Sep 14, 2010 | Uncategorized
Keltner Channels are created by employing a moving average of each bar’s volatility from high to low, and then multiplying that moving average by a constant number to adjust the band distances from he moving average line. The moving average period to compute the average range and the average line. I’ve seen a variety of moving averages used, any where between 5 and 20 periods. With the constant used, I’ve seen between 1.3 and 1.9. Interpretation seems to vary based on moving average used.
When the MA is around 10 and the constant is 1.5 – 1.9 then
– When close is above the upper channel it’s time to get out of longs (or go short)
– When close is below the lower channel it’s time to cover shorts (or go long)
When the MA is around 20 and the constant is 1.3 – 1.9 then
– When close is above the upper channel it’s time to go long
– When close is below the lower channel it’s time to go short
My favorite interpretation
Price has to have touched the moving average but the day range must not be more than 50% of the distance from the average to the band. Bands and Moving Average must be trending up. Enter with intraday reversal in the direction of the trend.
I’ll be covering more of this indicator and more at the 21st Annual AIQ Seminar in Las Vegas, October 9 – 10, 2010. Visit here for more info http://aiqsystems.com/vegas2010.htm
Aug 31, 2010 | Uncategorized
Richard Muller, AIQ TradingExpert Pro power user and Equity Analyst at Reuters Insider uses point and figure to review the major workd markets on his show click here to view the show.
Richard will be one of guest speakers at this years AIQ seminar in Las Vegas October 9 – 10, 2010
Aug 31, 2010 | Uncategorized
by Steve Palmquist
Don’t miss Steve and 5 other speakers at the Las Vegas Traders Seminar October 9-10, 2010
http://aiqsystems.com/vegas2010.htm
The financial press is full of articles about the ‘Hindenburg Omen’ and how it indicates that the market is about to plunge. The Hindenburg Omen is a combination of new 52 week highs and lows, the NYSE’s 10 week moving average, and the McClellan Oscillator. The creator of the Hindenburg Omen compares it to ‘a funnel cloud that precedes a Tornado’ and says it shows there is ‘a high probability that the market is going to crash’. The images of the actual Hindenburg disaster, and a Tornado, are vivid and scary. This plays well in the media, after all their job is to attract viewers for their advertisers, and a lot of financial shows can be; well, boring.
The key issue for any indicator is not the images it brings to mind, but whether or not it has predicted outcomes more often than chance, and hence is a useful trading tool. According to an article on CNBC the Hindenburg Omen has been ‘roughly 25% accurate in predicting big market upheaval since 1987’. That is another way of saying it has been wrong most of the time. Traders need to carefully understand, test, and evaluate every potential tool before considering using it. New indicators come along all the time. Some sound interesting, but the issue is always, ‘how well has it worked, and based on that should I add it to my trading tool box’. The idea of testing and evaluating a tool before using it is a fundamental part of trading. Even a broken clock is right twice a day, being right occasionally proves nothing. Traders need to break through the myths and select tools that have shown some real promise.
There are hundreds of indicators and patterns being used by traders. Many of them provide no more accuracy in predicting market direction than a coin flip. The bigger issue is that many traders do not even know how often the indicators and patterns they use have shown positive results, and how often they have failed. Not knowing this information is like throwing darts in the dark. Effective traders know what percentage of the time their trading techniques work in bullish markets, trading range markets, and bearish markets. Successful traders have multiple tools designed for different market environments and switch between them based on what the market is actually doing, not what the talking heads on TV say it is doing. Are you trading myths or tested results?
The Stochastic indicator is better known and more widely used than the Hindenburg Omen, but traders need to ask the same question before using it. How often does it work, and based on that data is it a valuable tool for trading? I tested the effectiveness of the Stochastic indicator by looking at trades during 2008 when the stochastic was below 20 and then moved above 20. After entry, each position was held for five days and then sold. During 2008 there were more than 26,000 trades in my trading data base of 2,500 stocks and only 41% of them showed a positive outcome.
2008 was a tough year for stocks, and market conditions can effect most trading systems, so I looked at all the Stochastic buy signals during calendar 2007. There were more than twenty thousand stochastic buy signals during calendar 2007, but only half of them were winning trades and the annualized return of all the trades was negative. I also looked at the sixteen thousand stochastic buy signals that occurred during 2006 and found that about fifty one percent of them were winning trades.
I then looked at how the test results for the Stochastic indicator varied based on different holding times and in different market environments. The results of this testing are covered in ‘How to Take Money from the Markets, Creating profitable Strategies’ This book analyzes six ready to use systems and shows how they work, and when they work. Trading systems are not magic, or based on hope. Effective traders use trading techniques that have been fully tested and analyzed. They know exactly how the systems have performed under different conditions and how different filters and variables effect results. When they pull a tool out of the trading tool box they know what to expect, and how to use the tool. This knowledge comes from testing and evaluation, not hopes and dreams.
Effective traders select trading tools based on the markets current environment, and their results of testing trading tools in different market conditions. They know when to trade pullbacks or retracements, whether they should focus on shallow or deep pullbacks, how trading results may be effected by the volume patterns, if the price of the stock or the average volume of the stock effects results, and several other key stock behaviors that can be tested and then used to improve trading results. No one is born with this knowledge, it is gained by testing and evaluating the behavior of stock patterns and trading systems. Traders can do this work themselves using many of the popular software packages that allow writing programs to test different patterns and indicators, or they can review the research presented in ‘How to Take Money from the Markets’. Trading without a clear understanding of how the market and several different trading systems work is like driving blind. Blind drivers usually have a bad outcome. Rather than rely on some new indicator with unknown success rates I will focus on techniques that have been tested and shown to have reasonable success rates. The market may indeed take another leg down, if and when it does there are more reliable indications for traders than the Hindenburg Omen.
Steve Palmquist a full time trader who invests his own money in the market every day. He has shared trading techniques and systems at seminars across the country; presented at the Traders Expo, and published articles in Stocks & Commodities, Traders-Journal, The Opening Bell, and Working Money.
Steve Palmquist a full time trader who invests his own money in the market every day. He has shared trading techniques and systems at seminars across the country; presented at the Traders Expo, and published articles in Stocks & Commodities, Traders-Journal, The Opening Bell, and Working Money.
Steve is the author of two trading books:
“Money-Making Candlestick Patterns, Backtested for Proven Results’, in which he shares backtesting research on popular candlestick patterns and shows what actually works, and what does not.
“How to Take Money From the Markets, Creating Profitable Trading Strategies” in which he uses the results of extensive backtesting techniques to smash trading myths and get to the truth of what has worked and what has not. The book provides six fully analyzed and tested trading systems and shows how they have performed in different market conditions.
Steve is the publisher of the, ‘Timely Trades Letter’ in which he shares his market analysis and specific trading setups for stocks and ETFs. To receive a sample of the ‘Timely Trades Letter’ send an email to sample@daisydogger.com. Steve’s website:www.daisydogger.com
provides additional trading information and market adaptive trading techniques.
Aug 27, 2010 | Uncategorized
Richard Muller is a TradingExpert Pro power user and Thomson Reuters Insider Equity Analyst. His TV shows cover the full range of tecncial analysis and fundamental research. Check out this clip from August 24th. Click here
Richard will be one of the guest speakers at this years 21st annual AIQ Trading seminar in Las Vegas on October 9 – 10, 2010 details at http://aiqsystems.com/vegas2010.htm Seats are filling up fast. Don’t miss out.
Aug 26, 2010 | Uncategorized
Donald W. Dony, FCSI, MFTA
Don’t miss Donald at this year’s Las Vegas seminar click here
Following the August 18 Market Minute titled “S&P participation remains weak”, underlying support for the S&P 500 has deteriorated during the last few days. On August 18, the percentage number of advancing stocks within the broad-based index had fallen to 50%. In contrast, at the peak of the bull advance in April, that percentage number was over 75%.
Market conditions have continued to change to the negative side. Currently, only 34% of the stocks in the index are trading over their 200-day moving average. This means that 66% are trending down (Chart 1). When the majority of an index’s securities are declining, a downward trend develops. Similar conditions occurred in late 2007 and throughout 2008.
Bottom line: Market support has shifted faster than expected to the negative side. Advancing markets require a clear majority (60%-90%) of their underlying stocks to move higher if an index is going to trend up. When the percentage falls below 50%, markets start to decline.
Investment approach: Models indicate that most indexes trade on an approximate 4-month cycle. As the last trough was in late May to early June, the next probable low can be anticipated in late September to mid-October. With the underlying support for both the S&P 500 and TSX quickly eroding, increasing downward pressure can be expected over the next 4-6 weeks.
Investors may wish to take a very defensive stance this month by increasing cash percentages and raising stops. Good value opportunities are anticipated after this correction in Q4.
Aug 12, 2010 | Uncategorized
In the age of the internet, there are lots of sites that give you free stock charts. For many people, a chart is all they need for their trading. Obviously AIQ offers much more than charting, but even if all you need are charts then you’ll love AIQ’s list feature.
This feature allows users to very quickly browse through the stock charts that they are interested in. Every AIQ power user heavily relies on the list feature. Knowing how to create and manage lists allows users to focus on the stocks they want to purchase, to more easily manage a large database, to effortlessly chart their favorite stocks, etc.
TradingExpert Pro comes with the S&P 500 and the AIQALL list. Many other AIQ list files can be downloaded from AIQ’s web page. The web page includes lists of the S&P 1500, Russell 1000, Russell 2000, Nasdaq 100, optionable stocks, etc. The web site is
http:// www.aiqsystems.com/lists.htm
After downloading one of these list files, you can very quickly and easily scroll through charts of the stocks. In AIQ Charts, use the dropdown arrow on the tool bar to highlight a list name. For this example, we’ll choose a list of the Nasdaq 100 stocks. By hitting the Enter key, the Control Panel is replaced by the list of Nasdaq 100 ticker symbols. By clicking on the Explore Right icon on the toolbar (or clicking on the individual ticker symbols), you’ll get a chart of each stock in the list. There is no need to type in the individual ticker symbols. Simply keep clicking the Explore Right icon and you can see every Nasdaq 100 chart in a matter of minutes.
While AIQ places many lists on its web site, some users may have a particular list of stocks that they want to closely track. This might include recommendations from Value Line or a favorite investment newsletter. In this case, users can create their own individual lists. Creating a list is a simple process.
– In Data Manager, click List on the menu bar and then New.
– Enter a name for the list you want to create.
– The list will appear on the left section of the Data Manager window.
– With your list name highlighted, click List again and Insert Tickers. To save time, enter a list of
tickers separated by semicolons.
– Click OK and the list will be created.
If you have a list of ticker symbols in a spreadsheet, TradingExpert Pro can import that list. That means if you subscribe to Investor’s Business Daily’s online service then you can download its top recommendations into a spreadsheet and then import the list into AIQ. To do this, first
save the list to a CSV format. Then go to the Data Manager and create the new list name using the process just described.
– With the list name created, select List and then Import.
– Highlight the CSV file and click OK.
AIQ allows users to merge two lists as well. Some people like to track a list that combines two list files, such as the SP 500 and Nasdaq 100. AIQ’s Advanced List Edit function allows you to merge two lists. You simply open both lists and then drag one list into the other. Be sure to save the new combined list to a new name.
So far we’ve discussed how list files help save time in charting. They are also helpful when you run Reports. When you run reports on your individual list file, only stocks that you are interested in will appear. The noise from other stocks that you’d never buy is eliminated. For instance, you can check for a breakout on AIQ’s Point & Figure Breakout report using your particular list of stocks. There is no need to filter through a bunch of stock symbols looking for the ones of interest to you. To accomplish this, go to Reports
– right-click on Stock Reports. The Global Properties box will appear
– Use the dropdown arrow next to Stock to select the name of the list you want to run and click OK.
We’ll choose to run reports on the Nasdaq 100 stocks. Some reports, however, show many stock choices. To quickly scroll through the list of stocks on a report, you can click the Build Report List icon on the toolbar. This will create a list of the stocks on a report. After naming the list, the first stock on the report will automatically be charted. Click the Explore Right icon to see the other stocks.
Similar to Reports, Expert Design Studio (EDS) scans can be run on individual lists.
– In EDS click the Properties icon and select the appropriate list.
– After the scan is complete, you can chart the stocks by clicking the Chart List icon.
The ability to create and use lists is a basic function of TradingExpert Pro. Although basic, this function is very powerful. It allows you to quickly scroll through charts and enables you to focus on the stocks you are most interested in.
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