\" the data, allowing trends to be more easily seen and provide a\nbenchmark by which to judge if a reversal has begun.\u003cbr\u003e\u003cbr\u003eSimple and exponential moving averages are the most popular types used by technicians. A moving\naverage assigns to each date a number that is an average of previous prices plus the current price. It\n\"moves\" by incorporating each new price into this average and either deleting the oldest price (simple\nmoving average) or reassigning the weights attached to the previous prices (exponential moving average).\u003cbr\u003e\u003cbr\u003eSimple moving average\u003cbr\u003e\u003cbr\u003eA simple moving average is the arithmetic mean or average of X price points (where X is the periodicity\nvariable). Figure 1 lists the closing September bond futures price for August 1987 and the three-period\nmoving average on the close. The calculation is simple. For example, the three-period moving average\nfor August 10, 1987 (with bond prices converted from 32nds to decimals) is:","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133778260337,"sku":"\\V06\\C03\\MOVINGA.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_aea04a0d-0551-4f7e-b8f3-9b9314514584.jpg?v=1739652218"},{"product_id":"v06-c03-payoff-pdf","title":"V.6:3 (115-118): Payoff index by Thomas E. Aspray","description":"Payoff index\nby Thomas E. Aspray\u003cbr\u003e\u003cbr\u003eIn my market analysis, I find the action of the open interest can be very important. Granted in the\nfinancial futures it occasionally gives misleading signals, but these are the exception rather than the rule.\nI use two indicators which incorporate the open interest, the Board Watch Trend Indicator and the\nHerrick Payoff Index (HPI) developed by John Herrick. I find the HPI is an excellent short- and\nlong-term tool, though my use and interpretation varies from John's.\u003cbr\u003e\u003cbr\u003eHPI is simply a mathematical method of measuring the money flowing in or out of a commodity by\ncomputing the difference in dollar volume each day. The formula, according to the CompuTrac System\nOperating Manual, is:","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133778293105,"sku":"\\V06\\C03\\PAYOFF.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_ab8eebaa-d27f-422f-9b8b-e5e77df72f96.jpg?v=1739652220"},{"product_id":"v06-c03-reading-pdf","title":"V.6:3 (97-98): Reading indicator charts by Arthur A. Merrill","description":"Reading indicator charts\nby Arthur A. Merrill\u003cbr\u003e\u003cbr\u003eIn the preceding column, I discussed the smoothing of indicator data. When you have tamed the wild\nfluctuations, how do you translate the result into a forecast? How do you read the chart?\u003cbr\u003e\u003cbr\u003eThere are several possible interpretations. A method that works well with one indicator may not be the\nbest for another. The selection of the method is usually made by common sense and trial and error. We'll\nlook at five of the most common and useful.\u003cbr\u003e\u003cbr\u003eUnusually high or low\u003cbr\u003e\u003cbr\u003eFor most indicators, I assume that the indicator is trying to tell me something when it is unusually high or\nlow.\u003cbr\u003e\u003cbr\u003eFor oscillators, this is a very useful method. However, this method should not be used if the indicator has\nan upward or downward trend. For example, if it has an upward trend, the most recent data will appear\n\"unusually high\" and will tell you no more than the fact that it is recent.\u003cbr\u003e\u003cbr\u003eWhat should you consider unusually high or unusually low? I usually use a simple benchmark: I consider\nthe top 25% of the data points to be unusually high and the lowest 25% to be unusually low. The middle\n50% is called \"no forecast.\" In Figure 1, 25% of the points are above the upper dashed line and 25% are\nbelow the lower dashed line.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133778522481,"sku":"\\V06\\C03\\READING.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_a36d270e-d356-4883-8bc7-337dd061e147.jpg?v=1739652223"},{"product_id":"v06-c03-surviva-pdf","title":"V.6:3 (99-101): Survival of the fittest by Philip Gotthelf","description":"Survival of the fittest\nby Philip Gotthelf\u003cbr\u003e\u003cbr\u003eWith the proper tools and right attitude, the \"Crash of '87\" represented one of the greatest profit\nopportunities in history. A single short S\u0026amp;P 500 futures position could have delivered an amazing\n$60,000 without even picking a top or bottom. However, we have the benefit of 20\/20 hindsight.\nCould we have spotted the Crash in time to profit? If so, could we have maintained the cool discipline\nrequired to stay with short positions long enough to take advantage of \"Black Monday\" and moves that\nfollowed?\u003cbr\u003e\u003cbr\u003eThe answer to the first question is obviously yes. It is the second question so many must answer in the\nnegative. In reality, few were able to sustain positions through the wild swings that took place the week\nbefore Black Monday.\u003cbr\u003e\u003cbr\u003eAn examination of the December S\u0026amp;P 500 chart (Figure 1) reveals that the market held support at 31000\nthroughout October 12. This area was tested in mid-September and late August. In addition, the June\/July\nconsolidation held above 31000 for more than four weeks. Therefore, strict chartists should have sold the\nS\u0026amp;P 500 on October 12, 13 or 14. The support was violated. Furthermore, the 10-day moving averages\nhad been penetrated.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133778555249,"sku":"\\V06\\C03\\SURVIVA.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_cda3a18d-a030-4010-af6f-d947e212f90b.jpg?v=1739652225"},{"product_id":"v06-c03-wavemkt-pdf","title":"V.6:3 (107-109): Wave market analysis Part 2 by Bryce T. Gilmore","description":"Wave market analysis\nPart 2\nby Bryce T. Gilmore\u003cbr\u003e\u003cbr\u003eIn part one of this article (February 1988), we examined four turning points[W], [X], [Y] and [Z]in\nthe trend of Coffee, Sugar and Cocoa Exchange Sugar-World #11 contract. We looked at time cycles and\nretracements and focused on the support and resistance levels they created.\u003cbr\u003e\u003cbr\u003eThis month we'll examine seven more analyses that could have been performed on the same data to detect\nthe four turning points.\u003cbr\u003e\u003cbr\u003eFigure 1: Weekly Trend Wave.\u003cbr\u003e\u003cbr\u003eA detrending analysis chart can be a great asset when evaluating the potential risk attached to a\ntime-and-price entry point. I detrend using short, medium and long-term price differences. The exact\namounts depend on your experience.\u003cbr\u003e\u003cbr\u003eThe way to read this chart is simple:\u003cbr\u003e\u003cbr\u003e1. When all waves are in a downtrend trade only short.\u003cbr\u003e\u003cbr\u003e2. When all waves are in an uptrend trade only long.\u003cbr\u003e\u003cbr\u003e3. If the shorter waves are diverging with the long wave expect a possible reversal to trend.\u003cbr\u003e\u003cbr\u003e4. Strength of trend can be evaluated by the position of each wave either above or below its center line.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133778588017,"sku":"\\V06\\C03\\WAVEMKT.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_056292a9-34a8-495c-b157-ec0c60099624.jpg?v=1739652228"},{"product_id":"v06-c04-compuls-pdf","title":"V.6:4 (138-141): The compulsive trader Part 2 by Van K. Tharp, Ph.D.","description":"The compulsive trader\nPart 2\nby Van K. Tharp, Ph.D.\u003cbr\u003e\u003cbr\u003e\"When water passes over your head, it makes no difference if it does so by an inch or afoot. You're\ndrowning. You don't want to admit that it is easier to get out of a $100,000 debt than a million dollar\ndebt. You just go for it. When you get to that point, it really starts accelerating. Nothing matters\nanymore. Nothing matters.\"\u003cbr\u003e\u003cbr\u003eA compulsive trader, Stocks \u0026amp; Commodities, January 1988.\u003cbr\u003e\u003cbr\u003eCompulsiveness, as illustrated by this quote, is deadly to investment success. Yet many traders have to\ndeal with it. In this second article on compulsiveness, we will delve into the characteristics of the\ncompulsive trader and some suggestions for help.\u003cbr\u003e\u003cbr\u003ePrior to the discussion, rate yourself on your own tendency to be a compulsive trader by completing the\nbrief yes-no questionnaire in Figure 1.\u003cbr\u003e\u003cbr\u003eThe 20 questions were taken from the questionnaire developed by Gambler's Anonymous for their\nmembers. I have simply changed the word \"gambling\" to \"trading.\" In a few instances I also have\nchanged other words to make the question fit speculative activity, without changing the nature of the\nquestion.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133778751857,"sku":"\\V06\\C04\\COMPULS.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_fb42325f-f568-41b9-ba57-38473acc1a76.jpg?v=1739652230"},{"product_id":"v06-c04-consens-pdf","title":"V.6:4 (157-159): Consensus indicators by Arthur A. Merrill","description":"Consensus indicators\nby Arthur A. Merrill\u003cbr\u003e\u003cbr\u003eThere are scores of indicators and, at the same moment, some present an optimistic picture of the\nfuture while others are predicting trouble. Which indicator should be watched most carefully? When two\nindicators disagree, which one is the most likely to be right?\u003cbr\u003e\u003cbr\u003eHow can you gauge the past performance of indicators? Can it be put into numerical form to simplify\ncomparison? Can indicators be combined into a consensus or model?\u003cbr\u003e\u003cbr\u003eMarket analysts usually consult the same battery of indicators but their conclusions are often quite\ndifferent. I exchange my weekly report with the reports of 50 analysts. If I sorted the reports between\noptimistic and pessimistic, the two piles would be almost equal. I believe that personal prejudice is a\nlarge part of the reason for the diversityoptimistic analysts give the most weight to optimistic\nindicators; pessimistic analysts believe the pessimistic indicators.\u003cbr\u003e\u003cbr\u003eAlso, it's always a temptation to remember recent successes and give undeserved weight based on recent\nperformance. A good example is October's \"Black and Blue\" Monday. It's easy to put on a pedestal the\nindicators that were bearish before the historic stock market crash. This is dangerous. One success isn't\nenough; it's called \"anecdotal evidence.\"\u003cbr\u003e\u003cbr\u003eProbably the most popular method of checking consistent accuracy is the graphical-eyeball approach. An\nindicator is charted and compared to the chart of a market indicator. Some analysts chart the indicator on\ntracing paper and superimpose it on a market index. The tracing paper can be moved forward to check the\nindicator's ability to predict the future of the market. Another popular method is to mark the indicator\nsignals with arrows on a chart of a market average. This quickly shows success or failure.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133778784625,"sku":"\\V06\\C04\\CONSENS.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_5757aee6-c71e-40cb-b50e-6d063fb7998e.jpg?v=1739652232"},{"product_id":"v06-c04-correla-pdf","title":"V.6:4 (133-134): Correlations: serial and auto by Clifford J. Sherry, Ph.D.","description":"Correlations: serial and auto\nby Clifford J. Sherry, Ph.D.\u003cbr\u003e\u003cbr\u003eSuppose you are testing a pricing pattern to see what relationship it has to future price movement. Or,\nyou are testing an indicator's correlations with price movement. In each case, you need a definitive test to\ntell you if there exists a statistically significant relationship.\u003cbr\u003e\u003cbr\u003eAgain, much of the early work testing the various forms of the efficient market hypothesis utilized either\nserial or auto correlation techniques. (See for example, P. Cottner's Random Character of Stock Market\nPrices, M.I.T. Press, Cambridge, 1964). Unfortunately, correlation techniques may not provide an\nadequate test of this hypothesis and using these techniques may lead to false conclusions.\u003cbr\u003e\u003cbr\u003eIf you are to test whether or not relationships exist, it is important for you to understand how\ncorrelograms are constructed and what they mean. As an example, the techniques described here will\nreliably show meaningful correlations, if they exist. I will use a series of artificial \"prices\" to minimize\nproblems of interpretation.\u003cbr\u003e\u003cbr\u003eBeginning with Figure 1, we will construct the \"lag-1\" serial correlogram by examining sequential pairs\nof prices. That is, we will compare the action of today's price with that of yesterday's the price with a\none-day lag.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133778817393,"sku":"\\V06\\C04\\CORRELA.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_5708f8dd-f1f3-419c-bcd7-aea3bee716af.jpg?v=1739652235"},{"product_id":"v06-c04-finding-pdf","title":"V.6:4 (149-152): Finding reliable trading strategies by Steve Kille","description":"Finding reliable trading strategies\nby Steve Kille\u003cbr\u003e\u003cbr\u003eDeveloping a trading strategy over historical data has become common practice among traders in\nrecent years. The proliferation of micro-computers in our industry has spurred the trend to the point\nwhere nearly every system sold or used has been developed with a computer using past data.\u003cbr\u003e\u003cbr\u003eThe focus of most research projects has been to develop trading strategies which produce the highest\nlevel of profit over historical data. This is understandable since accumulated wealth is the ultimate goal\nof every trader. Unfortunately, most technicians are simply searching for a set of rules which produce the\nhighest level of profits over historical data and then using these same rules to make trading decisions.\nThe real focus of any research should not be the level of profits but the degree of reliability the system is\nlikely to maintain during actual trading.\u003cbr\u003e\u003cbr\u003eFor good reasons, optimization has become the technique most widely used in the development of new\ntrading strategies. It is very powerful and extremely flexible. You could use optimization to find the\nbest-length moving average or the most appropriate stop level. For some purposes, optimization is the\nonly viable procedure. For instance, it is the best technique when trying to determine the average\nhalf-cycle of a market for performing Relative Strength Index (RSI) studies. How do you determine the\nmost suitable number of days to use in an RSI calculation? You would first test a 4-day RSI, then a\n5-day, 6-day, and so on to find the length which produces the most profitable results.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133778850161,"sku":"\\V06\\C04\\FINDING.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_f89d31d2-0caf-4c4e-afc3-7f9f2e7d3c7f.jpg?v=1739652237"},{"product_id":"v06-c04-kaufman-pdf","title":"V.6:4 (123-128): Kaufman on commodity trading","description":"Kaufman on commodity trading\u003cbr\u003e\u003cbr\u003ePerry Kaufman's first book, Commodity Trading Systems and Methods, was probably the second book I\nread on trading. I later discovered it to be a classic and it's been an indispensable reference ever since,\nparticularly around the offices of Stocks \u0026amp; Commodities, where \"new\" trading ideas make recurrent\nappearances.\u003cbr\u003e\u003cbr\u003eWhen the revised version came out late in 1987 it stimulated S\u0026amp;C to track down Perry and get a \"state of\nthe trader's art\" report directly from him. After more than the usual thrashing around we finally tracked\nhim down in the sunny climes of Bermuda doing about what you'd expect: system development and price\nforecasting for TransWorld Oil, Ltd., a large oil trading company operating in both the physicals and\nfutures markets. After thoroughly reviewing the state of the art in his book, staff editor Melanie Bowman\nand I sat down to chat with Perry about his feelings about trading.\u003cbr\u003e\u003cbr\u003eJohn Sweeney, Editor","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133779145073,"sku":"\\V06\\C04\\KAUFMAN.PDF","price":4.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_cffe681b-c04f-47a8-b674-43169d60e8fa.jpg?v=1739652240"},{"product_id":"v06-c04-obv-pdf","title":"V.6:4 (145-148): On-balance volume by Tom Aspray","description":"On-balance volume\nby Tom Aspray\u003cbr\u003e\u003cbr\u003eOn-balance volume or OBV is one of the early technical tools developed by the well-known market\nanalyst, Joe Granville. With the advent of new, and supposedly more sophisticated technical tools, it is\nused less often. Many analysts feel it is not useful, but I would disagree. I find it a very useful and simple\ntechnical tool.\u003cbr\u003e\u003cbr\u003eWhile it is much faster and easier to calculate this indicator by computer, it is very easily calculated by\nhand for individual stocks, market indices or commodities. Here is how you calculate it by hand: 1) Pick\nan arbitrary starting volume number. On most commodities or stocks take the volume for one week for\ndaily plotting or a month's volume if you are plotting weekly. 2) For the first OBV point, if the price on\nthe first day is higher than the previous day, add in the volume; if it is lower, subtract the volume. For\nexample:","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133779177841,"sku":"\\V06\\C04\\OBV.PDF","price":4.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_81ee191b-bab4-438b-bd41-e7c92a142ce6.jpg?v=1739652242"},{"product_id":"v06-c04-ovr-pdf","title":"V.6:4 (142-144): OVR - a new indicator by Fred Purifoy","description":"OVR - a new indicator\nby Fred Purifoy\u003cbr\u003e\u003cbr\u003eOn-balance volume (OBV) has two generally recognized goals: to serve as a filter for trending and\nnon-trending markets, and to anticipate reversals by divergence from the price trend. (OBV, recall, is the\ncumulative sum of volume where volume is added on up days and subtracted on down days.)\u003cbr\u003e\u003cbr\u003eHowever, coupling price and volume may not be the only path. If we accept that vertical (or bar) chart\naction is a function of volume and open interest (i.e., the activity of the market's participants), there\nshould be an indicator that would reflect that relationship. My attempt at defining such an indicator, using\nonly volume and open interest, is the on-balance volume reflex (OVR). To be useful it should serve the\nsame purposes as OBV, but do it better.\u003cbr\u003e\u003cbr\u003eTo calculate OVR follow these rules:\u003cbr\u003e\u003cbr\u003e-If open interest for a given day, t, is greater than that for day t-c, then add the day's volume to the\ncumulative total. (\"c\" can be set at any number of days. I use c=4 but there is room for\nexperimenting with this value).\u003cbr\u003e\u003cbr\u003e-If open interest for day t is less than that for day t-c, then subtract the day's volume from the\ncumulative total.\u003cbr\u003e\u003cbr\u003e-The value of the total is the indicator's value for day t.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133779210609,"sku":"\\V06\\C04\\OVR.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_2b3fa4aa-9ce4-4b9a-b26f-acb7a96be471.jpg?v=1739652244"},{"product_id":"v06-c04-peaking-pdf","title":"V.6:4 (129-132): Peaking of a grand supercycle by Robert J. Prechter Jr.","description":"Peaking of a grand supercycle\nby Robert J. Prechter Jr.\u003cbr\u003e\u003cbr\u003eFor 13 years, A. J. Frost and I have made the case that a great \"fifth wave\" bull marketthe\ntermination phase of a longer term uptrendwas in force and that it would be followed by a bigger crash\nand bear market than those of 1929-1932.\u003cbr\u003e\u003cbr\u003eFrom this perspective, October 19,1987 was not an anomaly in the stock market. Certainly, it has entered\nthe history books as the largest down day in Wall Street history, and one of the broadest. But it was\ntypical market behavior, the normal resolution of a pattern wave analysts have observed hundreds of\ntimes in smaller degree. What makes the October 1987 drop special is that such large \"kickoffs\" to bear\nmarkets of this magnitude are rare.\u003cbr\u003e\u003cbr\u003eIn 1941, R.N. Elliott, with limited data, concluded that the year 1857 had marked a second wave bottom\nand that 1928-29 was a third wave peak in a gigantic uptrend of Grand Supercycle degree. This meant\nthat the multi-decade advance from 1932 would be the termination phase of the expansion which began\nat the founding of the Republic. His was a remarkable observation given that he had discovered the Wave\nPrinciple five years before in smaller-degree formations and that his data were limited to stock price\nrecords from 1854 to 1941. But was he correct?","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133779243377,"sku":"\\V06\\C04\\PEAKING.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_1eae26bf-488a-441d-bf2f-c793b0be6f99.jpg?v=1739652247"},{"product_id":"v06-c04-pricere-pdf","title":"V.6:4 (136-137): Price reactions within a trend by Bill McLaren","description":"Price reactions within a trend\nby Bill McLaren\u003cbr\u003e\u003cbr\u003eI have, in the past decade, taught trading techniques to many students. Recently, most of my students\nhave entered the markets after purchasing a personal computer and a technical analysis software package.\nThese tools can be quite helpful but they are not the Holy Grail. A majority of my students' losses are\nrelated to one major weakness: little understanding of basic price movement.\u003cbr\u003e\u003cbr\u003eUnderstanding price movement is the foundation of profitable trading and all else must be built on that\nfoundation. Very simplistically, both stock and commodity markets move in only two waysthey trend\nor consolidate. You can view this from three perspectives: short-term (daily charts), intermediate-term\n(weekly charts) and long-term (monthly charts).\u003cbr\u003e\u003cbr\u003eFirst, though, you need a discipline to measure short-term trends. In a powerful, short-term trend, the\nnormal correction against that trend is three to four days, or 90 hours, which is one of the natural time\ncycle harmonics proposed by W. D. Gann. A movement that falls within the three- to four-day period is\nassumed to keep the strong trend intact. A shorter correction then indicates a stronger-than-normal trend,\nand a movement exceeding the fourth day indicates the trend may go into a consolidation or reversal.\n(This concept of normal movement against a powerful trend can be applied to weekly and monthly charts\nby using three to four weeks and three to four months as the normal lifespans of intermediate and\nlong-term corrections.)","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133779472753,"sku":"\\V06\\C04\\PRICERE.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_2f5bbefe-e557-4a9c-ab69-f21da7ae6910.jpg?v=1739652250"},{"product_id":"v06-c04-sidebarc-pdf","title":"V.6:4 (157-159): SIDEBAR: Coefficient of Correlation","description":"Coefficient of Correlation\u003cbr\u003e\u003cbr\u003eCorrelation is a measure of the degree of relationship between two series. When odd lot shorts are rising,\nis the Dow usually rising? When odd lot shorts are declining, is the Dow usually declining? Or is the\nreverse usually the case? Instead, is the relationship weak or nonexistent?\u003cbr\u003e\u003cbr\u003eThe correlation coefficient (r) varies between +1 and -1. If it is close to +1, the two series are in close\nagreement. If it is close to -1 when one series is rising, the other is declining. If the coefficient is close to\nzero, there is no evident relationship. Here is a suggested interpretation:","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133779505521,"sku":"\\V06\\C04\\SIDEBARC.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_a07d591b-5456-441b-b58b-9dab7631ea5e.jpg?v=1739652252"},{"product_id":"v06-c04-sidebw-pdf","title":"V.6:4 (157-159): SIDEBAR: What is Chi Square?","description":"What is Chi Square?\u003cbr\u003e\u003cbr\u003eIf, in the past, records show that the market exhibited more rises than declines at a certain time, could it\nhave been by chance? Yes. If a medication produced cures more often than average, could it have been\nluck? Yes. If so, how meaningful is the record?\u003cbr\u003e\u003cbr\u003eTo be helpful, statisticians set up \"confidence levels.\" If the result could have occurred by chance once in\n20 repetitions of the record, you have 99% confidence that the result isn't just luck. This level has been\ncalled \"probably significant.\"\u003cbr\u003e\u003cbr\u003eIf the expectation is once in 1,000 repetitions, you can have 99.9% confidence. This level has been called\n\"significant.\"\u003cbr\u003e\u003cbr\u003eIf your statistics are a simple two-way (e.g., yes-no; rises vs. declines; heads-tails; right-wrong), you can\neasily determine the confidence level with a simple statistical test. It may be simple, but it has a\nformidable name: Chi Square Test with Yates' Correction. Here's the formula:","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133779538289,"sku":"\\V06\\C04\\SIDEBW.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_1c75880e-faca-495f-90f8-5530a7bccc0e.jpg?v=1739652254"},{"product_id":"v06-c04-trueran-pdf","title":"V.6:4 (153-156): Programming the true range in Wilder's DMI system Part 4 by Jim Summers, Ph.D.","description":"Programming the true range in Wilder's DMI\nsystem\nPart 4\nby Jim Summers, Ph.D.\u003cbr\u003e\u003cbr\u003eThe March column described the fundamentals of macros. The February column detailed some major\npoints about Wilder's DMI and the system based on it. This time the action gets underway in earnest.\nWhile the material is still relatively elementary now, veteran Lotus programmers should at least skim this\nmaterial. Some of the techniques appear in none of the five books I own on using Lotus. One of them is\ncritical to successful processing of large amounts of data such as technical analysis requires.\u003cbr\u003e\u003cbr\u003eTrue Range\u003cbr\u003e\u003cbr\u003eFundamentally, Wilder's DMI system develops two measurements: (1) the true range in which prices\nmove and (2) the amount of the movement that was directional, whether up or down. Once these two\npieces are defined, everything else builds on them.\u003cbr\u003e\u003cbr\u003eNow we begin the work of programming in Lotus 1-2-3 in order to have it calculate the first piece of the\nDMI system, the true range (TR1). This and the calculation of directional movement are the more\ncomplex calculations in the system. If you can master them, you'll find the rest easy. Because the formula\nis so lengthy, much care will be taken in it's development. Let's start with the definition of TRI.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133779571057,"sku":"\\V06\\C04\\TRUERAN.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_9ae473b3-aefd-4a29-a7b0-dcdd59a8fd02.jpg?v=1739652256"},{"product_id":"v06-c05-assist-pdf","title":"V.6:5 (173-174): An assist in market timing by Irving Lehren","description":"An assist in market timing\nby Irving Lehren\u003cbr\u003e\u003cbr\u003eDetermining turning points and changes in the stock market often requires looking back at how the\nmarket reacted under similar circumstances. But aberrations occur in most cycles and a trader must\nformulate some intuitive judgment to arrive at a decision.\u003cbr\u003e\u003cbr\u003eAn essential factor in coming to grips with the stock market should be an indicator composed of the\nstocks that make new highs each week. Logically, it should reveal the flow of money or the state of\nsentimentif stocks are making new highs, this signifies the investment attitude is positive; a lessening\nof new highs signals non-conformance and results in a trend reversal.\u003cbr\u003e\u003cbr\u003eIn developing a reliable indicator of market sentiment based on new highs, I tried various time periods\nand found that a running five-week total of new highs resulted in an easily kept chart (Figure 1) and few\nwhipsaws.\u003cbr\u003e\u003cbr\u003eYou can construct this chart of the New Highs Indicator using the weekly \"new highs\" number published\nin Barron's or The New York Times.\u003cbr\u003e\u003cbr\u003eStart by adding the weekly number of stocks making new highs for the past five weeks. Each week, add\nthe current number of new highs and subtract the oldest new highs number.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133779603825,"sku":"\\V06\\C05\\ASSIST.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_2eb665a5-00b5-424a-aba9-69bb8ba68e19.jpg?v=1739652259"},{"product_id":"v06-c05-compari-pdf","title":"V.6:5 (192-193): Comparing data vendors by Steven B. Achelis","description":"Comparing data vendors\nby Steven B. Achelis\u003cbr\u003e\u003cbr\u003eIf you think choosing stocks and\/or commodities to buy is difficult, try selecting a data vendor to use\nwith your technical analysis software. At Computer Asset Management we have written software (The\nDownloader) to automatically \"download\" data from 13 vendors for use with our MetaStock technical\nanalysis program and other compatible software. We found significant differences among these vendors,\nas you'll see in Figure 1.\u003cbr\u003e\u003cbr\u003eWe gathered this information to assist our customers in choosing a data vendor, but keep in mind that\nthere may be advantages to the various data vendors based on criteria not shown here. For example, it is\nvery difficult to quantify the quality of data or the quality of technical support offered by the data vendor\nand\/or software developer. Computer Asset Management believes this information is accurate, but cannot\nguarantee that it iswe suggest you contact the data vendors for additional details.\u003cbr\u003e\u003cbr\u003eAlso, these comparisons were based on collecting data used by the MetaStock program. Features of the\ndata vendors that are not used by MetaStock, such as news and weather reports, were not compared. We\nrated manuals and ease of use on a scale of 1 to 10 (with 10 being the best) based on feedback that\nComputer Asset Management has received from our customers and on Computer Asset Management's\nown experiences working with these services.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133779833201,"sku":"\\V06\\C05\\COMPARI.PDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_9e319877-920f-4a97-8b98-d0677fb72ec5.jpg?v=1739652261"},{"product_id":"v06-c05-exorcis-pdf","title":"V.6:5 (175-177): Exorcise fear of a depression by Charles Bebber","description":"Exorcise fear of a depression\nby Charles Bebber\u003cbr\u003e\u003cbr\u003eNot surprisingly, economic reports in the weeks following the stock market's Black Monday bristled\nwith references to pessimism, alarm and failure of confidence. Contemporary economic thought has long\ntaken for granted that psychology plays a key role in the economy's performance. The high drama of\nOctober, therefore, compelled analysts to weigh again and again the possible emotional repercussions on\nmarkets and consumers.\u003cbr\u003e\u003cbr\u003eFrom the standpoint of psychology, however, questions can be raised regarding their repeated allusions to\none particular psychological elementraw fear:\u003cbr\u003e\u003cbr\u003e- In its first issue after the plunge, Newsweek worried that \"the cascading Dow and record trading\nvolume marked a major shift in psychology and sent a powerful shiver across the country... If hastened\nby a financial panic, a recession could quickly spread, creating deep economic distress around the\nglobe.\"\u003cbr\u003e\u003cbr\u003e- The initial issues of the several business publications waxed equally ominous. John Curran,\nFortune's chief stock market writer, described the nosedive and its aftermath as a \"once-in-a-lifetime\ntrauma,\" \"hair-raising,\" \"chilling\" and \"emotionally wrenching.\"\u003cbr\u003e\u003cbr\u003e- New York Times columnist R.M. Rosenthal, concerned about the emotional fallout from Black\nMonday, even interviewed a psychiatrist, who warned that \"panic and fear are the other side of greed\"\n(a fact well known by traders).","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133779898737,"sku":"\\V06\\C05\\EXORCIS.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_5a1344ea-78b2-4fff-b4f9-089ba7e7e87e.jpg?v=1739652264"},{"product_id":"v06-c05-pfspeed-pdf","title":"V.6:5 (194-195): Programming for speed Part 5 by Jim Summers, Ph.D.","description":"Programming for speed\nPart 5\nby Jim Summers, Ph.D.\u003cbr\u003e\u003cbr\u003eThe past several columns discussed macros and led you through some elementary programming to show\nhow to develop one of the indicators used in J. Welles Wilder's Directional Movement Index (DMI)\nsystem. The March column created range names for each row, moving down the rows while processing\nthe price data. That technique is very slow and, for several months' worth of data, would tie up a machine\nfor hours.\u003cbr\u003e\u003cbr\u003eTo overcome this problem, this column introduces concepts which allow the program to operate with\nminimal cursor or range movement. As a general rule, if you can avoid cursor movement or updating\nrange names, the program will be at its best in terms of processing speed.\u003cbr\u003e\u003cbr\u003eFor purposes of illustration, we'll use the same 14 days of March 1978 Chicago Wheat data, with the\nrange name displayed (Figure 1). The March column discussed data and date input macros. TR1 stands\nfor the trading range for the day. The April column explained the definition and the math. Two important\ncommands we'll introduce this month are essential to using Lotus 1-2-3 with the amount of data required\nfor technical analysis. These commands are {Put} and @Index(...), neither of which were in Release 1A\nof Lotus 1-2-3.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133779964273,"sku":"\\V06\\C05\\PFSPEED.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_828f900f-682e-49d8-812e-1ed0b645d779.jpg?v=1739652266"}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/collections\/volume-6-1988-18.gif?v=1739676738","url":"https:\/\/shop.traders.com\/collections\/articles-volume-6\/issue-04.oembed","provider":"Stocks \u0026 Commodities","version":"1.0","type":"link"}