2007 Jan 31 - Wed
Trading Site of the Day -- Information Arbitrage: Intellectually Speaking
Information
Arbitrage takes in depth reviews of the hard-core wonders of Wall Street -- things like
derivatives, economics, sell-side organizations, as well as taking on some of the main
stream topics like the "Jobs Put Option" bit.
On November 26, 2006, he wrote an article called "Black Box Trading: Panacea or
Promotion". He is saying I'm on a hopeless cause. Why should I succeed when big guys like
Ray Kurzweil throw millions of dollars at developing Block Box Trading Systems.
I'm slowly acquiring a perspective on how markets behave. And they certainly aren't well
behaved. The randomness is random, after a fashion. I'm impressed by how various simple
strategies I've come up with can reach a zero result, before commissions. But there has to
be an edge somewhere.
Hence, I'm proceeding along two avenues. One is continuing the development of an
Automated Strategy, just to see what I can do and what I can learn. The other is to resuse
some Darvas strategies I successfully used last year before getting too busy with other
stuff.
This is the reason for posting the Darvas stuff. I know it was successful before, and I
need to do a little paper trading to prove my techniques, before I jump in once again with
real money.
By tomorrow, I'll be behind by two days in posting the various results. I'll get caught
soon.
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2007 Jan 29 - Mon
Trading Site of the Day -- Trading Quotes: Timeless Words of Wisdom
On the lighter side of trading, Trading Quotes is devoted to presenting, well, I'll quote the author:
Timeless Words Of Wisdom And Stocks And Futures Trading Quotable Quotes. Trading Quotes That
Impart Important Trading Philosophy. Trading Quotable Quotes That Withstand The Test Of
Time. Good Trading Quotable Quotes Regarding Trading Systems, Money Management and
Psychology Of Trading.
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2007 Jan 27 - Sat
Trading Site of the Day -- Ensign Sofware: A Chartist's Dream
Ensign Software has a Newsletter that has been running for a number of years. The newsletter is
free. Each issue discusses a different way of looking at the market, from a charting
perspective. The issue contents have been summarized and categorized at the link provided
above. The breadth and scope of the topics covered is impressive. And each has commentary
regarding how it can be used in trading. Sometimes, topics are taken together so one can
get a feel out multiple topics come together to support each other.
The newsletter describes how to configure Ensign Sofware to display the patterns and
indicators described. After a trial period, he software is available on a per-month
subscription basis. The
software is designed to work with real-time, historical and end-of-day data from a number of
different vendors including IQFeed and Interactive Brokers.
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Trading Site of the Day -- NYSE Scalper's Tale: Trader's Diary
This is a scalping trader who
lays it out all out for you. He does daily and monthly summaries of
how well he does in the markets: how many trades he does, how profitable they are, and goes
into a tiny bit of background regarding the rationale behind each trade.
The interesting part of his site is his Weekend Reading Lists. At the end of each week,
he presents a list of links and brief descriptions to other blogs that he found interesting.
Each trading link offers up a pearl of wisdom to help one become a better trader.
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2007 Jan 26 - Fri
Trading Site of the Day -- BabyPips: Beginner's Guide To Forex Trading
BabyPips is a
site that takes a child-like view on the world of Forex. Perhaps that phrase
could be misconstrued as a negative when in fact I meant it as a positive. It uses bold
colors and clever graphics to hightlight the informative text.
The site has a School section where newcomers are introduced step by step to the world of
Foreign Exchange trading principles through discussions of terminology, chart reading,
psychology, news analysis, supporting indicies, and then proceeds to advanced topics.
That was the theoretical side. For the practical side, there are a number of site blogs
where the writers provide summaries of the trades for the day, why they did what they did,
and how it worked out. Other site blogs provide mini-discussions on relevant topics to help
round out the education.
There is a related forum section where site readers can provide feedback and ask
questions on foreign exchange trading.
A Forexpedia, a form of a Wiki is also present where knowledgeable members can write and
contribute articles regarding foreign exchange.
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2007 Jan 25 - Thu
Trading Site of the Day -- WilyTrader: The Blood and Guts of Freedom
WilyTrader.com is the Trading Blog
of an independent trader who's been doing it for just over a year. Basically, it is a daily
diary of trades and the thought processes he went through for each.
There are a couple of interesting observations regarding his site. One is to look at the
types of tools he uses. He has two types of personal diaries for recording his trades: one
diary to record the technical aspects such as the symbol, entry, exit, and associated
indicators and indexes used to perform the signalling.
He uses a second diary type to record the psychology of the trade such as whether he
exited late or early, whether it was a good idea or not, and then ranks it as Good, Bad, or
OK.
There are two additional sections in each entry. One provides an annotated chart of one
or more of his trades, with the chart showing the symbol plus his various indicators.
The second section of each entry is a description of the thought processes and
observations of what happened during the relevant phases of the trade.
Overall, WilyTrader is an interesting site for seeing how someone else performs setups,
entries, and exits.
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2007 Jan 24 - Wed
Trading Site of the Day -- Linda Bradford Raschke: Education, Lots Of It
Linda Bradford Raschke is a very well
known trader and educator. Her and her group, LBR Group, have an excellent, informative
site useful for new traders as well as experienced traders. The site has copies of many of
her articles as they appear in respected magazines. There are market commentaries and how
-to guides. There are many additional resources available once you sign her guest book.
There is also a paid-content section. Based upon what I've seen far, is probably very well
worth the cost of admission. Even the FAQ has useful trading information.
I found a couple interesting articles on Linda Bradford Raschke's site regarding
scalping. One was a one paragragh summary mentioning TICK and TIKI. Mention is also made of
how making use of multiple indexes can help determine market direction and related trading
strategies.
Another, more useful, scalping article I found on the web site was one by Kevin Ho
entitled "Scalp
Trading Methods". The article is only four pages in length but offers up six trading
patterns
for trading during periods of high volatility. One of the trade patterns is
Linda Bradford Raschke ANTI pattern using a stochastic indicator along with moving average.
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2007 Jan 23 - Tue
Trading Site of the Day -- Pivot Points
Daily Pivot Points are used by floor traders as easy to remember levels of support and
resistance for intraday trading. The basic calculation for the current day's pivot points
are based upon the previous day's High, Low, and Close. Here is a link to a good
Pivot Point Calculator.
To help become familiar with Pivot Points, there are a couple of helpful Pivot Point
articles on Investopedia:
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2007 Jan 22 - Mon
Trading Site of the Day -- Elite Trader: Opinions, Facts and Heresy
Elite Trader is predominately a
forum based site. It caters to traders of all types, where type may be newbie/experienced,
forex/equity/commodity, day-trader/swing-trader, to name but a few combinations.
The forums include coverage for a variety of topics. Here are but a few: Trading,
Stocks,
Wall Street News, Economics, Trading Journals, Psychology, Order Execution, Automated
Trading, Technical Analysis, Retail Firms, Prop Firms, Software, Educational Resources,
Futures (many categories here), Currency, Options, and Politics.
In addition to the forums, the following are rated, reviewed and commented upon, pretty
much on a daily basis: books, brokers, and software.
There is also an ability to chat in
realtime. There are quite a number of interesting Chat Room Transcripts.
Forum search is comprehensive but could use some improvement from a user-usability
perspective. Even so, I do find myself getting side tracked on to other threads,
finding useful pieces of information in most every forum I visit.
In a nutshell, even though there are the usual cranks and heretics, the site is rich in
content. I do visit the site regularily for the knowledge as well as the laughs. And
talking about humour, hidden away in there somewhere is a decent compendium of trading
and related and not so related jokes.
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2007 Jan 19 - Fri
Trading Site of the Day -- Trading Education: Pearls of Wisdom, Knuggets of Knowledge
Back on 2006/12/21, I wrote about using range bars as
part of an indicator set for
tracking market movements. In a tutorial at Trading Education, I came across an article by Brett Steenbarger called
Fundamentals of Short-Term Trading: Part I. Steenbarger recommends using what he calls
Equivalent Bars, with each bar representing approximately the same number of contracts.
Using this type of bar, one would hold contracts for a duration of Equivalent Bars, which he
says is helpful for risk control.
In that same article, Steenbarger also writes about Scalping. Scalping is a topic I'm
interested in learning more about, particularily the risk management side, of when to get in
and when to get out, and what type of instruments are good for scalping.
Anyway, he talks about using the NYSE Composite TICK indicator around the -750 mark along
with an idea of
volume as a basis for getting into a trade. I've read other authors use the TICK at 1000
and -1000 as useful indicators of when to reverse the market.
I suppose you could classify the TICK as an example of using inter-market analysis to
help define trading setups.
Richard W. Arms, Jr., in his book The Arms Index, talks about an indicator he created
called the TRIN. He suggests using TRIN, along with market averages and the TICK to define
good entry and exit points. In Chapter 2, he shows how to use an XY chart of TRIN and the
DOW Index to show significant intraday movements. He also provides some ideas on how to
interpret and make use of these movements.
Anyway, I've digressed. You'll find a bunch more interesting ideas in Steenbarger's
article, and you'll find more of his articles at his site.
As for the Trading Education web site, my main link takes you to their main resources
page. Their content is updated on a daily basis with market commentary, trading techniques,
and some general news regarding Business, Earnings, and Energy. The RSS feed helps get
around a bunch of advertisements to the meaty regular articles.
You can sign up for their regular newsletter called Synergistic Trading. As regular
contributors, they have well
known luminaries such as Robert W. Colby, Jim Wyckoff, and Dr. Van Tharp.
Contributors have a number of personal
blogs. Most have daily updates on market conditions and trading strategies.
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2007 Jan 17 - Wed
Trading Site of the Day -- Trader Daily: Ego, Psychology, and Incentive
In much of the literature, the topic of trading psychology is heavily talked about. How
to improve one's self as a trader is one common subtopic. Analysing Market Psychology is
another side of the same coin.
Trading, for some, is hard work. For others, a very competitive game. By mastering the
game, personal success is assured.
The incentives for mastering the game are reviewed monthly in the Trader's Monthly
Magazine. It has a web based companion site called Trader Daily. In a nutshell, it is all about wine, women, and song.
Well, for the women in the audience, wine, men, and song. It is light on how to trade, and
heavy on what to do with the rewards of trading.
The last few quarters have seen brokerage and trading firms make astronomical profits,
all thanks to their traders. The lifestyles of the rich and infamous are reflected in the
pages and forums of the web site.
In brief, major content headings of the web site include Magazine, Careers, Forums,
Events, Classifieds, Columnists, and Diversions. In short, the web site takes a look at the
lighter, livelier side of the trading personae. It helps to keep the goal firmly in mind
of what trading is all about.
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2007 Jan 16 - Tue
Trading Site of the Day -- EconoDay: Economic Indicators
Today I'm starting a new series, a series that will help me, and hopefully you as a
reader,
to learn of new sources of trading information scattered about the web. I'll look at big
popular sites as well as smaller niche sites. Whatever strikes my fancy for the day.
The site I'll start with today is EconoDay.
The primary feature in which I'm interested at EconoDay is their Economic Outlook Calendar. When opening that web page, it automatically
redirects you to a one week calendar listing the current Economic Events for the US. Each
brief entry in the calendar contains the indicator's name as well as the time the Economic
Indicator is to be released. For many upcoming significant events, they offer a 'Consensus'
value of what analysts predict the value will be upon release. For past events, a 'Report'
is provided of what the actual released value was.
Each entry is a URL linked to a descriptive web page which provides information such as
the following:
- The release schedule (for recurring events, the day of the year it is released)
- A Definition
- Why Do Investors Care? (where background is presented of market impact)
As an example of it's coverage, today it covered the Empire State Mfg Survey which had a
consensus of 20 and an actual value of 9.1; it had a Bank of Canada Announcement which was
unchanged at 4.25%; and coverage of the 4-Week Bill, 3-Month Bill and 6-Month Bill Auctions.
For tomorrow, January 17, the significant Economic Indicators appear to be PPI (Producer
Price Index) with a Consensus Month to Month change of 0.5%; the Industrial Production
indicator with a Consensus Month to Month change of 0.1%; and the NAHB-WF (National
Association of Home Builders) Housing Market Index.
I seem to recall that the Housing Market Index can be a significant market moving
indicator. We'll see what happens tomorrow.
Well, on that last point, I stand corrected. I took a look at Bernard Baumohl's book
"The Secrets of Economic Indicators". On page 187 he writes that it '... has a proven track
record of being a decent leading indicator of future home sales'. But for various and
sundry reasons, it doesn't have significant market impact in and of itself.
If you are interested in more details on what Economic Indicators are, how they work, how
they affect and are affected by the economy, which are popular and which are not, and how
they are sourced and composed, Baumohl's book would be a good one to pick up.
In a little over 350 pages, most, if not all of the relevant indicators are covered through
sections such as: Market Sensitivity, sources on the internet, release schedule, why it is
important, how it is computed, how to use it for crystal balling the economy, and how it
might impact various markets such as Bonds, Stocks, and Currencies.
A companion book to Baumohl's book might be Richard Yamarone's book called 'The Traders
Guide to Key Economic Indicators'. It is a shorter book at just over 260 pages and with
slightly larger print. It covers fewer indicators by focussing slighlty more on general
topics. It does provide a better description of indicator inter-relationships. As such,
these descriptive interactions provide tactile food for thought for traders, and help a
trader understand how a market may move because of the them.
Chapters in the book include:
- Gross Domestic Product
- Indicies of Leading, Lagging, and Coincident Indicators
- The Employment Situation
- Industrial Production and Capacity Utilization
- Institute for Supply Management Indicies
- Manufacturer's Shipments, Inventories, and Orders
- Manufacturing and Trade Inventories and Sales
- New Residential Construction
- Conference Board Consumer Confidence and University of Michigan Consumer Sentiment
Indicies
- Advance Monthly Sales for Retail Trade and Food Services
- Personal Income and Outlays
- Consumer and Producer Price Indicies
Within each chapter, the authors follows a consistent outline. He'll start the
discussion
by describing what the indicator is and how it evolved. Next he'll explain the sources of
the data. He'll then tie it all together with charts and text of the indicators in action.
Each chapter ends with a section on how to use what you've learned, and a section on some
'Tricks from the Trenches'.
As you watch the markets on a day to day basis, some days are influenced by indicators,
others by commodities, others by specific instruments, and others due to various random
factors. For the days with news on significant Economic Indicators, the information from
these two books as well as the EconoDay web site will help you get a feel for the trend for
the day's trading. And as a number of indicators stack up, a good feeling for the economy
will help in trading the longer term trends.
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