## Wiley Trading Advantage

Trading without Fear Richard W Arms, Jr. Neural Network Time Series Forecasting of Financial Markets E. Michael Azoff Option Market Making Alan J. Baird Money Management Strategies for Futures Traders Nauzer J. Balsara Genetic Algorithms and Investment Strategies Richard J. Bauer Technical Market Indicators Analysis and Performance Richard J. Bauer and Julie R. Dahlquist Seasonality Systems, Strategies & Signals Jacob Bernstein Managed Futures An Investor's Guide Beverly Chandler Beyond...

## Impact Of Transaction Costs

Transaction costs are the greatest deterrent to day-trading profits. The failure to execute near the intended price, plus the commission costs, can remove a large part of potential profitability and even turrrexpected profits into losses. An aspiring day trader has two ways of improving performance by paying lower commissions and by careful selection of opportunities. Table 16-1 presents the percentage relationship of moderate transaction costs to the maximum daily price move. The average...

## Fibonacci And Human Behavior

Even though we may not understand the cause underlying a particular phenomenon, we can, by observation, predict the phenomenon's recurrence. History is a record of great achievement in the face of disbelief, as exhibited by the explorations of Columbus, Magellan, Marco Polo the science of da Vinci, Galileo, Copernicus and the philosophy of Socrates and other men now known to be great. We are more observant today and less apt to condemn those who delve into areas still unknown. OFthese,...

## Momentum and Oscillators

The study of momentum and oscillators is an analysis of price changes rather than price levels. Among technicians, momentum establishes the speed of price movement and the rate of ascent or descent. Analysts use momentum interchangeably with slope, a straight-line angle of inclination of price movement as measured from a horizontal line representing time. Momentum is also thought of as force or impact it is often considered, as in Newton's Law, that once started prices tend to remain in motion...

## Spreadsheet Approach

A practical way of evaluating a portfolio without requiring special mathematical knowledge or expensive software is to use a spreadsheet program. Using a classic stock and bond mix, Table 23-2 shows the monthly returns of the S& P 500 (S& P) and the Lehman Brothers Treasury Index (LBTI) combined into a portfolio of 60 stocks and 40 bonds. Columns B and C show the monthly percentage returns of these two inputs and columns E and F have the corresponding cumulative returns. At the bottom of...

## Financial Astrology

Astrology seeks a common bond in human behavior, similar to the work in biological rhythms and cycles. The impact of astrology on civilization has been great observations of the periodicity of the moon is traced back 32,000 years. Star charts were known to have been in Egypt about 4200 b.c., and the earliest written ephemerides were in the seventh century b.c.36 The pyramids at Giza are said to have sloping corridors leading from the faces to the interior that were used as sighting tubes for...

## Bands And Channels

Thus far, modifications have been based on a simple moving average or trendline. The plot can be adjusted forward or backward, the position can be reversed, or the entry or exit delayed in an attempt to begin the new trade at the time when the trend has decidedly taken a new direction. Even if prices have begun what will become a major downtrend, an entry into a short position too soon may be subjected to sharp reversals caused by conflicting fundamental and technical elements at these turning...

## Interpreting The Bar Chart

The bar chart, also called the line chart, became known through the theories of Charles H. Dow, who expressed them in the editorials of the Wall Street Journal. Dow first formulated his ideas in 1897 when he created the stock averages for the purpose of evaluating the movements of stock groups. After Dow's death in 1902, William P. Hamilton succeeded him and continued the development of his work into the theory that is known today. Those who have used charts extensively and understand their...

## Projecting Daily Highsand Lows

F1GURE IS-I Graph of the New York Stock market. F1GURE IS-I Graph of the New York Stock market. Statisticians claim that the best forecast of tomorrow's price is today's price they state that no one has been able to reliably account for all the factors that would be needed to accurately project the changes that result in the high and low prices for tomorrow. Nevertheless, many traders project these values and seem to use them with success. The simplest approach to projecting tomorrow's highs...

## Exponential Smoothing

Exponential smoothing may appear to be more complex than other techniques, but it is only another form of a weighted moving average. It has the added advantage of being simpler to calculate than any other method discussed only the last exponentially smoothed value E,,i and the smoothing constant a are necessary to compute the new value. The technique of exponential smoothing was developed during World War II for tracking aircraft and projecting their position the immediate past is used to...

## Action And Reaction

The human element in the market is not responsible for the ultimate rise and fall of prices, but for the way in which prices find their proper level. Each move is a series of overreac-tions and adjustments. Many stock and commodity analysts have studied this phenomenon and base entire systems and trading rules on their observations. Elliott's Wave Principle is the clearest and most well-known of the theories founded entirely on this notion. Tubbs' Stock Market Correspondence Course is the first...

## Chart Formations

It would be impossible for the average speculator to follow the original method of recording every change in price. When applied to stocks, those charts became so lengthy that interpretations similar to those used for the traditional bar chart were necessary to select the best patterns. In X969, Robert E. Davis published Profit and Profitability, a point-and-figure study that detailed eight unique buy and sell signals. The study covered two stocks for the years 1914-1964, and 1,100 stocks for...

## Dispersion And Skewness

The center or central tendency of a data series is not a sufficient description for price analysis. The manner in which it is scattered about a given point, its dispersion and skewness, are necessary to describe the data. The mean deviation is a basic method for measuring distribution and may be calculated about any measure of central location, for example, the arithmetic mean. It is found by computing MD - or Avg AbsValue price - Avg price,n ,n where MD is the mean deviation, th average of the...

## Swing Trading

The foundation for the largest number of chart-based systems is the swing chart. Similar to point-and-figure, a swing is an upward or downward movement of a minimum size, regardless of the time it takes to achieve that move. Unlike point-and-figure, there are no boxes, and the notation does not use Xs and Os. The only difference between one swing chart and another is the swing filter. Once prices have reversed from a high or low point by the minimum amount specified by the swing filter, a new...

## Linear Regression Model

A linear regression, or straight-line fit, could be the basis for a simple trading strategy similar to a moving average. For example, an -day linear regression, applied to the closing prices, could be used with the following rules 1. Buy when the closing price moves above the forecasted value of today's close. 2. Sell when the closing price moves below the forecasted value of today's close.11 There is an important difference between a model based on linear regression and one founded on a moving...

## Key Reversal Days

A formation that has been endowed with great forecasting power is the key reversal day, sometimes called an outside reversal day. It is a weaker form of an island reversal. A bearish key reversal is formed in one day by first making a new high in an upward trend, reversing to make a low that is lower than the previous low, and then closing below the previous close. It is considered more reliable when the prior trend is well established. This could be identified using EasyLanguage as if close l...