{"title":"Favorite Articles from 2011","description":"Each year we survey our readers for our Readers' Choice Awards, which are published in the annual Bonus Issue. As part of the survey, we ask readers to vote for their favorite article from the past year. Here are the award winners for \"Favorite STOCKS \u0026amp; COMMODITIES Article\" from 2011:","products":[{"product_id":"stcov29234br","title":"Stocks \u0026 Commodities V. 29:1 (22-23, 34): Breakaway Gaps by Kenneth Gilliland","description":"Breakaway Gaps by Kenneth Gilliland\u003cbr\u003e\u003cbr\u003eThere are many different types of gaps, but this one provides the best riskreward ratio.\u003cbr\u003e\u003cbr\u003eA gap up in a stocks price is an exciting event. Usually, such moves will be covered by the financial media, creating hysteria and resulting in some people frantically buying the stock before its too late. Rarely do the pundits provide a reasoned and thorough explanation as to why the large jump in price will lead to any sort of substantial gains over the near future; they just report the awe-inspiring numbers without touching on their technical significance. Sometimes, armed with simply a headline, the uninformed will buy the stock and get lucky. Over the long term, however, this strategy is bound to fail, as a large gap up in price does not necessarily mean the stock will continue to rise. It is possible to trade these large price moves and jump on a profit-making trend, provided you learn to recognize the patterns that are more likely to succeed.\u003cbr\u003e\u003cbr\u003eThere are various types of gaps including common, runaway, and exhaustion gaps. For our purposes, however, the one we will concern ourselves with is the breakaway. From a trading perspective, it provides the best riskreward ratio when compared to other price gaps.\u003cbr\u003e\u003cbr\u003eWHY BREAKAWAY GAPS OCCUR\u003cbr\u003e\u003cbr\u003eJust like gasoline, beachfront property, shoes, or any other commodity, the price of a stock is affected by the forces of supply and demand. If demand is greater than supply, the price of an item will rise. Conversely, if supply is greater than demand, the price of the item will fall. If you are a trend-follower, you may be of the opinion that stock prices generally move up or down in a uniform fashion. However, if a situation has dramatically changed, it may cause the demand to rise or fall, resulting in a stock price gapping up (or down). Some examples of when a breakaway gap may form are an earnings surprise, award of a new government contract, or the possibility of a buyout. Will the stock continue to rise? We can never know for sure, but the charts give us some clues as to whether it might be worth entering a trade and riding the trend.\u003cbr\u003e\u003cbr\u003ePRICE MOVES OUT OF TRADING RANGE\u003cbr\u003e\u003cbr\u003eA breakout of a trading range is the main distinction that separates breakaway gaps from other types of price gaps (Figure 1). A quick look at a chart can tell you whether this has occurred. If a stock has been trading between $20 and $25 for three months and suddenly gaps up and moves out of that range, you may have a candidate for a breakaway gap. There is no set period of time, but the longer a stock remains in a trading range, the more significant the movement out of that range. Gaps that occur within a trading range are deemed common gaps. They are questionable and should not be traded, as the stock has yet to prove that it can move to the next level beyond the current range; those that occur at the end of a downtrend are also suspect. While this may forecast the possibility of a trend reversal, this is not the sort of price move we are discussing.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133907005809,"sku":"005GILLPDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_6669ddda-3214-4740-851c-413e1eb4b8a7.jpg?v=1739656427"},{"product_id":"stcov292hucy","title":"Stocks \u0026 Commodities V. 29:4 (24-28): Hurst's Cyclic Analysis by David Hickson","description":"Hursts Cyclic Analysis by David Hickson\u003cbr\u003e\u003cbr\u003eThis crash course on an almost-forgotten theory could shed some light on how you can trade consistently and profitably.\u003cbr\u003e\u003cbr\u003eIN the 1970s, an American engineer named J.M. Hurst published a thesis about why financial markets move the way they do. His expounded theory was the result of many years of research, and it became known as Hursts cyclic theory. Hurst claimed a 90% success rate trading on the basis of his theory, and yet his work has remained largely undiscovered and often misunderstood.\u003cbr\u003e\u003cbr\u003eAN ALMOST-FORGOTTEN THEORY\u003cbr\u003e\u003cbr\u003eHurst published two seminal works: The Profit Magic Of Stock Transaction Timing, followed a few years later by a workshop-style course that was called the Cyclitec Cycles Course (now available as JM Hursts Cycles Course).\u003cbr\u003e\u003cbr\u003eA number of enthusiastic advocates, prominent traders, and writers proclaim Hurst as the father of cyclic analysis and confirm the efficacy of the theory (including the late Brian Millard, who wrote several books about Hursts theory), but why isnt it better known and more widely used by technical analysts? There are two possible reasons:\u003cbr\u003e\u003cbr\u003e- First, Hursts cyclic theory is not easy. While it is beautiful and elegant in its essence, it is not a simple theory to understand or apply. The Cycles Course is more than 1,500 pages long, and most people take several months to work through it.\u003cbr\u003e\u003cbr\u003e- Second, although the theory presented in both the Profit Magic book and the Cycles Course is the same, there is a vitally important distinction between the analysis processes presented in them. Hurst claimed his success on the basis of the process presented in the Cycles Course, whereas many people read the Profit Magic book and go no further, with the consequence they never discover the more effective process presented in the Cycles Course.\u003cbr\u003e\u003cbr\u003e","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133935841649,"sku":"057HICKPDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_c9e27080-614f-4e1a-ae2f-b8a5e9ae1521.jpg?v=1739658183"},{"product_id":"stcov292mago","title":"Stocks \u0026 Commodities V. 29:1 (24-30): Making A Good System Great by Donald W. Pendergast Jr.","description":"Making A Good System Great by Donald W. Pendergast Jr.\u003cbr\u003e\u003cbr\u003eOnce you have a trading system, you still need to evaluate it. You can apply optimization strategies to increase profitability, reduce drawdowns, and enhance the stability of your system.\u003cbr\u003e\u003cbr\u003eDespite opinions to the contrary, building a successful daily trading system for stocks isnt all that difficult, especially if you have the right tools, tons of patience, and a sound understanding of why markets behave the way they do. Of course, 95% of all traders and investors probably are deficient in one or more of those three critical areas of market savvy, and as such they are most likely destined to trash their trading accounts within a given period of time unless they seek the guide of a market mentor or professional trading system developer. For the sake of argument, lets say you do have all of these foundational tools and skills at your disposal and you have been able to piece together a reliable and profitable equity trading system for trading the market from the long side, one that you can use on individual stocks in both your cash and retirement (Ira or Roth Ira, for example) accounts.\u003cbr\u003e\u003cbr\u003eOf course, now that youve gone as far as you can in fine-tuning your system to work well in a range of market environments, what else can you do to boost its profitability and reliability?\u003cbr\u003e\u003cbr\u003eThis article may offer at least a few answers to that question by showing how to use portfolio optimization strategies in order to increase profitability, reduce drawdowns, and enhance system stability.\u003cbr\u003e\u003cbr\u003eA SIMPLE, YET STURDY SYSTEM\u003cbr\u003e\u003cbr\u003eFirst, lets look at a simple trading system, one designed to enter a long stock position on a pullback in the five-period money flow index (Mfi) (5) with the goal of exiting with a profit on an anticipated snap back higher, using a five-period relative strength index (Rsi)(5) to exit with a profit or using a fixed stop-loss to exit with a loss. This system is very short term in nature, meaning that the use of a broad market timing filter doesnt appreciably change the performance (profitability and drawdown being the two metrics that carry the most weight) of it as much as you may have expected, although it might still be worth pursuing for hard-core system developers intent on deriving the last available penny from this strategy. I used these 100 large-cap stocks:","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133970149745,"sku":"006PENDPDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_a09053d5-fdcd-4544-90d0-79cf0efa1018.jpg?v=1739659504"},{"product_id":"stcov293whyo","title":"Stocks \u0026 Commodities V. 29:3 (36-40): What You Don't Know About Candlesticks by Thomas N. Bulkowski","description":"What You Dont Know About Candlesticks by Thomas N. Bulkowski\u003cbr\u003e\u003cbr\u003eResearching candlesticks yields some surprises.\u003cbr\u003e\u003cbr\u003eIN writing my latest book, Encyclopedia Of Candlestick Charts, I made some startling discoveries. I used more than 4.7 million candle lines (price bars) for the research with data going back as far as the 1980s in hundreds of stocks, but not all stocks covered the entire period.\u003cbr\u003e\u003cbr\u003eREVERSALS WIN\u003cbr\u003e\u003cbr\u003eOne famous technical analyst wrote that continuations perform better than reversals. That would make sense, since it is easier for price to swim with the tide than against it. There is just one problem: Thats wrong. I tested this on thousands of chart patterns and candlesticks with similar results for each. Reversal candlestick patterns outperform continuations 59% to 41% of the time.\u003cbr\u003e\u003cbr\u003eOne explanation is that the price trend in a candlestick continuation is tired and doesnt move far. After a reversal, however, traders are excited and power the stock in the new direction, leading to an extended move. Those caught on the wrong side of the trade exit their positions and then jump on the new trend, powering it even more.\u003cbr\u003e\u003cbr\u003eI dont know if that explanation is correct, but I do know that reversals beat continuations.\u003cbr\u003e\u003cbr\u003eTRADE WITH THE TREND\u003cbr\u003e\u003cbr\u003eIf youre a serious candlestick player, then youll want to know when candles work best. Since we know that reversals work better than continuations, make sure that the breakout direction agrees with the primary trend.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133994725745,"sku":"042BULKPDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_6e7fd060-1cc1-48a5-9e9b-460d2d70958f.jpg?v=1739661182"},{"product_id":"stcov293thin","title":"Stocks \u0026 Commodities V. 29:3 (30-35): Three-Bar Inside Bar Pattern by Johnan Prathap","description":"Three-Bar Inside Bar Pattern by Johnan Prathap\u003cbr\u003e\u003cbr\u003eThis trading strategy uses an inside bar as a three-bar pattern for long and short positions. Find out how it performed on gold, silver, and crude oil contracts.\u003cbr\u003e\u003cbr\u003eWhether you look at an intraday, daily, weekly, or monthly chart you will, without a doubt, see many inside bars. They appear in uptrends, downtrends, and sideways markets. Typically, most traders think of an inside bar as a two-bar pattern, but I have found successful trades using an inside bar pattern as a three-bar pattern for both long and short signals. An inside bar accompanied by higher closes indicates a short-term uptrend, and an inside bar accompanied by lower closes indicates a short-term downtrend.\u003cbr\u003e\u003cbr\u003eI tested this setup on daily data from May 2001 to August 2010 on three major commodities: gold (GC), silver (SI), and crude oil (CL). The results are worth some consideration.\u003cbr\u003e\u003cbr\u003eTHE INSIDE BAR\u003cbr\u003e\u003cbr\u003eThe typical inside bar two-bar view indicates minimal activity in a market. It is defined as a bar (or series of bars) that is completely within the range of the preceding bar; that is, it has a higher low and lower high than the bar immediately before it.\u003cbr\u003e\u003cbr\u003eSome traders consider a bar an inside bar if the high and low are equal to the previous bar or where there are several consecutive bars within the range of a previous bar. The Inside Bar Show Me study in TradeStation will not mark bars that meet either of these conditions.\u003cbr\u003e\u003cbr\u003eMany analysts tend to view inside bars as an indication of declining market activity, or possibly a prelude to a large movement in either direction.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52134007112049,"sku":"041PRATPDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_b321c493-d04a-4f83-a33e-8cb8957e5f36.jpg?v=1739661885"},{"product_id":"stcov291cors","title":"Stocks \u0026 Commodities V. 29:1 (16-21): Combining RSI with RSI by Peter Konner","description":"Combining RSI with RSI by Peter Konner\u003cbr\u003e\u003cbr\u003eOptimization and stop-losses can help you minimize risks and give you better returns.\u003cbr\u003e\u003cbr\u003e\nYou would like to be long in a market thats trending up, but what about when the trend turns down? Do you exit and just watch from the sidelines, or do you try to trade on the corrections in the downtrend? Heres a simple combination where you can trade long-term uptrends and short-term corrections, all in one chart.\u003cbr\u003e\u003cbr\u003eOne of my previous strategies didnt allow me to enter a trade and stay there in a long and strong uptrend, since the strategy was designed to use the relative strength index (RSI) on a daily basis. The total return from my Rsi strategy was fair, but there were many trades with little return, especially in volatile markets.\u003cbr\u003e\u003cbr\u003eI decided to build a new strategy with these requirements:\u003cbr\u003e\u003cbr\u003e1. The strategy should be based on a single model or indicator to keep it as simple and transparent as possible.\u003cbr\u003e\u003cbr\u003e2. It should be designed for weekly trading. I have a full-time job and can only spend time analyzing stocks on the weekends.\u003cbr\u003e\u003cbr\u003e3. The need for subjective analysis of charts and formations such as support lines, channels, and so forth should be kept to a minimum.\u003cbr\u003e\u003cbr\u003e4. The strategy should be designed to stay long in an uptrend but also trade on the corrections in a downtrend.\u003cbr\u003e\u003cbr\u003e5. Its implementation should be fairly simple.\u003cbr\u003e\u003cbr\u003eTechnician Martin Prings Kst (know sure thing) indicator comes in three different setups short term, intermediate term, and long term and is designed for weekly data. The three setups try to model the market waves of three different periods where short term is between three and six weeks, intermediate term is between six weeks and nine months, and the long-term trend is between six months and three years. Figure 1 shows a bar chart of the Standard \u0026amp; Poors 500 and the three KST indicators.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52134030344561,"sku":"004KONNPDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_1b17f65c-0eda-4385-8ded-c515e3088911.jpg?v=1739663346"},{"product_id":"stcov294howg","title":"Stocks \u0026 Commodities V. 29:2 (42-47): How Good Is Your Data? by Sunny Harris","description":"How Good Is Your Data? by Sunny Harris\u003cbr\u003e\u003cbr\u003eAll data is equal at least thats what we think.\u003cbr\u003e\u003cbr\u003eIS all data equal? If truth be told, I never gave it much thought. I have been using one vendor nearly exclusively for about 20 years. My fills are good enough. My closing prices seem to match what I see on television or find online. As long as the profits roll in, there has been no reason to question the data.\nBut then I was told by another vendor that my vendors data is off by just enough to generate a side income, through the slippage from actual price to the price I am presented. My curiosity was piqued, and so I decided to investigate. First, I set up a spreadsheet and compared the two vendors. To keep it simple, I considered only the past five years of data. My data experiment ran from June 30, 2005, to June 29, 2010.\u003cbr\u003e\u003cbr\u003eRunning experiments\nI began by exporting the data for a single symbol from each software application to a comma-separated value (Csv) text file. The instrument I chose was the Russell 2000 index, which has different symbols in different software, like Rut, $Rut, and RU2000. I selected the Russell 2000 because of its high liquidity, ease of use, and it is something little guys like us can trade.\nFigure 1 shows the beginning of the spreadsheet, with the data of the two vendors (T and M) in the columns. At first glance it appeared that everything was in order, with small discrepancies here and there. The differences in the data, where there is one, seem to be out in the hundredths place, like 600.01 vs. 600.02. That wouldnt make much difference over time, with some errors to the positive and the negative. It seems like it should be a wash.\nNext, I put columns in the spreadsheet to calculate the differences between the open, high, low, and close (Ohlc) of each vendor. Part of that spreadsheet is shown in Figure 2. At the top of each column, in the first row of data, is the result of calculating the sum of all the differences between the two vendors Ohlc data. I wouldnt have been surprised if each component had been consistently lower or higher than the other. But these summation numbers show that the data is all over the map. The closes are 52 points lower, the opens are 40 points higher, the highs are 65 points lower, and the lows are 48 points higher. The spread between the numbers is alternating positive and negative. Could it be as one vendor suggested that there is enough of a spread in there for vendor T to cash in on the spread alone?","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52134030410097,"sku":"026HARRPDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_2c5e7d09-19b1-4826-96a4-d151905bfc26.jpg?v=1739663351"},{"product_id":"stcov294lawi","title":"Stocks \u0026 Commodities V. 29:11 (42-47): Larry Williams And The Art Of Short-Term Trading by J. Gopalakrishnan and B. Faber","description":"Larry Williams And The Art Of Short-Term Trading by J. Gopalakrishnan and B. Faber\u003cbr\u003e\u003cbr\u003eLarry Williams has taught thousands to trade the markets, won many trading championships, and has been the only futures trader in the world to repeatedly trade $1 million of his own money live at seminars around the globe.\u003cbr\u003e\u003cbr\u003eWilliams began following the markets in 1962 when the market suffered a severe fall. He discovered that if you had been short the market right at that point, you could have made millions. He also found out that he could make $100 a day trading the markets, whether the market was going up or down, and with that, he was smitten. To a 20-year-old college kid, $100 bought a lot of beer and pizza! By 1965 Williams was actively trading the markets and began writing newsletters as well. It wasnt long before he began producing ground-breaking market research. In 1966 he developed his famous timing tool, the Williams %R, a tool that is still published in major financial newspapers and that is a standard indicator provided on trading websites from Msns Money Central to Yahoo.\u003cbr\u003e\u003cbr\u003eIn 1970 Williamss first investment book, The Secret Of Selecting Stocks, was published, followed up with the first book ever on the seasonality of stocks and futures, Sure Thing Commodity Trading: How Seasonal Factors Influence Commodity Prices.\u003cbr\u003e\u003cbr\u003eHe spoke with Stocks \u0026amp; Commodities Editor Jayanthi Gopalakrishnan and Staff Writer Bruce Faber on August 22, 2011, via a telephone interview.\u003cbr\u003e\u003cbr\u003eLarry, how did you get interested in trading?\u003cbr\u003e\u003cbr\u003eIt all began in 1962. What captured my attention was that the stock market crashed, just like it did recently. President Kennedy had lowered steel prices in 1962 and maybe that was the reason. It was the worst decline in years. Of course, it was on the front page of all the newspapers.\u003cbr\u003e\u003cbr\u003eI was in college at the time and did not know anything about stocks, so I asked what that meant. I was told, basically, that I could have made a lot of money in one day if I had known about the crash beforehand. The idea of making a lot of money in one day really appealed to me.\u003cbr\u003e\u003cbr\u003eWhat happened between then and when you were trading futures in a big way? How did you go from that sounds like a good thing to being a big trader? What was the progression?\u003cbr\u003e\u003cbr\u003e(Laughing) Oh yeah, I traded one day and then I made millions.\u003cbr\u003e\u003cbr\u003eYeah, thats what we thought.\u003cbr\u003e\u003cbr\u003eNot quite. I started following the markets, asking, What is this? I have a degree in journalism. I started as an art major in college. I was totally clueless about this stuff. But my art background was great because I could see all these patterns and relationships. I could look at charts and see things that others would not. The first book I ever read about the markets was by Joe Granville, whom I think of as such a hero. I dont agree with him on a lot of things, but he made some major contributions. He taught us so much about so many things. After reading his book I started trading stocks.\u003cbr\u003e\u003cbr\u003eI didnt know anything about futures. That was the farthest thing from my mind. By 1966 I was trading stocks and had a bit of luck. A broker said to me, You are doing great at this. Why dont you trade commodities? I said, Isnt that risky? He explained that pork bellies dont have as large a percentage move as, say, utilities do. The problem is that to buy a utilities stock you have to put up 60% of margin, but to buy pork bellies you have to put up about 5%. So it is how much money you put up that makes it risky. Most commodity traders want to put up the bare minimum. That means they get knocked off the horse all the time because they are not capitalized for this. So he told me if I capitalized the trade correctly, with my trading skills, I should be okay.\u003cbr\u003e\u003cbr\u003eAnd back then, the big thing was to make a $5,000 trade in stocks. Your commission would be maybe $650700, and a similar trade in commodities was about $40. Commissions were really high in stocks, so I thought I would give commodities a try. I did, and the rest is history.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52134044795249,"sku":"187INTPDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_1e51ff75-6d2c-4558-8b8b-a6f88f548005.jpg?v=1739663897"},{"product_id":"stcov29128in","title":"Stocks \u0026 Commodities V. 29:5 (16-23, 28): In The Volume Zone by Walid Khalil and David Steckler","description":"In The Volume Zone by Walid Khalil and David Steckler\u003cbr\u003e\u003cbr\u003eHeres a look at the volume zone oscillator, which can be applied to trending and nontrending markets. Find out how it can be used to trade the Djia, Spy, and gold.\u003cbr\u003e\u003cbr\u003eAN axiom of technical analysis states that with few exceptions, all technical indicators can be classified as either trending or oscillating (nontrending) in their design. This new indicator, the volume zone oscillator (VZO), addresses both.\u003cbr\u003e\u003cbr\u003eIn his book Technical Analysis Of The Financial Markets, John J. Murphy explains that using oscillators provides three benefits:\u003cbr\u003e\u003cbr\u003e Overbought and oversold conditions warn that price trend is overextended and vulnerable.\u003cbr\u003e\u003cbr\u003e Divergence between oscillator and price action shows hidden strength or weakness in the market, which is not apparent in the price action.\u003cbr\u003e\u003cbr\u003e The crossing of the zero line can give an important trading signal.\u003cbr\u003e\u003cbr\u003e\nThe formula depends on only one condition: If todays closing price is higher than yesterdays, then the volume will have a positive value (bullish). Otherwise, it will have a negative value (bearish).\u003cbr\u003e\u003cbr\u003eSo:\nVolume zone oscillator = 100 x (VP\/TV)\u003cbr\u003e\u003cbr\u003ewhere:\nVP (Volume position) = X-days Ema ( volume)\u003cbr\u003e\u003cbr\u003eand\nTV (Total volume) = X-days Ema (volume)\u003cbr\u003e\u003cbr\u003eTHE VOLUME ZONE OSCILLATOR\u003cbr\u003e\u003cbr\u003eVolume is simply the number of shares or contracts that have been traded throughout the day, so the higher the volume, the more active the security. Volume is always treated as a secondary indicator, despite its importance in confirming trends and chart patterns.\u003cbr\u003e\u003cbr\u003eVolume analysis is a key component of analyzing and predicting the future direction of an asset. Joe Granville introduced the on-balance volume (Obv) indicator in his Granvilles New Key To Stock Market Profits. This was one of the first and most popular indicators to measure positive and negative volume flow. The concept behind Obv is that volume precedes price. Obv adds a periods volume when the close is up and subtracts the periods volume when the close is down.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52134068650353,"sku":"074KHALPDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_220220ff-e584-477f-aeb3-4173d2bcd932.jpg?v=1739664642"},{"product_id":"stcov292eibe","title":"Stocks \u0026 Commodities V. 29:11 (24-26): The Eight Best-Performing Candles By Thomas N. Bulkowski","description":"The Eight Best-Performing Candles By Thomas N. Bulkowski\u003cbr\u003e\u003cbr\u003eAfter removing rare candlesticks and combining reversal or continuation rates with performance after 10 days, surprising winners emerge.\u003cbr\u003e\u003cbr\u003eThose of you well versed in candlesticks will find this article surprising. It describes how single-line candles can lead to the best performance. In an earlier article, I discussed investment-grade candles, those that performed best as reversal or continuation patterns. In another article, I discussed candles that led to strong moves 10 days later. This article combines those two qualities and adds a third filter that removes rare candles to uncover the eight best-performing candles overall.\u003cbr\u003e\u003cbr\u003eDEFINITIONS AND METHODOLOGY\u003cbr\u003e\u003cbr\u003eDescribing my testing methodology is necessary so everyone understands my measurement technique. I looked at more than 4.7 million price bars (candle lines) to identify and track 103 candle patterns. A close above the top of a candle represents an upward breakout. Similarly, a close below the bottom of the candle pattern is a downward breakout. Thats true of most candle patterns except for unusually tall ones, such as eight or 13 new price lines, where I used the last price bar upon which to conduct the up or down breakout test.\u003cbr\u003e\u003cbr\u003eIf price entered the candlestick from the bottom but exited out the top, it acted as a continuation. Similarly, if it exited in the same direction that it entered (entering from above and exiting upward, for example), the candle acted as a reversal.\u003cbr\u003e\u003cbr\u003eTo exclude rare candles, I ranked the frequency of each candle found in the same database (500 stocks of 10 years duration). I split the frequency rank in half and threw out the rare ones (the rare half).\u003cbr\u003e\u003cbr\u003eTo find which candles had the best overall performance, I started with the plentiful candles, measured and ranked the reversal or continuation rates, added a rank for the price move after 10 days, and ranked the result. The idea was to find candles that performed best as reversal or continuation patterns, trended far enough in the breakout direction to make money, and appeared often enough to be identified. Here, I describe the top two candles in each category.\u003cbr\u003e\u003cbr\u003e\u003cbr\u003e\u003cbr\u003e","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52134086279537,"sku":"182BULKPDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_5245a030-de5c-4983-b8f4-0aec79601ebf.jpg?v=1739665504"},{"product_id":"stcov29136ga","title":"Stocks \u0026 Commodities V. 29:5 (14-15, 36): Gap Fill And Go by Jamie Theiss","description":"Gap Fill And Go by Jamie Theiss\u003cbr\u003e\u003cbr\u003eHeres a look at two trades using a strategy you can use almost every day.\u003cbr\u003e\u003cbr\u003eI'M going to show you two trades using a bread \u0026amp; butter strategy you can use almost every day to capture profits from the stock market. As you can see from Figures 1 and 2, I use candlesticks and moving averages on a five-minute time frame. I use the eight- and 21-period simple moving averages (SMA), which are displayed in green and blue, respectively, along with the 200-period SMA (red). Of course, eight and 21 are Fibonacci numbers. In addition, the 200-day SMA is watched by so many that it has practically become self-fulfilling. I call the technique the gap fill and go.\u003cbr\u003e\u003cbr\u003eTHE SETUP\u003cbr\u003e\u003cbr\u003eTo set up these trades, please observe that the eight- and 21-period Smas are in an uptrend on the five-minute chart. While not shown, the Smas are also in an uptrend on the higher time frame charts, such as the 15-minute and 60-minute charts.\u003cbr\u003e\u003cbr\u003eNext, we have a bullish gap up on the opening bell. Now the hardest part of the trade is sitting on your hands for the first 30 minutes of trading. You want to just sit and observe. Then, you may begin to notice the gaps are starting to fill. This is just a version of the well-tested slogan, Buy the dips and sell the rallies. You are just waiting for the dip to occur in the predetermined uptrend.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52134108987761,"sku":"073THESPDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_59395652-b262-4d02-ab4f-0ae8847d5446.jpg?v=1739667131"},{"product_id":"stcov291idst","title":"Stocks \u0026 Commodities V. 29:11 (10-14): Identifying Stops And Targets by Jeffrey Kaprelian","description":"Identifying Stops And Targets by Jeffrey Kaprelian\u003cbr\u003e\u003cbr\u003eHow do you figure out where to place stops and targets? Try using support and resistance levels together with the average true range.\u003cbr\u003e\u003cbr\u003eAS a broker, I am often asked how to figure out where to place stops and targets. There are, of course, many different methods, ranging from not using them at all to using volatility-based figures. One of the most reliable is the use of support and resistance coupled with the average true range (Atr). I will demonstrate this principle using multiple time frames with two unrelated markets to show how truly universal it can be.\u003cbr\u003e\u003cbr\u003eFirst of all, we must define support and resistance. The most basic understanding of support is a level where prices fail to make new lows. The opposite the failure to make new highs is true for resistance. They can be thought of as floors and ceilings.\u003cbr\u003e\u003cbr\u003eSUPPORT AS STOP-LOSS\u003cbr\u003e\u003cbr\u003eFigure 1 is a weekly coffee chart. Once the market makes a double low (points 1 and 2), we can use that as a temporary level of support. Observe how the market retraces at points 3, 4, 5, and 6 before it moves away for good. Often, the exact level (56.234) at which the dotted line is drawn is inconsequential relative to any major price points in this case, 56.000 when setting a stop-loss.\u003cbr\u003e\u003cbr\u003eThere is no guarantee that stop orders will be filled at the traders preferred price. Once the stop order has been triggered, it turns into a market order, which is then filled at the best possible price. The fill price may be higher or lower than the price specified by the stop order.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52134111936881,"sku":"179KAPREPDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_6e19bbfe-dc03-4177-8c1e-75da2fd6a1ce.jpg?v=1739667260"},{"product_id":"stcov294appu","title":"Stocks \u0026 Commodities V. 29:12 (40-46): Applying The Put\/Call Ratio Indicator","description":"Applying The Put\/Call Ratio Indicator\u003cbr\u003e\u003cbr\u003eIn this third part of the series, you will find a trading method based on using the three put\/call ratio indicators introduced in part 2.\u003cbr\u003e\u003cbr\u003eCan the put\/call ratio and open interest be used to build a leading indicator? Yes, it can. In part 1, I defined the put\/call ratio. In the second part of this three-part series, I discussed how you can create the put\/call ratio indicator (Pcri). Now, heres how you can apply the three put\/call ratio indicators.\u003cbr\u003e\u003cbr\u003eFigure 1 shows my charting template for trading based on the put\/call ratio indicators. The window at the top holds the Standard \u0026amp; Poors 500 daily data with three simple moving averages: 50 days (blue), 100 days (red dashed), and 200 days (red). These are typical averages useful as dynamic support and resistance levels. For the shorter-term dynamic support and resistance, I am using standard 20-period Bollinger Bands. Finally, I will be using support and resistance levels and trendlines in this window to look for line breaks.\u003cbr\u003e\u003cbr\u003eThe second and third windows display the fast and slow put\/call ratio indicator and the inverse Fisher transform of the slow Pcri. These were discussed in the first and second parts of this series. In the fourth window, I use a standard stochastic 30-period oscillator with a five-day slowdown. In the same window you can see a smoothed inverse Fisher transform stochastic. This will help you stay in a trade or ultimately get you out of one if other signals fail.\u003cbr\u003e\u003cbr\u003eTHE SMOOTHED INVERSE FISHER TRANSFORM STOCHASTIC OSCILLATOR\u003cbr\u003e\u003cbr\u003eYou can find out all about the put\/call ratio indicators in the second article of this series. But before starting on the trading examples, I have to discuss the inverse Fisher transform stochastic oscillator (SVE_Stoch_IFT) used in the lower window of the template. Basic information about the inverse Fisher transform can be found in my article about the relative strength index (Rsi) inverse Fisher transform published in the October 2010 issue of Stocks \u0026amp; Commodities.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52134153093489,"sku":"204VERVPDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_e2fe4993-04c1-4bba-bc45-a55182eeeccd.jpg?v=1739669066"},{"product_id":"stcov29235to","title":"Stocks \u0026 Commodities V. 29:6 (24-26, 35): Top 10 Candles That Work by Thomas N. Bulkowski","description":"Top 10 Candles That Work by Thomas N. Bulkowski\u003cbr\u003e\u003cbr\u003eWhich candlestick patterns trend the most in 10 days?\u003cbr\u003e\u003cbr\u003eIN my last article, I described 13 candlesticks that worked best as reversal or continuation patterns. That means price closed above the top of the candle pattern or below the bottom of it, signaling a reversal or continuation not just once, but reliably in thousands of cases. However, just because a candle acts as a reversal 66% of the time doesnt mean that price moves far beyond the candlestick boundaries.\u003cbr\u003e\u003cbr\u003eThis article discusses candles that perform best over time that trend furthest but they may not be good reversal or continuation candidates.\u003cbr\u003e\u003cbr\u003eSTART AT THE BEGINNING\u003cbr\u003e\u003cbr\u003eDoing research on candlesticks means making decisions on how to test them. How do you determine the best performance? Since candles are often short-duration patterns (most are three price bars or shorter), their trend often does not lead to a big, long-duration move. I would make that statement based on working with chart patterns, where the tallest ones outperform their shorter brethren, but also from testing more than 100 candlestick types using daily price data and 4.7 million lines (a candle line is a single price bar).\u003cbr\u003e\u003cbr\u003eI decided to measure the price move from the close of the day the candle pattern ended (not the breakout) to one, three, five, and 10 trading days into the future. This article discusses the 10-day performance results in a bull market. For details on other varieties, such as bear market performance over five days, please refer to my book Encyclopedia Of Candlestick Charts.\u003cbr\u003e\u003cbr\u003eUP BREAKOUTS: COLLAPSING DOKI STAR\u003cbr\u003e\u003cbr\u003eThe top-performing candle with an upward breakout is the collapsing doji star. I show the ideal configuration in Figure 1. Its a three-line pattern with an uptrend leading to the start of the candlestick. The first line is white, but it can be tall or short. What matters is that it gaps above the next candle a doji.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52134178193777,"sku":"092BULKPDF","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_aff0d751-ae84-4185-9efc-b515f9f1d517.jpg?v=1739670379"},{"product_id":"stcov294pura","title":"Stocks \u0026 Commodities V. 29:10 (40-44): The Put\/Call Ratio And Price Cycles by Sylvain Vervoort","description":"The Put\/Call Ratio And Price Cycles by Sylvain Vervoort\u003cbr\u003e\u003cbr\u003eThe put\/call ratio and open interest can be used as a leading indicator to predict the next index move. In this, the first part of a three-part series, the put\/call ratio is defined and the cyclical phases this indicator goes through.\u003cbr\u003e\u003cbr\u003eI started writing my first book near the end of the previous century. That sounds like such a long time ago! It was only published in Flemish, my native language. A small part was about fundamental analysis, the main part was about technical analysis, and there was an introduction to option strategies. In the part about option strategies, based on the put\/call ratio and the open interest, I wrote about my idea of how these two parameters could be used as a leading indicator to predict the next index move.\u003cbr\u003e\u003cbr\u003eFor a couple of years afterward, I published followup commentary and accompanying data from the European Options Exchange (Eoe). Unfortunately, at some point this data stopped being offered anywhere I looked for it and I had to abandon that project, much to my regret.\u003cbr\u003e\u003cbr\u003eThen in early 2010, I noticed that the put\/call ratio of all the Cboe equity options is available at the Cboe website (http:\/\/www.cboe.com\/data\/PutCallRatio.aspx). There, you can find the Cboe equity put\/call ratio data from October 21, 2003. That made me think about my earlier work.\u003cbr\u003e\u003cbr\u003eAn indicator that uses the put\/call ratio has an advantage in that it is not based on the usual price or volume data, and as such, it can be an interesting extra piece of independent price information. Looking at Figure 1, however, where you see a chart of the Standard \u0026amp; Poors 500 at the top with the raw put\/call ratio data at the bottom, it is evident that we will need some tricks to create a usable indicator.\u003cbr\u003e\u003cbr\u003ePUT\/CALL RATIO DEFINITION\u003cbr\u003e\u003cbr\u003eYou get the daily put\/call ratio by dividing the sum of all put options by all call options traded on all individual Cboe equity option contracts. Important: Do not use the put\/call ratio of the index itself; this will not give you a meaningful indicator.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52134196248945,"sku":"163VERVPDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_ce032f10-1ad7-4117-b4b6-a22af2f24efb.jpg?v=1739671458"}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/collections\/favorite-articles-from-2013-21_2ae6dac4-003b-4266-9c2f-cd916388c32b.gif?v=1790892043","url":"https:\/\/shop.traders.com\/collections\/faarfr202.oembed","provider":"Stocks \u0026 Commodities","version":"1.0","type":"link"}