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[tigeran]

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http://www.google.com.vn/url?sa=t&rc...ExAa5NFTFELDCw

[tradingpro8x]

Đây là series những bài nghiên cứu chuyên sâu về phần mềm phân tích kỹ thuật PTKT MetaStock

Two Patterns to Catch New Trends Early: The Bowtie and the First Thrust

Contributed by Dave Landry

The trend is your friend is one of the few true market adages. Critics will argue that a trend is your friend until it ends. And, admittedly, this is true. Trends do not last forever. Eventually they exhaust themselves but quite often, a new trend in the opposite direction emerges. However, established trends can often last much longer and go much further than most anticipate. Trying to buy a stock (or other market) because it is low or sell short a stock because it is high is a loser's game. The good news is that the stock will leave clues that a trend is turning and will usually have a minor correction before resuming its new trend. Looking to enter after that minor correction and only if the new trend shows signs of resuming is the goal of my transitional patterns and is illustrated below.



When you catch a new trend early, the payoff can be huge. Unfortunately, since you are fighting what could turn out to be only be a correction in a longer-term trend, you have to realize that there will be a higher failure rate than trading pullbacks in established trends. Like the pioneers, when trading transitions you are either going to get the gold or the arrows.

Let's look at two of my favorite transitional patterns, First Thrusts and Bowties.

First Thrusts

Markets in major trend transitions often begin with a bang. They make a sharp thrust in the new direction. This tends to catch participants off guard. Trapped on the wrong side of the market, they find themselves waiting for the market to reverse so they can get off the hook. Bottom pickers and top pickers who missed the top or bottom and do not want to pay up are also waiting for some sort of meaningful correction. Unfortunately for these traders, the meaningful correction may never come. Often, markets making a sharp thrust in a new direction only pull back very briefly before resuming their new trend. The old market participants will soon be forced out at adverse prices and the bottom/top pickers must pay up or risk being left behind. By waiting for the market to have a sharp thrust in the new direction, you avoid the pitfalls associated with picking tops/bottoms. By looking to enter at the first signs of a correction rather than waiting for something more substantial, there is the potential for your position to be helped along by the predicament of the aforementioned traders.

Let's look at the pattern. Referring to figure below, after making a significant new low (1), the market should have a sharp thrust in the new direction (2) and then make a lower low and a lower high; in other words a 1-bar pullback (3).* Look to enter above the high of the pullback (4).



*Rule 3(a). Occasionally markets are in such sharp reversals that they will only make a lower high (vs. lower high and lower low). These make for somewhat risker trades. With risk comes reward though. Sometimes you're able to get into a major trend early.

The best transitional patterns come off of markets that are making major new lows for longs. This helps to ensure that the most people as possible are on the wrong side of the market when the trend turns. Notice below that Berry Petroleum is at its lowest level in over a decade (1). The stock then has a sharp thrust higher (2). The stock makes a lower-low and a lower high (3). Go long (4) above the high of (3).



The great thing about transitional patterns is that they occur in all markets and in all time frames. Here's an example in the weekly Australian Dollar (AUD/USD). The currency makes an all-time high (1) and then begins to sell off (2). It then makes a higher high and a higher low (3) to complete the setup*(4). A short is triggered when the stock turns back down. The contract resumes its slide over the next few weeks.



*Note: a somewhat more aggressive entry would have been to enter after the higher low only (a)

Bowties

The First Thrust is a fairly abrupt pattern that occurs over very short periods of time. These new trends begin with a bang. Sometimes though, new trends start more gradually. Markets go through a distribution phase and then begin to accelerate in the new direction as the new trend emerges.

For this pattern, I use a 10 day simple, 20 day exponential, and 30 day exponential moving average. Although all indicators are prone to lag, I did notice that these moving averages would often come together and then spread out in the opposite direction right before a market makes a major transition. That is, they would go from proper downtrend order - the faster moving averages (shorter periods) below the slower moving averages (longer periods) - to proper uptrend order - the faster moving averages above the slower moving averages. When this happens over a short period of time, it gives the appearance of a Bowtie. This is illustrated below. Notice that the moving averages are in downtrend "proper downtrend order" 10-SMA < 20-EMA < 30-EMA but quickly flip over to uptrend proper order 10-SMA > 20-EMA > 30-EMA). Ideally, this should happen over a period of three to four days (1). After this occurs, it suggests that the market has made a major trend shift. However, it is still prone to correct. Therefore, you wait for the market to have at least a 1-bar pullback (2) and then look to enter after that minor correction (3).



Like all my transitional patterns, I prefer those that come off of major highs or lows.

Let's take a look at an example. USG Corp. (USG) makes 6-year plus lows (a). Notice that the Bowtie moving averages are in downtrend proper order (10SMA <20EMA <30EMA). Then as the stock begins to bottom, the moving averages come together and then change to uptrend proper order (10SMA>20EMA>30EMA) over a short period of time. This creates the appearance of a bowtie( 1). This makes a lower low and a lower high followed by another lower low and lower high (2). Enter when the high of (2) is taken out (3).



Although I'm not a big fan of day trading, the following Bowtie caught my eye on the 5 minute chart when asked about the ETF during a recent webcast. It actually was triggering during the live show.

The Direction Small Cap Bull Shares (TNA) make an intra-day high (a). In fact, this is actually also a multi-day high. The moving averages come together and quickly cross over to form the bowtie (1). The ETF pulls back (3). Enter as the trend begins to resume (3).



Staying on the right side of the market

Transitional patterns can often alert you to the fact that an old trend is coming to an end and a new one is emerging. In fact, they can signal the beginning of major bull or bear markets for stocks and other markets (e.g. Forex, commodities, bonds, etc). This is especially true if the market is making a longer-term high or low. If you study major market turning points - such as the stock tops in 2000/2007 and the bottoms in 2003/2009, and now the top (?) of 2011, you'll see that transitional setups occurred as the market turned on a variety of time frames. Not every transitional pattern will turn into a major top or bottom but all major tops or bottoms will have some sort of transitional pattern. Let me repeat, all major tops or bottoms will have transitional patterns. This is what makes watching for them so worthwhile.



Summary

Trying to picks tops or bottoms is a loser's game. You're much better off waiting for the market to show signs that the trend is turning and then look to enter after the first correction. The First Thrusts and Bowties are two of my favorite patterns I use to catch new trends early. The best setups occur after major highs and lows. Multi-year or even lifetime highs/lows work the best. This helps to ensure that the most traders are trapped on the wrong side of the market. Not all transitional patterns will turn into major tops or bottoms but all major tops or bottoms will have transitional patterns. Like the pioneers, when trading transitions you are either going to get the gold or the arrows. I think the chance for gold makes it all worthwhile.

For more information

For more information on trading transitions, see Dave Landry's 10 Best Patterns and Strategies (www.davelandry.com/books.htm) and his newest book "The Layman's Guide To Trading Stocks". Amazon.com: http://tinyurl.com/2vo395r

About Dave Landry:

Dave Landry has been have been actively trading the markets since the early 90's. In 1995 he founded Sentive Trading, LLC,(d/b/a www.davelandry.com)--a trading and consulting firm. He is author of Dave Landry on Swing Trading (2000), Dave Landry's 10 Best Swing Trading Patterns & Strategies (2003), and The Layman's Guide to Trading Stocks (2010). His books have been translated into Russian, Italian, French, Japanese, and Chinese. He has made several television appearances, has written articles for several publications including Technical of Stocks & Commodities, Active Trader, and Traders Journal-Singapore. He has been publishing daily web based commentary on technical trading since 1997. He has spoken at trading conferences both nationally and internationally. He holds a Bachelor of Science in Computer Science and has an MBA. He was registered Commodity Trading Advisor (CTA) from 1995 to 2009. He is a member of the American Association of Professional Technical Analysts.

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Support Tip
QuoteCenter Application Symbol Cheat Sheet

Contributed by MetaStock Support

Have you ever wanted to look up a symbol in MetaStock quickly but didn't know how to do it?

If you answered "Yes", to the previous question this article is just for you! Below you will find tips on how to locate indices, futures, mutual fund, stocks and much more! The first step is to open up MetaStock. Once you are in, go to "file" and "new chart".



After selecting the "new chart" option, the following screen will appear.



This allows you to select how you would like to search; by symbol or by name. The following information below should help you determine how to search for the information you desire. To search for:

Indices (QuoteCenter)
All countries have indices. To locate indices in MetaStock, you need to know the country code. For this example, we will use the United States index code (us). All index symbols begin with either a (us or (us&) and must be all upper case.
Examples: us&SPX (S&P 500 index)
us;NDX (Nasdaq 100 index)

Futures (QuoteCenter)
There are two types of futures symbols: specfici and continuous.
Specific contract: Each specfic contract symbol must always have a month and year code and always begin with the country code. For this example, we will use the United States (us). The symbol format is as follows:
countrycode@basesymbolyearmonth
So, the following symbol us@ES07U is for the SP Emini 2007 September contract.

Here are the month and year codes:

Month Codes
January - F
February - G
March - H
April - J
May - K
June - M
July - N
August - Q
September - U
October - V
November - X
December - Z

Year codes
2006 - 06
2007 - 07
2008 - 08
2009 - 09
2010 - 10
2011 - 11

Continuous futures symbols: us@basesumbol.1
Example: @:ES.1 - SP Emini continuous contract

Session specific symbols
Futures contracts can trade on up to three different sessions. For example there is a day, night and overnight trading session and then the composite of all three. When searching by name in the symbol database for futures symbols you will see futures with multiple listings, see examples below for cattle feeder.

Cattle Feeder Pit CME - us@FC - Day session
Cattle Feeder Globex - us@LG - Night Session
Cattle Feeder Composite - us@LCC - Both sessions

Mutual Funds (QuoteCenter)
All mutual fund symbols will contain five letters. EOD data only.

Stocks
All stocks begin with their country code followed by a (, see examples below.
US Stocks - us; (us;IBM)
Cairo Stock Exchange - eg; (eg;AACO)
Canadian Stocks - ca; (ca;CEE)

FOREX (QuoteCenter)
All forex symbols are upper case, see examples below.
$$EURJPY - EURO\YEN
$$GBPUSD - Pound\Dollar
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MetaStock Power User Tip
Working with Favorites Chart Setup in MetaStock

Contributed by Breakaway Training Solutions
In this second video on using the Favorites folder in MetaStock, you'll learn how to control how the charts will appear, how to control the appearance of your charts when scrolling, manage the folder lists and more. Have a look!

http://www.learnmetastock.com/FreeSt...hartSetup.html

For more MetaStock training, make sure to visit us at www.learnmetastock.com or email us at admin@learnmetastock.com.

About Kevin Nelson

Kevin Nelson is the founder of Breakaway Training Solutions, Inc. He has spent the last 17 years becoming an expert on MetaStock software and a serious student of technical while working for MetaStock. Prior to joining MetaStock in 1993, Kevin was a stockbroker for a well-known NYSE firm. In his role as Sales Manager at MetaStock, Kevin interacted extensively with MetaStock customers via phone, webinars, and public appearances. His experiences while working at MetaStock have enabled him to gain a keen understanding of the needs of technical analysts worldwide. While with MetaStock, Mr. Nelson was a featured presenter for four years. During this time, he traveled the U.S. introducing the MetaStock program to thousands of people and teaching them how to use its many features. His easy-to-understand approach is considered by many to be the best in the industry.

[1nightdream]

Đây là series những bài nghiên cứu chuyên sâu về phần mềm phân tích kỹ thuật MetaStock

RSI with EMA Strategy
Contributed by Robert W. Colby, CMT

In my 39 years of actual technical research experience, I have tested many of the analytical tools available. (Okay, so in my early years, I was testing different kinds of graph paper, rulers, and pencils). More than 22 years ago, I reviewed more than a dozen technical software programs for PC Magazine, Special Issue, April 15, 1986, Volume 5, Number 7. MetaStock was new then, practically a startup, but it stood out above the rest, and so I selected it as “Editors’ Choice”. 17 years later, I selected MetaStock software again for exclusive use researching for my 820-page book, The Encyclopedia of Technical Market Indicators, Second Edition, McGraw-Hill Publishing, 2003. I selected MetaStock for its wide-range of powerful capabilities, its flexibility, its ease of use, and its affordability.

While doing research for my book, I ran hundreds of optimizations, back tests, and forward tests. Since then, I since have run thousands more. It is my impression that these very powerful tools are widely misunderstood and underutilized by the great majority of investors and traders. In 2005, I gave an interview to TradingMarkets.com where I demonstrated an optimized version of a robust and very popular technical indicator, RSI 3 (buy below 30, sell above 70), combined with a long-term EMA filter of 330 days, for a simple mechanical trading system that offers moderately good performance with no subjective judgment. RSI alone is a relatively weak performer, but the addition of an EMA to filter the trades is the key to greater consistency of results. Which EMA? Optimize over past actual history to find out. The full MetaStock code is shown below. The chart shows the forward tested, real-time simulated performance of this same system applied to the S&P 500 continuous futures contract since January 3, 2007. Since the Buy Long signal on January 3, 2007, this RSI/EMA system is up 8.60%, significantly outperforming Buy & Hold (which is down 12.00%) by 2060 basis points. Of 24 signals, 66.67% were profitable, with 16 winners and 8 losers. See chart for the Cumulative Equity graphed against the raw closing price data.

The purpose of this demonstration is not to recommend any specific trading system. RSI, though very popular, is not the best indicator, and it certainly is possible to develop much better trading systems than the one shown in this example. My purpose is to show that by using powerful analytical software, such as MetaStock, combining common known indicators, optimizing parameters, back testing, and forward testing, it is possible to develop a trading system that can outperform going forward. More power to you!

RSI/EMA System Code

Enter long:
(RSI(C,opt1)<50-opt2
AND
C>Ref(Mov(C,opt3,E),-1))
AND Year()>2006
Close long:
(RSI(C,opt1)>50+opt2
OR
C<Ref(Mov(C,opt3,E),-1))
AND Year()>2006
Enter short:
(RSI(C,opt1)>50+opt2
AND
C<Ref(Mov(C,opt3,E),-1))
AND Year()>2006
Close short:
(RSI(C,opt1)<50-opt2
OR
C>Ref(Mov(C,opt3,E),-1))
AND Year()>2006
OPT1
Range: From 3 to 3 by 1
Current value: 3
OPT2
Range: From 20 to 20 by 1
Current value: 20
OPT3
Range: From 330 to 330 by 1
Current value: 330
Initial equity - 1424.8
Positions - Long and short
Entry trade price - Close
Entry trade delay - 0
Exit trade price - Close
Exit trade delay - 0
Entry commission - 0%
Exit commission - 0%
Interest rate - 0%
Margin req. - 100%

How can I run an Exploration to find Relative Strength Comparative values?

To construct a Comparative Relative Strength Exploration in MetaStock, please use the following steps below for your version of MetaStock:



MetaStock 8 – 10.1

With the newer versions of MetaStock this can now be done with the Security Data Function.

To construct a Comparative Relative Strength Exploration in MetaStock for Windows version 8.01 perform the following steps (This example will reference online data from Reuters DataLink, specifically the S&P 500):
Open the Tools menu
Select the Explorer
Click New
Name it Relative Strength Comparative
Select the Column A tab:
Enter the following formula: C/Security(“ONLINE:.SPX”,C)
Click OK
Run the Exploration
The results are displayed in the exploration report. They can be ranked by selecting the column header.


MetaStock 6.52 – 7.X


In versions of MetaStock for Windows prior to 8.01, this had to be done using the “P” variable and required you to open the chart of the index to be compared against.

To construct a Comparative Relative Strength Exploration in MetaStock for Windows, prior to version 8.01, perform the following steps:
Open the chart for the desired index.
Click to select the price plot (This will place small boxes on the prices to designate that the price has been selected)
Create a custom exploration for the Relative Strength Comparative
Open the Tools menu
Select the Explorer
Click New
Name it Relative Strength Comparative
Select the Column A tab
Enter the following formula; C/P (Note: The P variable references the selected indicator in the active chart which would be the close)
Click OK
Run the Exploration
The results are displayed in the exploration report. They can be ranked by selecting the column header.

The Rahul Mohindar Oscillator

What sets MetaStock apart? Well, succinctly stated from the unbiased perspective of the MetaStock sales team; “a lot”. MetaStock feature after MetaStock feature has become the industry standard. Data, charting, back testing, speed and power of , the Explorer, the Expert Advisor, user defined analytics, 150 indicators and line studies, performance systems, unsurpassed support that is free for life… the list goes on and on. One of the most popular, if not revolutionary, features has been the legendary Rahul Mohindar Oscillator (RMO).

The RMO was developed by the famed trader and CNN and CNBC India analyst Rahul Mohindar. It took Asia by storm and now, as released by MetaStock, has become a worldwide phenomenon.

The RMO uses five indicators to detect the correct overall trends in financial markets. It uses multiple criteria to identify a trading opportunity – and provides rules for getting out of a trade; working across any timeframe for a wide variety of securities including stocks, commodities and FOREX.

No system is “one size fits all” or can claim the merits of a crystal ball but the RMO has been successful for legions of users giving them high levels of confidence in their trades by getting them in with the primary trend while keeping a close eye on the swing in the market and market sentiment.

As one customer told me, “The RMO system is truly a winner…the RMO Buy/Sell signals have been fantastic.”

What sets MetaStock apart? The RMO has been a very powerful tool for many, many users and is exclusive to MetaStock. If you are looking for a little more of a trading edge; check out the RMO in MetaStock 10.

Call (800) 587-8014 if you have questions about how MetaStock will improve your trading odds using the RMO or any of our 26 trading systems and unparalleled tools.

Contributed by Greg Allred

[tradingpro8x]

Đây là series những bài nghiên cứu chuyên sâu về phần mềm phân tích kỹ thuật PTKT MetaStock

January - February 2012 MetaStock Monitor

Mysteries of Trader Tax Status

Contributed by Jim Crimmins

Just because you call yourself a securities trader doesn’t make you one in the eyes of the Internal Revenue Service.

In fact, Uncle Sam is predisposed to consider you merely a hyperactive investor—and thus deny you a more favorable tax status—unless you meet a number of criteria that are frustratingly open to interpretation.

You read that right: the tax code contains no actual definition of trader tax status.

Instead, the IRS has issued guidelines the tax courts have expanded upon with case law, most of which denied tax appeals by traders.

What we’re left with is a blurred image, like a photograph of a trader taken from a speeding car.

According to the IRS, to qualify as a trader:

• You must seek to profit from daily market movements in the prices of securities and not from dividends, interest or capital appreciation;
• Your activity must be substantial, and
• You must carry on the activity with continuity and regularity.

To help determine if you meet these three tests, the IRS considers these qualifiers:

• Typical holding periods for securities bought and sold;
• Frequency and dollar amount of trades during the year;
• Extent to which you pursue trading to produce income for a livelihood, and
• Amount of time you devote to the activity.

Swoosh, right? What is “substantial” activity? “Continuity and regularity?” And what’s an acceptable holding period? Is a week too long? A month?

We know who investors are: They’re our hardworking neighbors who buy securities and hold them for such long-term goals as a college fund or retirement.

Traders, on the other hand, buy and sell securities solely to take advantage of short-term market changes. Your profits come from price swings, not dividends and interests. Since your holding period is brief, often a day at most—hence the term “day trader”—there’s no need to perform due diligence on the companies you trade.

Who cares how the IRS classifies you? You do!

Investors are subject to the 2% threshold for deductible investment expenses — and hence cannot write off most of their expenses—and are limited to a $3,000 capital loss deduction.

But as a trader, you write off 100% of your expenses, and if you elect the mark-to-market accounting option, you can offset all of your losses against your earned income.

Three Steps to Claim and Protect Your Trader Tax Status

Step 1: Prove beyond doubt you are a bona fide trader — that is, you “seek to profit from daily market movements.”

The best way to accomplish this is by showing a pattern of high trading volume and short holding periods. Keep your personal investments well separated from your trading business. The IRS is looking for “earnest intent;” that is, you work diligently to manage transactions, conduct strategy sessions and make frequent trades.

Step 2: Clear the “substantial activity” hurdle.

The hallmarks the feds are looking for here are “frequent, regular and continuous” trading. That means volume. One court case ruled that 330 trades a year was sufficient to warrant trader status. The feds need to know that you approach this as a business, not a hobby. Fail to convince them of that and you’re back in investor-land.

Step 3: Trade with “continuity and regularity.”

If you want trader tax treatment, it only stands to reason that you must actually be in — and remain in — the business of trading.

Here’s where the IRS is looking for a healthy flow of trades, significant dollar amounts, short holding periods — all the signs that you are at least attempting to make a living as a trader.

If you take the summer off or show other gaps in your trading, the IRS will be disinclined to grant you trader status. If you’re a newbie and flame out after nine months, while it seems unfair, the IRS has made it clear: no trader status for you.

Once you obtain trader tax status, you’re not entirely in the clear. Owing to the capricious nature of appellate rulings and the ever - evolving tax code, there are no guarantees the trader status you enjoy today might not be gone tomorrow.

One good way to secure your trader status is to trade under the umbrella of a business. That’s not only where the most lucrative tax advantages reside, but a legal entity such as a general partnership, Limited Liability Company or C corporation sends a strong message to the IRS that yours is an earnest and legitimate business enterprise worthy of trader tax status.

My recommendation is for you to maintain a day timer devoted completely to tracking the amount of time you spend each day on your trading activities. If you are audited by the IRS chances are it will be two or three years after you have filed your taxes. The day timer will service as proof of how many hours you spend each week on your trading activities.

About Jim Crimmins

Jim has become a nationally known speaker on tax strategies, entity structuring, and lifestyle change. He delivers over 30 talks a year throughout America as well as speaking in several chat rooms each month. You can learn more at TradersAccounting.com.

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Support Tip
Why are my candles colored incorrectly?

Contributed by MetaStock Support

The up and down color options in the price properties windows is not based on the same open/close relationship that governs candlesticks. Candlesticks are solid (black) if the open is more than the close and hollow (white) if the open is less than the close. The price bars are colored by the properties window as up if the current close is more than the prior close and down if the current close is less than the prior close. If you want to have candles colored differently, you will need to use an expert with different highlights setup for white and black candles.

You can do this with an Expert Advisor as follows:

1) Start MetaStock.

2) Display a candlestick chart.

3) Click "Tools" and then "Expert Advisor".



4)Click New.



5) Click the Name Tab. Type "Candlestick Color Change" into the Name Field.



6) Click the Highlights Tab. Click New.



7) Type "UP CANDLE" into the name field. Set the color to green. Type "C>O" into the condition field and click OK.



8) Click New again. Type "DOWN CANDLE" into the name field. Set the color to red. Type "C<O" into the condition field and click OK.



9) Click OK and close the Expert Editor menu.



10) Now, you can attach this expert advisor to any Candlestick Chart in MetaStock. Simply right click anywhere on the chart and select Expert Advisor, then Attach.



11) Select the Candlestick Color Change Expert and click OK.



12) Your candlestick chart should display candlesticks in red and green.



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MetaStock Power User Tip
Working with the Commentary in the Expert Advisor

Contributed by Breakaway Training Solutions
Using the Commentary in the Expert Advisor can be a great educational tool. To help you get the most out of it, watch this short 3 minute video for a couple of helpful tips.

http://www.learnmetastock.com/FreeSt...rkingWith.html

For more MetaStock training, make sure to visit us at www.learnmetastock.com or email us at admin@learnmetastock.com.

About Kevin Nelson

Kevin Nelson is the founder of Breakaway Training Solutions, Inc. He has spent the last 17 years becoming an expert on MetaStock software and a serious student of technical while working for MetaStock. Prior to joining MetaStock in 1993, Kevin was a stockbroker for a well-known NYSE firm. In his role as Sales Manager at MetaStock, Kevin interacted extensively with MetaStock customers via phone, webinars, and public appearances. His experiences while working at MetaStock have enabled him to gain a keen understanding of the needs of technical analysts worldwide. While with MetaStock, Mr. Nelson was a featured presenter for four years. During this time, he traveled the U.S. introducing the MetaStock program to thousands of people and teaching them how to use its many features. His easy-to-understand approach is considered by many to be the best in the industry.

[1nightdream]

Đây là series những bài nghiên cứu chuyên sâu về phần mềm phân tích kỹ thuật MetaStock

Combining Relative Strength and Other Technical Indicators

Contributed by Michael Carr

Technical analysts have spent decades creating formulas designed to give them a trading edge. Many are based upon the principle that changes in momentum will occur before changes in price trend, in other words technicians are saying that Relative Strength (RS) in a stock’s past performance is a good indicator of future price appreciation. Examples of technical indicators include stochastics, the moving average convergence-divergence indicator (MACD), and the Relative Strength Index (RSI).

RSI was introduced to the world by Welles Wilder in 1978. It is among the most popular momentum oscillators used by technicians, and is a very useful component in many trading strategies. The RSI compares the strength of a stock's recent upside movement to the magnitude of its recent losses and provides that information as a single value that ranges from 0 to 100. However, it is not a measure of comparative RS because it does not take into account the performance of other stocks or the market itself. The theory behind the RSI is that it will identify those times when a stock has moved too far, too fast and is due to exhibit mean reverting behavior causing a reversal of the current trend. It is intended to spot tops and bottoms rather than find stocks that are starting to move higher for an extended period of time, as RS seeks to do.

MACD measures the difference between a short-term and long-term moving average of closing prices. The longer moving average is subtracted from the shorter moving average. The theory behind this indicator is that this calculation of a stock’s momentum will show when prices are changing directions. A positive value of MACD indicates that the short-term MA is trading above the long-term MA. A negative MACD indicates the opposite. If MACD is positive and rising, then the gap between the two MAs is widening, which means the rate of change of the short-term MA is higher than the rate of change for the long-term MA. This should lead to higher prices for the stock. If MACD is negative and declining further, then downward momentum is accelerating, and lower prices are to be expected.

The MACD indicator has been adapted as a measure of RS by Christopher Hendrix, CMT.ii Hendrix substitutes a RS calculation for price into the traditional MACD formula and creates a Momentum of Comparative Strength (MoCS) formula:

MoCS = (12-period EMA of (Stock/S&P 500)) – (26-period EMA (Stock/S&P 500))

where EMA represents an exponential moving average

Stock represents the closing price of the stock being evaluated

S&P 500 represents the close of the S&P 500 Index

An exponential moving average (EMA) is used by some market technicians to reduce the time lag introduced with simple moving averages. When using a moving average to smooth the data and help identify the trend, some delay is introduced into the price series. EMA's reduce the lag by overweighting the importance of more recent prices, with the amount of overweighting determined by the specified period of the EMA. Shorter period EMAs overweight the most recent price more than longer period EMAs. In the MoCS formula, the most recent close accounts for 15 percent of the value of the 12-period EMA, and the 26-period EMA derives about 7.5 percent of its value from the most current price. Because it puts more weight on recent prices, an EMA will react quicker to recent price changes than a simple moving average which equally weights all data points.

Trading signals are generated when a 9-period EMA of the MoCS crosses above or below the current value of the MoCS. An example is shown in Figure 1. Buys are signified when the solid line is above the dotted line, sell signals are the reverse. The advantage of MoCS is that it compares the movement of a stock to the overall market but allows the investor to apply a RS strategy to a single security, rather than requiring that an investment universe be rank ordered and sorted into percentiles. The chart shows there are clear buy and sell signals based only upon the behavior of this stock compared to the market.

Figure 1: Modifying the formula of the well-known MACD technical indicator to measure RS allows an investor to see clear buy and sell signals for an individual security. The Momentum of Comparative Strength (MoCS) indicator is shown in the bottom panel of this figure. In this case, a buy signal occurs when the solid line crosses above the dashed line, and a sell occurs when the solid line falls below the dashed line.

As can be seen in Figure 1, MoCS offers timely signals. Its sell signals are usually closer to the top than the signals given by other indicators. Traditional oscillators give a large number of false signals. Using weekly settings for MoCS provides very few signals, and even fewer losing trades.

This technique can be applied to any technical indicator by adapting the formula to use a RS ratio instead of the stock’s closing price. It is a highly adaptable strategy which can employ RSI, or stochastics, for example, instead of using MACD. Alternatively, investors can change the time periods for MACD to generate a greater or lesser number of signals.


Wilder, J. Welles, New Concepts in Technical Trading Systems, Trend Research, 1978.

ii ‘It’s Like Spreading Peanut Butter & Jelly,’ Christopher P. Hendrix, CMT, SFO Magazine, November 2006.

Michael Carr has been trading for more than twenty years and is a Chartered Market Technician (CMT). Carr began researching relative strength trading more than a decade ago and after retiring from the U.S. Air Force as a Lieutenant Colonel, he became a full-time relative strength investor. He is the editor of the Market Technicians Association (MTA) monthly newsletter, Technically Speaking, and associate editor of the MTA's scholarly publication, Journal of Technical . Carr also serves on the board of directors of the MTA Educational Foundation. His work has been published in SFO, Futures, TRADERS , and Working Money. He is also the author of Smarter Investing in Any Economy: The Definitive Guide to Relative Strength Investing (www.w-apublishing.com), from which this article is extracted.

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Support Tip
How can I backup my formulas? (Indicators, Experts, Explorations & System Tests)

Contributed by Equis Support

All of your formulas can be quickly backed up by the following procedure:

Open MetaStock
Click Tools | Indicator Builder
Click Organizer
Click Export
For each of the formula based tools, select the items to be backed up.
Specify the location you wish to export the files to. You can password protect them here, but we advise you not to unless you are distributing them to other people you do not want to have access to the formula code.
Click OK
This will back up the selected formula files in the destination location you specify. Although safe guards are put into place to in MetaStock to mitigate loss of data, backing up your work provides you with additional peace of mind; therefore we recommend that you regularly back up your work.

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MetaStock Features
MetaStock Scanning

Contributed by David Derricott

One of the most commonly used features in MetaStock is the ability to scan. This is a very powerful and useful part of the program. It’s a great way to find securities you want to trade, will help you decide when to trade, and if you should stay out of the market. A very simple and easy scan you can create using MetaStock is scanning for buy and sell signals when a moving average crosses above or below the price bar over the last 20 days.

Another great part of the scanner is the ability to make the scans as simple or as complex as you would like. MetaStock has about 40-50 pre-programmed scans included in the software. You can use historical data to back test these scans to see how they perform over any given period of time. Once you have determined which scans work best for you, you can apply these to your trading portfolio. MetaStock provides data for 30 years on daily charts and one year on intraday charts. The scanning capabilities within MetaStock work well for both end of day traders and real time traders. It doesn’t matter if you trade stocks, options, futures, or forex the program will work great with all markets.

If you would like assistance with setting these scans you can contact our support team. We offer world class support and all our representatives are very knowledgeable and will spend as much time as needed to assist you with your questions and problems. In the past year MetaStock support representatives have answered 85% of their calls in two minutes or less. You can contact the support department via phone, email, or online using our support chat feature.

For more information regarding the scanning feature found within MetaStock, please contact David Derricott directly at 800.587.8012 or via email at david.derricott@thomsonreuters.com.

[tradingpro8x]

Đây là series những bài nghiên cứu chuyên sâu về phần mềm phân tích kỹ thuật PTKT MetaStock

March - April 2012 MetaStock Monitor

Creating and Compounding Wealth via Trend Following

Contributed by Andrew Abraham

I started trading (in particular trend following) in 1994. I was overwhelmed with all the books and courses offering so called “magical success” and millionaire traders who really weren’t. I wanted to know who was succeeding and what they were doing. My broker told me the most successful client of his company was a dentist. He was not a Harvard graduate nor a partner in Morgan Stanley. Yes, he was a dentist! I was told he invested $200,000 in a robust trend following concept in 1979. He let that money compound over time. He currently has an account of $5,000,000 plus he has made over $12,000,000 from trading the markets over the years.

The dentist was the exception. Most clients of the brokerage did not make money. Most clients actually lost money. The difference between the majority of the clients that lost money and the dentist was he had a trading plan with risk management and he followed it with patience and discipline. Even with his plan he always had numerous loses, went through drawdowns and even long periods of time when he did not make money. However, he did not give up or start to look for a new methodology.

He did not have any magical holy grail formula. He is a trend follower who had a simple robust methodology and, more importantly, knew how to properly condition his thought processes to get through all the tough drawdowns and long periods when he was not making money. What encouraged me over the years was if the dentist can do this, so can I. Another example to me was Richard Donchian who traded his trend following breakout strategy into his 90’s. If the dentist can do this and Richard Donchian can do this, so can you!

There is nothing perfect in this world. There are no perfect systems or even traders. Every system and methodology has drawdowns and losses. Traders need to accept losses as a natural process of trading. Those that cannot accept losses jump from one system or one indicator to the next seeking the elusive holy grail. Traders need to realize success in trading is a process and takes time. They need to have patience with themselves and apply themselves to a methodology fitting their personality. Doctors do not become proficient overnight. Neither do lawyers.

I want to share with you one of the methodologies I have traded over the last 18 years. Trend following can be simple, but don’t make the mistake of thinking it is easy! We seem to convolute it via our fear and greed. There are countless websites and late night infomercials trying to tell you differently. They make you think you just have to read a few pages or attend an online class, and then, magically you’ll become a successful trader.

Don’t be misled!

Trend following is not retirement in a box! You need to do your work!

One of my methodologies is very simple and robust. It works on all platforms, time frames and markets. It is one of two general approaches in order to attempt to catch and ride trends I utilize. They both attempt to put on low risk trades in the direction of a trend and have various similarities.

Trend Break Out and Trend Retracement

For the sake of this article I am going to focus on one issue: Trend Retracement. The concept of trend retracement is that we are already witnessing a trend and we are looking for a low risk method in order to participate and enter in the direction of the trend. I believe in keeping things very simple as when we are trading we know what we must do and we have a well thought out plan in advance. Do not confuse the word simple with unsophisticated or not possible to generate money. This methodology is used by many successful traders.

This Trend Retracement is a four bar setup:

1. Identify a strong trend either by a high RSI or an ADX which is above 30.
2. We want to see a retracement against that trend where we have 3 lower lows.
3. On Bar 4 we will simply buy a breakout of the Bar 3 high.
4. If we do not have a breakout buy on Bar 3 – Buy the breakout of Bar 4 as demonstrated below.



As you can see in this hypothetical example one would have bought the breakout of Bar 4.

There is more to just the Trend Retracement Entry. One needs to think of how many shares to put on. What I suggest is looking at the range from the high to the low of the 4th bar to determine how many shares we can put on. The high of the 4th bar was $610.01 and the low was $607.68. The difference is $2.33. What one needs to do is look at their account size and how much of that account size are they willing to risk on anyone trade. For example if I was trading a $30,000 account and wanted to risk 1% on any trade I could risk and potentially lose $300 on a trade. If I wanted to risk 2% on a trade I could risk and potentially lose $600. The more risk per trade the more potential profit as well as the more potential loss. Let’s examine what would have transpired in this hypothetical example with Google running to its high of $619.77. (Clearly we would not have gotten out at the top, but we can use it as a reference to just highlight the difference in position sizing and position percentage risk).

Entry $610.01 to $619.77; difference is $9.76.

1. Risking 1% of $30,000 was $300 risk allowed us to purchase 128 shares X $9.76 = $1249.28.
2. Risking 2% of $30,000 was $600 risk allowed us to purchase 257 shares x $9.76 = $2508.32.

As you can clearly see there is more entailed than just using a specific setup. One needs to think about risk per trade.

Please also realize any trade is 50/50. After this nice trade there could have been another trade as there were 4 down bars with a breakout that did not work as this trade did.

There are only four potential out comes when we trade.

1. Big losses - however we had an immediate stop placed to prevent.
2. Small losses - these will happen all the time.
3. Small profits - these also will happen all the time and cancel out the small losses.
4. Big profits - These are rare and make up for all the small losses are small profits do not offset.

Too many times system sellers & promoters just give you a setup. It is paramount to know where to exit either with a loss or a profit. Too much emphasis is placed on setups, patterns, and entries. In order for trading success one needs a complete trading plan that states when to enter, how much to buy/sell, when to exit with a profit and loss. On a slightly more deep level one also needs to know what to trade which I detail in my courses.

I like to keep my exit rules simple. An easy exit rule in where you lock in profits when trades work and exit you when trades do not work is a trailing 3 bar low as an exit when you buy and a 3 bar high when you go short.



Trend followers do not worry what the markets are going to do tomorrow. They have an exact plan with all contingencies thought out ahead of time. Trend followers are like surfers and look to ride the waves.

Trend followers have an exact plan. This plan is based on objective and automated set of rules.

Trend followers follow their plan without second guessing it. A trading plan makes life easier by eliminating emotions from trading decisions. A trading plan forces discipline. If you do not follow the trading plan you will not succeed. Do not even start if you cannot follow the plan. The above examples are not complicated yet they are an effective way of taking money out of the markets.

Trend following entails having a defined plan and strategy to put money into trade to achieve one and only goal: PROFIT!

About Andrew Abraham

Andrew Abraham has been investing in commodities and managed futures since 1994. He adheres to the philosophy of trend following. Trend following stresses a disciplined approach to commodity/futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets Andrew's strategy apart from other traders is that he is not only concerned about the return on investment but also with how much risk should be tolerated to achieve goals. For more information, contact Andrew via his website (TrendfollowingMentor.com), email, or Skype: Abraham Investment Management.

***Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts, commodity options or forex can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT.

IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. ALL TRADING DECISIONS ARE SOLELY YOUR RESPONSIBILITY.

THE MATERIAL IS INTENDED FOR EDUCATIONAL PURPOSES ONLY.


Support Tip
How do I add new Data on Demand symbol to MetaStock?

Contributed by MetaStock Support

Are you trading a security, stock, commodity, etc. that is not included with the thousands of symbols that come with MetaStock's data feed? This happens from time to time but it is very easy to add the symbol to your MetaStock data feed. For Data on Demand symbols, remember to enter ALL symbols in upper case. Here's how:

1) Start MetaStock.

2) Click "File", then "Open".



3)Click "Tools", then "New Symbol".



4) Type the name of the symbol into the name field. Type the desired symbol into the symbol field. Select the proper exchange; if you are not sure this option can be left blank. For this example, we will add the USD - Gold Spot Price. You can add the type field and the start and end times of when the security trades, but it is not necessary. If you do, make sure the hours listed are in your time zone. The Type field tells you what folder structure in the symbol database the security will be added. We recommend leaving this as "Other". Once you have filled out all of the applicable fields, click "OK" to continue.



5) After clicking "OK", you can search for the symbol you created.



6) Here is a screenshot of the security we just added to our data base.



Helpful Hint: If you are adding a futures symbol that includes the specific month and year code for a specific contract make sure to select the TYPE as "OTHER".
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MetaStock Power User Tip
Want to find stocks that are moving?

Contributed by Breakaway Training Solutions
In this short four minute video, you’ll learn how to use a scan that you already have to quickly find those stocks on the move. Take a look!

http://www.learnmetastock.com/FreeSt...manceScan.html

For more MetaStock training, make sure to visit us at www.learnmetastock.com or email us at admin@learnmetastock.com.

About Kevin Nelson

Kevin Nelson is the founder of Breakaway Training Solutions, Inc. He has spent the last 17 years becoming an expert on MetaStock software and a serious student of technical while working for MetaStock. Prior to joining MetaStock in 1993, Kevin was a stockbroker for a well-known NYSE firm. In his role as Sales Manager at MetaStock, Kevin interacted extensively with MetaStock customers via phone, webinars, and public appearances. His experiences while working at MetaStock have enabled him to gain a keen understanding of the needs of technical analysts worldwide. While with MetaStock, Mr. Nelson was a featured presenter for four years. During this time, he traveled the U.S. introducing the MetaStock program to thousands of people and teaching them how to use its many features. His easy-to-understand approach is considered by many to be the best in the industry.

[tradingpro8x]

Đây là series những bài nghiên cứu chuyên sâu về phần mềm PTKT phân tích kỹ thuật MetaStock

Bollinger Band Basics

Contributed by John Bollinger

Bollinger Bands are available on MetaStock and most charting software. They have become popular primarily because they answer a question every investor needs to know: Are prices high or low?

What are Bollinger Bands? They are curves drawn in and around the price structure on a chart providing a relative definition of high and low. To wit: Prices near the upper band are high, prices near the lower band are low.

The base of the bands is a moving average that is descriptive of the intermediate-term trend. This average is known as the middle band and its default length is 20 periods. The width of the bands is determined by a measure of volatility called standard deviation. The data for the volatility calculation is the same data that was used for the moving average. The upper and lower bands are drawn at a default distance of two standard deviations from the average.

These are the standard Bollinger Band formulas

Upper band = Middle band + 2 standard deviations
Middle band = 20-period moving average
Lower band = Middle band - 2 standard deviations

Here is an example of Bollinger Bands applied to a chart:



To teach you how to use Bollinger Bands effectively would take a book, however the following rules serve as a good beginning point.

15 Basic Rules for Using Bollinger Bands

1. Bollinger Bands provide a relative definition of high and low.
2. That relative definition can be used to compare price action and indicator action to arrive at rigorous buy and sell decisions.

3. Appropriate indicators can be derived from momentum, volume, sentiment, open interest, inter-market data, etc.

4. Volatility and trend already have been deployed in the construction of Bollinger Bands, so their use for confirmation of price action is not recommended.

5. The indicators used for confirmation should not be directly related to one another. Two indicators from the same category do not increase confirmation. Avoid colinearity.

6. Bollinger Bands can be used to clarify pure price patterns such as M-type tops and W-type bottoms, momentum shifts, etc.

7. Price can, and does, walk up the upper Bollinger Band and down the lower Bollinger Band.

8. Closes outside the Bollinger Bands can be continuation signals, not reversal signals--as is demonstrated by the use of Bollinger Bands in some very successful volatility-breakout systems.

9. The default parameters of 20 periods for the moving average and standard deviation calculations, and two standard deviations for the bandwidth are just that, defaults. The actual parameters needed for any given market/task may be different.

10. The average deployed should not be the best one for crossover signals. Rather, it should be descriptive of the intermediate-term trend.

11. If the average is lengthened the number of standard deviations needs to be increased simultaneously; from 2 at 20 periods, to 2.1 at 50 periods. Likewise, if the average is shortened the number of standard deviations should be reduced; from 2 at 20 periods, to 1.9 at 10 periods.

12. Bollinger Bands are based upon a simple moving average. This is because a simple moving average is used in the standard deviation calculation and we wish to be logically consistent.

13. Be careful about making statistical assumptions based on the use of the standard deviation calculation in the construction of the bands. The sample size in most deployments of Bollinger Bands is too small for statistical significance and the distributions involved are rarely normal.

14. Indicators can be normalized with %b, eliminating fixed thresholds in the process.

15. Finally, tags of the bands are just that, tags not signals. A tag of the upper Bollinger Band is NOT in-and-of-itself a sell signal. A tag of the lower Bollinger Band is NOT in-and-of-itself a buy signal.

These rules outline the basic guidelines for using Bollinger Bands. For a more comprehensive understanding of the bands, I suggest that you read “Bollinger On Bollinger Bands”. The book starts with the basics, builds to the complex and teaches the technical process including which indicators to use and how to read charts.
The Bollinger Band Tool Kit for MetaStock provides easy to use implementations of all the trading systems and indicators from the book.

John Bollinger, CFA, CMT is probably best known for his Bollinger Bands, which have been widely accepted and integrated into most of the analytical software currently in use. He is the president of Bollinger Capital Management, a money management firm, and publishes a monthly newsletter, The Capital Growth Letter. He has eight financial websites: www.BollingerBands.com, www.BollingerOnBollingerBands.com, www.EquityTrader.com, www.FundsTrader.com, www.GroupPower.com, www.MarketTechnician.com, www.PatternPower.com and now a forex site, www.BBForex.com.

Support Tip
How can I find and delete local securities that are no longer trading?

Contributed by Equis Support

A good technical trader regularly cleans up the symbol lists they use for trading. Creating an exploration to identify securities that are no longer trading takes just a moment and saves you time in the future. The following method identifies securities that are no longer trading and provides a way to easily remove them from your lists.


Create a new exploration with the following formula:

Col A name: month, Col A formula: Month()
Col B name: day, Col B formula: DayOfMonth()
Col C name: year, Col C formula: Year()
Filter ( (Year() < 2009) OR (Month() < 2) )

Run the exploration. The results will be the securities that are no longer trading. Select all of the results and delete them.

Below is a step by step process of how to create this exploration:

1. Open MetaStock

2. Open the Tools menu

3. Select The Explorer

4. Click New

5. Name the new exploration (we suggest "no longer trading")

6. In Column A, type in the following:
- name: month

- formula: Month()

7. In Column B, type in the following:
- name: day

- formula: DayOfMonth()

8. In Column C, type in the following:
- name: year

- formula: Year()

9. In the filter column, type in the following
- ( (Year() < 2009) OR (Month() < 2) )

- Note: you'll want to change the '2009' and '2' to the current year and month before you run this exploration.

10. Click OK

11. Click Explore

12. Add your data folders to the Select Securities dialog

13. Click OK

14. Click Reports when complete and select the Results tab

15. Select the first security, hold down the Shift key and click on the last security

16. Right click on the selected securities

17. Select delete securities

MetaStock Features
The RMO ATM

Contributed by Devin Ekberg

With the recent highly turbulent financial markets, it is extremely important to consider volatility and volume as part of a trader’s technical . Volatility is defined as the relative rate at which the price of a security moves up or down, and is calculated using a statistical method of standard deviation. Volatility can be a trader’s best friend or worst enemy depending on how his/her accounts for it.

Most traders expect to make money quickly and easily; knowing when markets are dormant, active, or hyperactive can mean the difference between a fast moving profit and a slow churning loss. The RMO ATM add-on for MetaStock contains many templates and strategies for measuring volatility, including a set of indicators called “Zone Detector” and “Zone Fill” (See Figure 1 below).



The Zone Detector (dark green line) ranges from 0-1 indicating a period of sufficient activity (1) or insufficient activity (0). A value of one indicates enough activity is present to move the price action in either direction quickly and efficiently. When the value is zero, a trader is more likely to experience a sideways or choppy movement in price action.

The Zone Fill (light green histogram) is a secondary measure suggesting the activity is not only favorable for a trade, but also considered “hyperactive” and a trader can feel more comfortable with a larger position or more aggressive profit target.

These two indicators can be used along with the other strategies in the RMO ATM add-on as a filter for executing only the trades with the highest probability for success. Imagine a mechanism keeping one’s money out of the capital-draining choppy markets, and only in efficiently trending markets.

The RMO ATM was created by Rahul Mohindar, who is best known for his RMO Trade Model template in MetaStock 10. I have many clients who have given superb feedback in these strategies even in the most unpredictable financial markets of our lifetimes. If you have any questions about this product or others, you may contact me anytime for more detailed information. Until then, I hope your trading is successful.

[tradingpro8x]

Đây là series những bài nghiên cứu chuyên sâu về phần mềm phân tích kỹ thuật PTKT MetaStock

2012 May-June MetaStock Monitor

Mysteries of Trader Tax Status

Contributed by Jim Crimmins

Just because you call yourself a securities trader doesn't make you one in the eyes of the Internal Revenue Service.

In fact, Uncle Sam is predisposed to consider you merely a hyperactive investor - and thus deny you more favorable tax status - unless you meet a number of criteria that are frustratingly open to interpretation.

You read that right: the tax code contains no actual definition of trader tax status.

Instead, the IRS has issued guidelines that the tax courts have expanded upon with case law, most of which denied tax appeals by traders.

What we're left with is a blurred image, like a photograph of a trader taken from a speeding car.

According to the IRS, to qualify as a trader:

You must seek to profit from daily market movements in the prices of securities and not from dividends, interest, or capital appreciation;
Your activity must be substantial, and
You must carry on the activity with continuity and regularity.
To help determine if you meet these three tests, the IRS considers these qualifiers:

Typical holding periods for securities bought and sold;
Frequency and dollar amount of trades during the year;
Extent to which you pursue trading to produce income for a livelihood, and
Amount of time you devote to the activity.
Swoosh, right? What is "substantial" activity? "Continuity and regularity?" And what's an acceptable holding period? Is a week too long? A month?

We know who investors are: They're our hardworking neighbors who buy securities and hold them for such long-term goals as a college fund or retirement.

Traders, on the other hand, buy and sell securities solely to take advantage of short-term market changes. Your profits come from price swings, not dividends and interests. Since your holding period is brief, often a day at most - hence the term "day trader" - there's no need to perform due diligence on the companies you trade.

Who cares how the IRS classifies you? You do!

Investors are subject to the 2% threshold for deductible investment expenses - and hence cannot write off most of their expenses - and are limited to a $3,000 capital loss deduction.

But as a trader, you write off 100% of your expenses, and if you elect the mark-to-market accounting option, you can offset all of your losses against your earned income.

Three Steps to Claim and Protect Your Trader Tax Status

Step 1: Prove beyond doubt that you are a bona fide trader - that is, you "seek to profit from daily market movements."

The best way to accomplish this is by showing a pattern of high trading volume and short holding periods. Keep your personal investments well separated from your trading business. The IRS is looking for "earnest intent;" that is, you work diligently to manage transactions, conduct strategy sessions and make frequent trades.

Step 2: Clear the "substantial activity" hurdle.

The hallmarks the feds are looking for here are "frequent, regular, and continuous" trading. That means volume. One court case ruled that 330 trades a year was sufficient to warrant trader status. The feds need to know that you approach this as a business, not a hobby. Fail to convince them of that and you're back in investor-land.

Step 3: Trade with "continuity and regularity."

If you want trader tax treatment, it only stands to reason that you must actually be in - and remain in - the business of trading.

Here's where the IRS is looking for a healthy flow of trades, significant dollar amounts, short holding periods - all the signs that you are at least attempting to make a living as a trader.

If you take the summer off or show other gaps in your trading, the IRS will be disinclined to grant you trader status. If you're a newbie and flame out after nine months, while it seems unfair, the IRS has made it clear: no trader status for you.

Once you obtain trader tax status, you're not entirely in the clear. Owing to the capricious nature of appellate rulings and the ever-evolving tax code, there are no guarantees that the trader status you enjoy today might not be gone tomorrow.

One good way to secure your trader status is to trade under the umbrella of a business. That's not only where the most lucrative tax advantages reside, but a legal entity such as a general partnership, Limited Liability Company or C corporation sends a strong message to the IRS that yours is an earnest and legitimate business enterprise worthy of trader tax status.

My recommendation is for you to maintain a day timer devoted completely to tracking the amount of time you spend each day on your trading activities. If you are audited by the IRS chances are it will be two or three years after you have filed your taxes. The day timer will service as proof of how many hours you spend each week on your trading activities.

About Jim Crimmins

Jim has become a nationally known speaker on tax strategies, entity structuring, and lifestyle change. He delivers over 30 talks a year throughout America as well as speaking in several chat rooms each month. You can learn more at TradersAccounting.com.
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Support Tip
How do I scan Fundamentals and charts at the same time?

Contributed by MetaStock Support

Many traders use technical systems to help determine when to execute trades. You can ensure your technical indicators will give you the full picture with a little bit of fundamental . For example, your trading indicators tell you a good trading opportunity is about to take place. Then when you place your trade, the market moves in the opposite direction because you traded right before a big news announcement. Your technical will not tell you this information. By combining both of these types of together, you can get a more complete picture of the market. Here's how to view both technical and fundamental information in MetaStock:

1) Start MetaStock.

2) Click "File", then "Open".


3)Select and open desired security. In this example, we'll use Thomson Reuters.


4) Once the chart is open, right click on the background of the chart. From the menu, select "Research". From the following menu, select "Financial Highlights".


5) After the page has opened from the MetaStock Window menu select "Column". Both the chart and financials should be displayed side by side.


6) Click the "Next Security" button and the chart will change to the next security in that solder, AND change the Financials page to match. You can also use other options on the Financials page to check other fundamental information, such as Snapshot. Continuing to use the Next Security function will rotate through all the securities in that specific folder.


You can also use the procedure above in conjunction with reviewing the results of an exploration:
1) Choose your exploration.


2) Select the securities for your exporation.


3) After you have run your exploration, select all the securities you wish to review from the results by highlighting them. Right click on the highlighted area. From the menu, choose "Copy Securities".


4) In the destination folder box enter the name of the folder you would like the securities copied to. (Name the folder with a reference to the exploration used and the date explored. For this example, we will use: MayJuneMonitor).


5) You may get a message saying "Folder does not exist! Create the folder?". Click "yes". This copies the data files for the selected securities to the new folder. Exit the Explorer.

6) Go to File, Open, and look in your MetaStock data folder. The newly created folder of securities should be there. The one we just created is highlighted in green.

7) Then repeat the steps in the scanning procedure listed to attach fundamental information, starting with number 3.
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MetaStock Power User Tip
Interpreting and Using the Performance Indicator

Contributed by Breakaway Training Solutions
In this short video, Kevin will show you how to interpret and use the Performance indicator. You’ll also learn how to quickly compare the performance of different securities against each other.

http://www.learnmetastock.com/FreeSt...Indicator.html

For more MetaStock training, make sure to visit us at www.learnmetastock.com or email us at admin@learnmetastock.com.

About Kevin Nelson

Kevin Nelson is the founder of Breakaway Training Solutions, Inc. He has spent the last 17 years becoming an expert on MetaStock software and a serious student of technical while working for MetaStock. Prior to joining MetaStock in 1993, Kevin was a stockbroker for a well-known NYSE firm. In his role as Sales Manager at MetaStock, Kevin interacted extensively with MetaStock customers via phone, webinars, and public appearances. His experiences while working at MetaStock have enabled him to gain a keen understanding of the needs of technical analysts worldwide. While with MetaStock, Mr. Nelson was a featured presenter for four years. During this time, he traveled the U.S. introducing the MetaStock program to thousands of people and teaching them how to use its many features. His easy-to-understand approach is considered by many to be the best in the industry.

[tradingpro8x]

Đây là series những bài nghiên cứu chuyên sâu về phần mềm PTKT phân tích kỹ thuật MetaStock

A New Look At A Decades-Old Tool

Contributed by Don Fishback

There's been a lot of talk lately about models, probability and statistics. The reason is manifold, but it all distills down to what's going on in the banking and financial sector. You see, nearly every major decision in national and global-scale finance - whether it was the ability of a group of borrowers to pay back loans, the amount of capital banks were required to keep, the amount of collateral required to provide credit default insurance, or the value of certain derivatives - is based on a probability model.

A contemporaneous example is the so-called "bank stress test". Regulators disclosed the methodology for the stress test in late April. In that disclosure, they said, " of [commercial and industrial] loan loss projections was based on the distribution of exposures by industry and by internal rating provided by the firms. In many cases, these ratings were mapped to default probabilities by the firm; in other cases, this association was established by supervisory analysts. This information was confirmed and supplemented by external measures of risk, such as expected default frequencies from third party vendors. Supervisors evaluated firm loss estimates using a Monte Carlo simulation that projected a distribution of losses by examining potential dispersion around central probabilities of default."

A Monte Carlo simulation works by randomly generating inputs going into a model (or formula or equation), and then evaluating all the results. The first step in the process of using a Monte Carlo simulation requires that you create the model. Obviously, that's important. The second part is equally important. It requires you to answer this question: How do you generate the random numbers? To do that, you need to select a "domain" or "distribution". There are many different types of distributions out there: uniform, binomial, triangle, etc. One of the most widely used, and the one that is used in the financial arena more than any other, goes by several different names: Gaussian, normal or bell-curve.

In finance, we typically add a complication, and that is to express movements in terms of logarithms. Personally, I like to keep things simple, so I would hesitate to add anything making it more difficult. But the addition of the logarithm does have a purpose. The reason we express movement in terms of logarithms as opposed to percentages is because a 50% loss and a 50% gain are not necessarily the same thing. Think of a stock at 100. If it loses 50% and then gains 50%, the stock goes from 100 down to 50 up to 75. Instead, a 50% loss and a 100% gain are the equal-magnitude inverse of each other. If the stock goes down 50%, then up 100%, then the path is from 100 down to 50 and back to 100. You get the same result if the path reverses going up 100% first then down 50%. The stock starts at 100, then up to 200, then back down to 100. The net of all of this is that the natural logarithm of 0.50 (-0.69315) is the inverse of the natural logarithm of 2.00 (+0.69315).

Now back to the bell curve that is used in financial Monte Carlo simulations and derivative pricing. One of the interesting properties of the bell curve is that it gives us the ability to calculate probabilities, as shown in the following graph:



x-axis is expressed in terms of standard deviation. Graph produced using R by Jeremy Kemp

As you can see, there are certain probabilities associated with different standard deviations. That's important, because standard deviation is associated with something else that we as traders are well aware of: volatility. You see, volatility is equal to the annualized standard deviation of the asset.

That means, if we know an asset's volatility, we can use certain formulas to calculate probability.

That's where the ODDS Probability Cone, developed over a decade ago, comes in. This indicator -- unique to MetaStock -- has those formulas built into it, allowing you to easily visualize probability.

Below is a chart of the S&P 500 Index plotted with the CBOE Volatility Index (VIX). The VIX is a measurement of expected volatility of the S&P 500 Index over the next 30 days. That expectation is implied by the prices of S&P 500 Index options. Also shown in the chart is a yellow arrow pointing to a parabolic shape in the Line Studies toolbar. That's the ODDS Probability Cone.



If you click on the parabola, your cursor becomes a cone-shaped indicator that you can move across the chart. Simply move the indicator to where you want to do the , and you're ready to set the parameters, as shown in the next graphic.



Once you've placed the cone where you want it, simply double click it and see the dialog box that allows you to set the dates, the probability and the volatility. In this particular instance, I set the date from May 7 to the June options expiration, June 19. I set the volatility to the specific value of the VIX that day. And I set the probability to 68.2% -- the level corresponding with +/- 1 standard deviation. Once I've set the parameters, MetaStock performs the calculations I created, and the ODDS Probability Cone (shown in yellow) is drawn. By scrolling across the indicator, you can get the Cone values at different points in time, as shown in the next graph.



As you can see, when the cursor is placed on the Cone at 06/19/2009, the values are 1019.90 and 807.295. That means, based on an expected volatility of 33.44, there is a 68.2% chance that the index will be in between those two values on that date, which is when the June options expire. There is a 31.8% chance the index will be outside that range on June 19.

Not only can we look at 68.2/31.8, the probabilities associated with +/- 1 standard deviation, we can look at other probabilities as well. For example, we can look at 50/50 (green), 80/20 (blue), or 90/10 (orange).



To option traders, this provides vital information, as it allows us to visualize the expected probability of a certain-size market movement. By looking at this chart, we can see that the market is expecting a 90% chance the S&P 500 will be within 750 and 1100 at June options expiration.

So when you look at all that's going on in the banking and the markets today, with the stress tests and the attempts at pricing derivatives, realize that one of the tools those folks are using is built into MetaStock so you too can determine probabilities quickly, easily and visually.

-- Don Fishback

A couple of caveats: First, this is a simplified explanation meant to highlight the major factors and the features of the indicator. A more comprehensive explanation requires a lot more math, and this simply isn't the forum for that discussion. Second, the formulas used to calculate the ODDS Probability Cones are based on the assumption that the stock market follows a logarithmic, normal distribution. No asset actually follows that distribution perfectly. But it is a useful representation when applied to an asset class such as a broad-based stock index. Just remember these words from statistician George Box, "All models are wrong, but some are useful."

ODDS(r) is a registered trademark of Donald M. Fishback, Jr.

About the Author - Don Fishback is the creator of ODDS® – Options and Derivatives Decision Support. ODDS is a method for analyzing options and other derivatives based on a unique method for balancing risk, reward and probability. The key to this approach is volatility, which is the way most people look at options, plus magnitude over time. Don’s oddsonline.com software provides traders with his unique Measure, Don’t Model™ tools. Not only does ODDS Online calculate probabilities based on the most commonly used option pricing models, but it also incorporates actual measurements of stock price movement to evaluate option strategies. A 25 year veteran of the derivatives business, Don spent many years on the conference and lecture circuit. Now he prefers to spend his time at home with his family.

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Support Tip
How can I restore the back-up copy of my custom formulas?

Contributed by Equis Support

How can I restore the back-up copy of my custom formulas?

Open MetaStock

Click Tools | Indicator Builder

Click Organizer

Select "Import formula files", then click Next

Specify the location you wish to import the files from

Click Finish

All of the formula files, experts, explorations, and system tests will be read from and added to the current installation location for MetaStock.

If you already have formulas, experts, explorations, and system tests of the same name in MetaStock, you will be asked if you want to replace them. If you say yes, the import will finish, overwriting the formulas of the same name. If you say no, the import will be halted and no custom formulas will be restored.



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MetaStock Features
Fire Plug-In

Contributed by Ken Spelman

One of our best plug-ins for broad market is also one of the least understood; Fire. Fire is a tool that allows you to calculate and plot breadth indicators on sectors and industry groups rather than the market as a whole. A breadth indicator is a specific type of indicator using advancing and declining issues to determine the amount of participation in the movement of the stock market.

Fire allows you to perform External Relative Strength (also known as ERSA). ERSA is a concept that measures how a stock’s price has performed versus all other stocks in the selected group over a specific time frame. Fire allows you to customize your by choosing the stocks you group together to calculate an array of breadth indicators over any time period. You can then plot your results in MetaStock for more .

Fire is the only program that will allow you to easily create your own custom index. With Fire’s custom indices tool, you’ll get quick calculations on the average open, high, low and close of all the securities in the folder you create.

[tigeran]

Mình nghĩ cứ nên giữ những bài phân tích kỹ thuật PTKT MetaStock này dưới dạng tiếng Anh chứ không nên dịch ra vì sẽ làm mất ý nghĩa của chúng

[tradingpro8x]

Đây là series những bài nghiên cứu chuyên sâu về phần mềm PTKT phân tích kỹ thuật MetaStock

The Downtrend and Uptrend are Not Created Equal

Contributed by Martha Stokes, C.M.T.

There are many myths perpetuated in the trading world. One such myth is that if you know how to trade the uptrend or the buy side of the market, then you can easily switch and trade the downtrend or sell side of the market. All too often, Retail Traders assume the two are mirror images of each other. Unfortunately, this often leads to problems for traders who want to sell short.

The downtrend is significantly different in price action than the uptrending market. Here are some aspects of downtrending price action every trader needs to understand and recognize to improve their sell side trading:

The Market Participants who trade the downtrending market are a different mix than those who trade the uptrending market and do so for very different reasons. Since the late 1990’s, the levels of Market Participants have expanded and we now have 8 groups of Market Participants each with their own agenda for investing or trading stocks. On the uptrend, the Institutional Investor dominates price action. During a downtrend, the Institutional Trader controls the action. Since each of these groups has entirely different buying and selling agendas, price action is impacted often in dramatic ways. Understanding this phenomenon helps the Retail Trader know what kinds of entry signals to look for, the patterns to watch for in institutional indicators, and what kinds of exit signals and strategies to use for both stock and option trading.

Stocks require strong volume patterns to move up, so a continued increase in volume is necessary for the uptrend to sustain. On the downtrend, stocks can and do fall even on low volume patterns. This is especially true during the secondary and final phases of the downtrend. Retail Traders need to adjust their volume indicator settings to accommodate the variances between the uptrend and the downtrend. Volume bars should be used with a sub-indicator, either a moving average or rate of change and the settings need to be significantly tighter on the downside to achieve an accurate of volume to the downside.

To the downside, the angle of descent is far more vertical and occurs more frequently than the angle of ascent. The angle of descent can maintain a vertical drop longer than the angle of ascent. When a trader understands this phenomenon and is expecting it, then they are able to make adjustments to their exit strategies and indicator to keep them in the trade for higher point gains. Since the angle of descent is steeper, the sell side tends to move faster with far more momentum, even on lower volume. This creates different Trendline Patterns to the downside. Traders should expect to see tighter consolidations with dramatic stairstep patterns that are longer than upside stairstep patterns. The runaway trendline pattern will also occur more often to the downside than to the upside.

Traditional textbook theory on bear market trends identifies 3 phases of a bear market; however, today’s bear markets tend to have more than 3 phases. Bottoming patterns are more complex and gaps are more common. Retail Traders also need to watch out for more frequent bounces. During the first phase of a bear market or major correction, price action will be at its steepest. In recent years, the final move down of major corrections tends to fizzle out rather than the huge dramatic drops that occurred in prior decades.

The initial downtrend phase is an important area for retail traders to recognize to enter just as the topping action completes. Often Retail Traders are not aware of the topping action and miss the highest point potential of the downtrend. Conversely, during the early stages of a market bottom, Retail Traders are often attempting to sell short while institutional investors are quietly accumulating.

Here are a few tips to help you with your selling short trading:

Whenever any financial market, whether it is stocks, bonds, options, or forex go vertical and sentiment has gone over 90% to the upside, start watching for one of the 5 topping patterns and shift your mindset in preparation for selling short. Choose 1-3 sell short entry signals, adjust your indicators, and start setting up for selling short. Wait for the drop in volume on the final move up.
The Institutional Investors tend to exit the stock, index, or other instrument prior to the final move up. The small investor and late comers create that vertical extreme peak pattern on falling volume. If the stock, index, or other instrument doesn’t make a higher high and higher low on rising volume, then you have an initial topping pattern developing. Be aware that the late buyers coming in will “buy on the dip” with ‘market orders’ rather than controlled orders and this can cause a big bounce. Watch for this pattern.
Do not keep your stop loss too tight, allow for normal overlapping that forms in downtrend price action. Falling price action tends to overlap far more than upside price. If you keep a very tight stop, you will get whipsawed out of the sell short or option put prior to the major move down. Overlapping on downtrending stocks occurs because even as the Institutional Traders move in to control the downside action, late uninformed small lot buyers are rushing to buy with ‘at market’ orders. This creates a surge of pre-market orders allowing market makers to gap price up at market open, then as the large lot sellers move in, price drops quickly. The more popular the stock, the more overlapping of price action there will be when small lot late buyers meet Institutional Traders selling short.
When a stock drops below $15.00, it has less profit potential for selling short. Retail Traders need to be vigilant during the final phases of a downtrend to monitor the activity of the Institutional Investors who will move in quietly without disturbing price much. Once their counterparts, the Institutional Trader, finds out about the quiet accumulation, speculative bottoming action will occur. Often times Retail Traders have delayed selling short during a downtrend and jump in just as the stock is about to begin a bottom. If a stock has fallen 40%-50% or more, then it is usually not an ideal candidate for selling short.
Keep a 3/1 Profit Point to Risk ratio when selling short. The sell side offers a much higher profit potential per trade than the buy side, however, the risk is also greater as bounces can wipe out profits quickly. By choosing only optimal picks with a higher profit to risk ratio, you lower your overall risk and raise your profit potential.
Do not choose weaker picks with lower profit to risk ratios simply to have something to trade. If you can’t find ideal picks, then stop and accept the fact that the market is telling you something important. Often when you aren’t able to find picks with good profit to risk ratios the market is right on the cusp of a major upside shift.
Summary: The sell side is different than the buy side of the market. It has a much faster moving price action in the early stages of the downtrend, but it also has overlapping patterns not seen as frequently when stocks are trending up. The matrix of Market Participants—who is buying, who is selling, who is buying to cover, and who is selling short differs on the sell side to the buy side and impacts price action. When a trader understands these often subtle differences and can see the patterns on the price chart, they are on their way to mastering the sell side and becoming an expert trader.


About the Author:

Martha Stokes, C.M.T. is the co-founder and CEO of TechniTrader®, an educational firm dedicated to helping small investors and retail traders. Since 1998, TechniTrader® has taught thousands of beginners to professional level traders how to be consistently successful in the stock and option markets.

Martha’s fascination with the markets and business started at the age of nine. She made her first investment while still a teen. Her theory on Cycle Evolution is a landmark work on financial cycles. She has been involved in several startups and has sat on both sides of the Venture Capital negotiating table, worked on an IPO, managed a small fund, taught at community colleges, and has been a guest speaker at numerous seminars and investment groups including the Boeing Employees Investment Group. She has been a guest on the CFRA radio Ottawa Canada.

Her long list of educational work includes: 15 stock, investing, and option courses, 16 semester length Lab Classes, her Annual New Technology Reports, Sector and Industry, and Special Edition Reports, hundreds of articles, resource papers, and white papers. Martha writes 6 newsletters each week and still finds time to answer student questions.

www.technitrader.com

www.marthastokes.com

www.technitraderblog.com

TechniTrader Twitter Page

TechniTrader Facebook Page



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Support Tip
Updating Your Symbol Utility - Symbol Database

Contributed by Equis Support

The stock market is dynamic and symbols are constantly being changed, removed, or created. In order to keep up with the symbol changes, Equis updates the symbol file found within its symbol database. The Symbol Utility reflects those changes. It allows customers to automatically update the symbols in their “Local Data” view in the Open dialog on a monthly basis without having to manually change each symbol within each folder on their hard drive.

How to update the Symbol Database built into MetaStock.

Open MetaStock.
Select Tools – “Update Symbol Database”.
When you get the message “patch successful” select Close.
Close and restart MetaStock.
How to install the Symbol Utility for Reuters DataLink.

Go to: http://www.equis.com/customer/suppor...olutility.aspx
Read the warnings and agree to the terms and select “Download RDL file”.
When prompted select “Save”, this will open the “Save As” window. Using the drop down menu select the “Desktop” for the “Save In” then select “Save”.
When the download is complete close out of the Symbol Utility web page.
On your desktop you will have a new icon named “RDL_Symbol_Utility.exe” double click onto the file and select “Run”.
The extractor window will appear showing the unzip folder path as C:\MetaStock Data, next select “Unzip” to begin the extraction process.
Follow the steps below to download historical data from Reuters DataLink.

Open the DownLoader.
From the Tools menu in The DownLoader select “Download Prices”.
This will open the Select Securities window. On the left hand side of the folder tree, expand the C drive and highlight the MetaStock Data folder and select “Add all Subfolders” and select OK. This will add the folders and symbols created by the Reuters DataLink Symbol Utility for a data download.
Select “OK” on the Select Securities window and the Vendor Selection window opens. Make sure the Reuters DataLink tab is forward in front and select OK to begin a data download.
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MetaStock Features
The ETS Trading System

Contributed by Greg Allred

In today’s marketplace, there is a lot of confusion and bad trades being executed. The common systems and methods used in past years do not seem to work as well in today’s market conditions. ETS Trading System can create clarity in today’s uncertain market conditions and help shift the odds in your favor.

ETS Trading System does an excellent job of providing very clear and easy to read buy and sell signals. The system will display protective stops, trailing stops, and profit targets. Many systems only work on an end-of-day or intraday basis but this system works well for both time frames. ETS Trading System has two experts: ETS Basic and ETS Complex. The complex expert includes profit targets and protective stops for long or short trades. This system works with stocks, options, indices, futures, and FOREX. ETS Basic gives you clear and precise buy and sell signals.

The powerful tools ETS offers helps you eliminate the stress and emotion most people experience while trading. Whether you are a new or experienced trader, ETS can help avoid costly decisions and mistakes. The program comes ready to use out of the box and is easy to use. Help put your trading on the right side of the markets by adding these valuable tools to your collection.

[tradingpro8x]

Tài liệu cứ phải để English mới hay, đặc biệt là tài liệu phân tích kỹ thuật

[tradingpro8x]

Đây là series những bài nghiên cứu chuyên sâu về phần mềm PTKT phân tích kỹ thuật MetaStock

Creating an Effective System: Acceleration Bands and Williams' Percent R


Contributed by Price Headley


For option traders, correctly forecasting short-term price action is imperative to long-term success and, in my view, technical is the best way to achieve this. Many would say the “Holy Grail” of technical is to find true “leading” indicators … those that point to directional movements and trends as they are occurring or before they occur, not lagging indicators that show what has already occurred. I’ve tested and designed hundreds of technical indicators over the years, and I want to share with you one of my trading systems that uses two of my favorite and time-tested indictors. The two indicators? One is Acceleration Bands, which I created. The other is Williams’ Percent R, which I have modified and created specific rules to utilize that are different than is seen in normal trading systems.
A major problem that many traders have is too many signals. In other words, their criteria needs to be tightened and refined. As many of you already know, I look for the Big Trends that rarely occur, this helps me leverage my capital while reducing the number of total trades. Now, don’t be fooled, there is no fool-proof system out there … so risk control is an important part of any technical system. In life, it's good to be an optimist, but excessive optimism in system development can easily lead to ignoring the risks and the weaknesses in your trading system. All systems have weaknesses. Make sure your systems have a risk control element to it.
Today I want to share with you a system that uses only two indicators, Acceleration Bands and Williams’ Percent R – remember keep your system simple. First, it’s important to describe each system independently to see the strength and weaknesses of each.
Acceleration Bands: Available in the MetaStock Big Trends ToolKit
Description: Adaptive bands that contain 95% of price action usually used in 20 or 80 bar periods. Trading signals occur when price action is confirmed outside the bands. This indicator targets the top 5% of moves, keeping traders focused on the best trends.
The 20 Bar Acceleration Band Expert Advisor (SPX chart below) shows buy and sell signals based on my system. Notice that in the 14 months shown, the S&P500 only exposed a signal 4 times, each was profitable. This depicts the 5% theory well – Acceleration Bands highlight only the extreme moves for option traders. The issue many traders face is really two-fold; many traders want more signals and the entry point can use some refinement. Like the Yin & Yang relationship, I’ve developed a system that combines Acceleration Bands with Williams’ Percent R to remove any weaknesses and refine trading signals. Let’s take a look at how it works.


Williams’ Percent R – Traditional indicator available in MetaStock. The Big Trends Willams’ %R is available in the Big Trends Toolkit with two separate systems based on breakout and retest (lower risk entries) methods. We have smoothed out and modified Williams’ Percent R to make it a better and more usable trading vehicle.
Descriptions: Larry Williams created the Percent Range oscillator to highlight overbought versus oversold levels in securities. Traditionally overbought connotates a long exit or sell short entry as oversold would insinuate the opposite, however, we in general consider overbought to be bullish and oversold to be bearish. The Big Trends Percent R system targets the top 20th percentile and bottom 20th percentile.
In the chart below we have the Expert Advisor for Big Trends ToolKit (BTTK) Percent R Retest System applied to the S&P500. My first impression is that there may be too many signals with 11 trades in 14 months (compared to 4 with the Acceleration Bands). The Percent R Retest System targets lower risk entry points by signaling buy or sell-short signals after a corresponding breakout confirmation occurs. These pullbacks, or retests, are patterns that help identify fast moving trades that are immediately profitable. If they do not move in the expected direction immediately an exit signal is triggered for effective risk control.


Notice that we also have 20 Bar Acceleration Bands applied to the price action -- my favorite system employs both Percent R and Acceleration Bands; reducing the number of trades while only trading the best pullbacks. I focus on Percent R retests within Acceleration Band signals. Let’s take a look at an example of this signal below.

Notice above that we also have 20 Bar Acceleration Bands applied to the chart (but not a part of the trading signals) -- my system employs both Percent R and Acceleration Bands; reducing the number of trades while only trading the best pullbacks. I focus on Percent R retests within Acceleration Band signals. Let’s take a look at an example of this signal below.
When developing a system I look for winners that are at least twice the size of losses and a minimum 50% winning average, however, I’ve found that 60% winning average is optimum and realistic. That’s why using Acceleration Bands and Willams’ Percent R has become one of my favorite two indicator systems. Acceleration Bands highlight extremely strong moves, while Percent R Retest Method highlights low risk entry points within those Accelerations. In addition, I found that this system works particularly well on individual stocks, which typically provide more Acceleration signals than market averages like the S&P500.


For ease of learning I want to show you a quick example of a signal using both indicators within the same time frame as the charts above on the S&P500. In the chart below we have the Acceleration Band Expert Advisor (20 Bar) exposing a sell-short signal based on momentum. Notice that in the days after extreme selling signals an Acceleration short signal, we see a bounce, or retest, in price action. This typically occurs from value seekers, however, we know that once the trend has Accelerated thus far it’s probable to continue.
The blue arrow shows us where Percent R initially confirms bearish activity (prior to Acceleration signal) , and we know that any Percent R spike above 20% is now a qualified retest. Furthermore, if the retest occurs after the Acceleration Band signal it’s a lower risk entry within a highly probable signal. Adding the Percent Retest filter to your Acceleration bands will help you be patient for those lower risk entries after momentum has confirmed; while Acceleration signals help you identify weaker trends where retest become reversal.







As I’ve mentioned, in general keep a trading system simple – I have found that the unique combination of Acceleration Band breakouts and Williams Percent R re-tests (utilizing Big Trend Percent R methods) is a very effective trading tool & system. I encourage you to start testing this on your favorite stocks as it has helped me increase my winning percentage, while reducing those whipsaws that many traders experience from Acceleration Bands alone.


Trade Well,
Price Headley
BigTrends.com
1-800-244-8736



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Support Tip

How do I color my volume for up / down colors?


Contributed by Equis Support


Volume is one of the most powerful technical tools traders use in predicting the way a security is about to move. The difference between a smaller return and a bigger return is sometimes only a matter of seconds. Coloring volume bars to identify up volume and down volume can be used as a tool to give traders the edge they need.


To do this we must create a custom indicator in MetaStock.


1. Open MetaStock.
2. From the Tools menu on the main toolbar, select Indicator Builder.
3. Click New on the right hand side to open the Indicator Editor to create the new indicator.
4. Type in the desired name of the indicator in the name section.
5. Check the option to “Display in quicklist”.
6. Click in the larger “Formula” window and type or copy and paste this formula:
When comparing volume data to yesterday’s volume data:
If(V>=ref(V,-1),V,0);
If(VOr when comparing volume data to yesterday’s close price:
If(C>=ref(C,-1),V,0);
If(C7. Click ok to close the Indicator Editor and create the indicator, then close the Indicator Builder dialog.
8. Open any chart.
9. Using the indicator quick list, plot your new volume indicator; this will plot two different lines.
10. Scroll to the end of the chart and right click onto the line going up and select properties. Next select the Color/Style tab and select green for the color and set the style to histogram. Then select OK.
11. Scroll to the end of the chart and right click onto the line going down and select properties. Next select the Color/Style tab and select red for the color and set the style to histogram. Then select OK.


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MetaStock Features

Big Trends Toolkit Review


Contributed by David Derricott


The Big Trends Toolkit has been an immensely popular add-on. The reason is simple; people have found that the system works. Big Trends Toolkit features Explorations, System Tests, and Expert Advisors. The systems included in the add-on are Price Headley’s time tested strategies and can be used in any market. When market changes happen, as they have in the last year, it is important to have strategies that have proven their merit over time, and this is why the toolkit has been so popular. The Toolkit can be used to identify low-risk entry and exit points, spot accelerations, and more. I would encourage users to use the System Tests included with the Big Trends Toolkit to identify the best system to match the stocks you are trading. Customers really appreciate the level of detail in which the commentaries define how to use the system in trading. Each commentary provides detailed explanations of the systems and detailed instructions on how to trade each entry with your risk tolerance in mind. You have the opportunity to try this add-on on a 30 day money back guarantee.

[tigeran]

Đây là series những bài nghiên cứu chuyên sâu về phần mềm phân tích kỹ thuật PTKT MetaStock

Non-Farm Disappoints, But Gold Still Ends The Week On A Low. So What’s Next For Gold?

Contributed by Nik Kalsi and Phil Carr

Gold fell 1.6% in less than two hours on Thursday, as monetary policy easing in Europe and China was shortly followed by a better-than-expected US jobs report on Friday. US June non-farm payrolls rose by 80,000 while the jobless rate unchanged at 8.2 per cent, official figures showed.

US employers hired at a dismal pace in June, raising pressure on the Federal Reserve to do more to boost the economy and further imperilling President Barack Obama's chances of re-election in November.

By Friday lunchtime in London, Gold in Dollars was down around $5 per ounce on the week, while the Gold Price in Euros was still showing a 1.9% weekly gain following the weakening of the Euro. Meanwhile Silver fell to $27.10 per ounce – a few cents below where it started the week.

The Gold & Silver Clubs technical ******** on MetaStock’s QuoteCenter shows Gold has been in a three month consolidation range of $1525 to $1640. Despite its flat performance in recent months, we believe it’s likely to rebound before the end of the year and here are three good reasons why...

Quantitative Easing

Last Thursday The Bank of England (BoE) confirmed it was to restart its asset purchase programme with a further £50 billion of quantitative easing (QE). To put that into perspective, that will take the total size of the UK programme to £375 billion. We believe the Federal Reserve will be next to boost the US economy and of course that will result in renewed buying interest in the shiny metal.

Central banks still buying gold

Central banks, the largest holders of gold, may expand reserves for the third year running, according to the World Gold Council.

As gold prices head for a 12th consecutive annual gain, the council forecasts that central banks may buy more this year than the purchases of 456 tons in 2011 as countries diversify their reserves. We believe this makes absolute sense. The last thing that central banks want to hold is dollars. The most obvious thing for them to diversify into is dollar-denominated real assets and the easiest of these is gold.

Indian gold demand: A repeat of 2009?

Another reason why gold is in a consolidation period is due to news that the Indian economy, the biggest global consumer and importer of the commodity, is suffering, with the country registering its slowest quarterly growth of 5.3% in nine years in the first quarter this year.

In early 2009, when the Indian economy faltered and the rupee crumbled, demand all but disappeared. In the first quarter of that year, demand was just 24.2 tonnes, down 77% year-on-year, according to GFMS data. For the full year Indian gold consumption fell 19%.

Since March, gold sales to India have dropped between 50% and 60% year-on-year, with analysts forecasting Indian demand to fall between 20% and 30% over the full year.

However, traders should be aware that a downturn in Indian consumption is a purely cyclical phenomenon. In 2010, for example, when the Indian economy made a comeback, gold consumption soared 74% to a record high of 1,006 tonnes, according to GFMS estimates. And a similar rebound, later this year or in 2013, could be back on the cards.

Whilst we are still bullish on gold in the long-term, what’s our short-term outlook?

In the short-term The Gold & Silver Club is focused on potential sell short opportunities with both Gold and Silver. If we break the important support levels – $26 on Silver and $1525 on Gold, the momentum is likely to continue downward in the short-term.

If Silver breaks $26.00, we expect a big sell off with the price rapidly dropping to $25.00, $24.00, $23.00 or lower fast. In which case traders should be prepared with two things: ***, the right trading strategy to profit from the downside momentum and two: a precise market data tool such as MetaStock’s QuoteCenter to give you the right information at the right time to make the right trading decision.

On the flipside, if the market continues to bounce and rally off the $26.00 support level this potentially could be a very profitable trade to the upside. This key level has not been breached in the last 12 months so is the pivotal level to watch.

Looking at gold – if we continue to bounce off and rally from the $1525 to $1535 support level then expect a great trade toward the upside. Again this key level has not been breached in the last 12 months so is the pivotal level to watch. On the reverse side, if gold breaks through $1525 prepare yourself for a major sell off with the potential of gold price hitting lows of $1500, $1485, $1450 or lower fast.

On both occasions be aware – The more times we test a support level, the likely it is to break. To sum things up, the outlook for gold and silver remains bullish for the medium and long term but is rather bearish for the short term. If you would like to receive free weekly Gold & Silver trading updates then sign up to The Gold & Silver Clubs newsletter at www.thegoldandsilverclub.com.



About Nik Kalsi and Phil Carr

Nik Kalsi and Phil Carr are recognised as leading authorities on gold and silver trading. They are the founders of thegoldandsilverclub.com and professional commodity traders.

Nik Kalsi

Nik has extensive knowledge of the financial markets and investment strategy. Prior to founding The Gold & Silver Club, he spent 5 years coaching professional fund managers and traders internationally for some of the world’s top tier hedge funds and investment banks. Through his journey across the world’s leading trade floors, Nik formed first hand relationships with successful traders – discovering the strategies, mindset and tools giving professional traders the definitive edge in any economy. Nik has written many articles on monetary economics. He is also a regular columnist for a number of financial publications and appears frequently on television.

Phil Carr

Phil is the co-founder and director of The Gold & Silver Club. He specialises in teaching people how to make money from trading *** of the biggest financial markets in the world: Gold, Silver & Oil and has trained hundreds of individuals to become independent traders and successfully manage their own investment portfolio.

He has personally developed The Gold & Silver Club’s trademark investment strategies that have a proven track record of generating returns for traders.

Phil speaks at numerous trading seminars and workshops across the world sharing his expert knowledge with investors who have a passion and interest in trading Gold, Silver & Oil.


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Support Tip

How do I create an expert adviser for an optimized system test?

Contributed by MetaStock Support

Some of the System Tests look for optimized values based off of the data set and security you are testing. Optimization values can change with each new data point coming into the chart, so the optimization values can constantly change. Since optimization values are ever changing, it would be impossible to create an Exploration\Expert including all the different optimization values. This is why there are not matching Explorations and Experts for each System Test.

http://forum.metastock.com/Discussio...tor#post152766

[tigeran]

Đây là series những bài nghiên cứu chuyên sâu về phần mềm phân tích kỹ thuật MetaStock

Catch that Trend! Directional Strength and How to Find it.

Contributed by Barbara Star, Ph.D.

Traders usually favor moving averages to help them determine price trend. However two other popular indicators, the Moving Average Convergence/Divergence (MACD) and the Average Directional Index (ADX), can help traders detect not only trend direction, but trend strength as well.
The MACD, created by Gerald Appel, is a momentum indicator that often identifies price direction as it rises and falls above or below its trigger line and its zero line.
The ADX, part of the Directional Movement system developed by Wells Wilder, is designed to detect the strength of price movement. ADX values in the 20 to 30 range indicate mild to moderate trending behavior while values above 30 usually signify a strong trend. A rising ADX indicates that prices are trending, but does not reveal the direction of that trend.
Plot the ADX 14 period indicator above the MACD on the same price chart as shown in Figure 1, and patterns emerge that show both trend strength and trend direction.


Three Patterns
Three distinct, and profitable, patterns frequently appear. These patterns do not detect tops and bottoms, but can help traders confirm a trend. They are especially useful for those traders who prefer shorter-term trades.
Confirming Pattern: The confirming pattern occurs when both the ADX and the MACD rise and fall in unison with price. When the indicators rise together they identify up-trending price movement that presents bullish traders with an opportunity to enter the long side of the trade. The strongest and most ideal trading configuration takes place when the ADX begins to rise and the MACD rises above its trigger line and also above its zero line. The level from which the ADX rises does not matter. In the Confirming pattern, when prices change direction to the downside so do both the ADX and MACD to indicate a loss of momentum and/or a potential trend change.
The Confirming pattern was evident on the daily Allegheny Technology price chart. Both indicators rose in April confirming the price move from the $30 to $40 level. Both indicators declined in May as prices dipped, but rose once more in June when price moved toward $45. The indicators declined in late June to reflect the falling to sideways price action.


Diverging Pattern: The diverging pattern identifies down-trending price movement. Here, the indicators move in opposite directions. The ADX rises to indicate that it has found a trend, but the MACD declines which indicates that the direction of the developing trend is down. Its mirror-image formation makes it an easy pattern to spot visually.
This is a good pattern to follow for traders who are bearish and want to short a stock. It also serves to warn those traders who might wish to enter a long position that they should wait for a more favorable time.

The strongest pattern occurs when the ADX rises while the MACD falls below its trigger line and also below its zero line. Two distinct Diverging patterns appeared on the chart of Abbott Labs in Figure 3 as prices took a nosedive from February to March and again in April.



Converging Pattern: This pattern has an upward bias that comes after a steep decline. The ADX rolls over and begins to decline, signifying that the strength of the trend has weakened. At the same time the MACD, which had been below its zero line, begins heading up to its zero line. Visually, the declining ADX and the rising MACD seem to be converging toward each other. Although this pattern sometimes marks the beginning of a new up trend, more often than not it is a countertrend rally that produces a partial retracement of the price decline.
Figure 4 shows the Converging pattern on a daily chart of Honeywell International. Following the price decline in the February time period that took the stock below the $25 level, price began moving up in March where it was able to retrace much of its loss. The MACD responded to the increase in price by crossing above its trigger line and rising to (and in this case, through) its zero line as the ADX stopped rising and moved down to complete the Converging pattern.
This is an enticing pattern, but often not as profitable as the others because its moves tend to be short-lived and, even though the MACD rises, prices may move sideways instead of upward.


A Trading Example

Traders could have profited from many of the patterns signaled by the ADX-MACD duo on the CH Robinson Worldwide price chart in Figure 5.
Area A marked a decline with a Diverging pattern that was followed by a Converging pattern as price rose in area B. That Converging pattern gave way to a Confirming pattern (Area C) as price continued to rally another ten points. A new Confirming pattern appeared in Area D which reflected the decline that filled a prior price gap before reversing to the upside.
Could you have benefited from any of the four areas identified by the ADX-MACD patterns?



Summary

The patterns displayed by the ADX and MACD combination appear on charts of commodities, indexes, and mutual funds as well as stocks. Not only do the patterns have profit potential, they signal changes in price which can help avoid trading pitfalls. This dynamic duo may be worth adding to your trading arsenal.

About Barbara Star
Barbara Star, Ph.D., (818) 224-4070, is a former vice-president of the Market Analysts of Southern California. She is a frequent contributor to the magazine, Technical of Stocks and Commodities. A former university professor, Dr. Star currently provides individual instruction and consultation to those interested in learning technical . Her e-mail address is star4070@aol.com

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Support Tip

How to Automatically Load Your MetaStock Charts at Start-up

Contributed by Equis Support

Any trader can tell you that being able to quickly load your workspace makes decision making easier and faster. With the ever changing markets, seconds can mean the difference between making a profit and taking a loss. MetaStock's "Restore workspace on startup" allows users to automatically load a user defined workspace of charts and trading systems when opening MetaStock.

How do I get MetaStock to automatically open my charts?

1. Open MetaStock
2. Select - Tools - Options
3. Select the General tab - check the option "Restore workspace on startup".
4. Click OK to apply the settings.
5. Next open all the charts you would like to open automatically on startup, then select File - Exit to close the MetaStock program.
6. When you re-open the program it will open those charts.

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MetaStock Features

JBL Risk Manager v7.0

Contributed by Devin Ekberg

As I interview successful traders from all over the world, I have the fortune of learning what works and what doesn't work. Overwhelmingly, successful traders share common principles in their individual strategies even though they trade and invest in different markets around the world. Simply stated, there are four requirements:

Entry Strategy - Education & Experience
Trade Sizing Strategy - Money Management - How many shares to buy.
Exit Strategy - Risk Management - Minimize Loss with a stops or exits.
Profit Taking Strategy - Protecting Profits on the way up, when do I SELL

Unfortunately, the major focus of many technical traders is to create a system of entry and exit rules, and trying to develop discipline to follow them. However, they ignore the critical concept of money risk management, and endanger their long-term survival.

There are many books available on proper risk and trade management, and learning these principles are important for removing emotion and calculating risks. The subject is sometimes a bit difficult to follow and ultimately difficult to put into practice.

The new JBL Risk Manager v7 software from Metastock gives a simple "step-by-step" method of managing your trades. It gives you Automatic Trade/Position Sizing, Initial Stop and Trailing Stop exit price calculations, Multiple Portfolios, Short & Long trades, integrates with your Metastock database, Stock Split Adjustment, Performance: Win/Loss ratios, and Trade Expectancy.

This add-on is very unique among the Metastock add-on and plug-in library. If you are currently trading and not utilizing a money management tool, I strongly encourage you to add this to your to-do list. It will make a huge difference.

[bietshop]

hay nhưng mà gà tiếng anh thì khổ thật, hối hận những ngày tháng ăn chơi

[tigeran]

Đây là series những bài nghiên cứu chuyên sâu về phần mềm phân tích kỹ thuật MetaStock

$34 Soybeans...Fantasy or Possibility?

Contributed by Jake Bernstein

If you think that my headline is a clear indication that I have finally lost my marbles then perhaps you may change your mind when you consider this possibility in the context of history. Specifically I refer to the 1970’s experience in the soybean (and many other) markets. Given the confluence of cycles, COT commercials accumulation, central bank massive money printing and timing indicators, I believe that the stage is being set for a 1970’s style commodity price inflation “blow off”. Gold and silver have led the way. While it is likely that gold and silver have not yet made their highs, the odds are growing daily that many if not all of the other commodity markets will make similarly large gains over the next few years. I discussed the details of my expectation in a 2 hour Webinar which you should attend if you have not already done so. It was one of my most detailed Webinars and while I made some stunning forecasts for the next few years I believe that they are reasonable as well as based on facts and not fictions.

Among my forecasts was the realistic possibility that soybean prices could reach the $34 level over the next few years. While producers may rejoice and perhaps even see that this is possible based on fundamentals, many traders will likely consider this forecast to be “off the wall” or just not possible. Before you dismiss my forecast as unrealistic, I urge you to consider the chart below. It shows the 1970’s bull market in soybean futures – a bull market that developed in underlying economic and cyclical conditions that were, if anything, less extreme than what exists today. Now, after reviewing the chart, consider the current chart for soybeans with a similar % increase projection. What do you see?


Now that you have had a look at the soybean bull market of the 1970’s consider the “what if” scenario with regard to the current soybean market. Buy why do so? Here is the logic:

Soybean cycles are long term bullish
Fiat money printing all over the world has made virtually all paper backed currencies unpalatable forcing many professionals and savvy investors into tangible assets
Demand for grains and feeds continues to be strong
Based on the monetary and fiscal policies that have been rushed into place in order to prevent an economic collapse, the odds favor significant commodity price inflation for the next few years and
Precious metals accumulation continues to underscore a flight from paper currency into hard assets. This trend has started to spread to all tangible commodities
If soybean prices repeat their 1970’s experience then the chart below shows what could happen over the next few years. Is it impossible? Before you say that this can’t happen consider all of the “this can’t happen” events of the last 25 years. Now take a look at the chart again. I realize that I’m going out on a limb with my forecast but many of my cyclical forecasts over the years have been correct.


Now add to the mix the fact that Commercials as assessed by the Weekly Commitment of Traders Report using my analytical method (available in the Jake Bernstein MetaStock Plug In) shows strong accumulation of long positions virtually across the board in many of the grain markets. Time will tell If I am right but the confluence of fundamentals and technicals is noteworthy. In light of the recent grain report which resulted in a collapse of grain and soybean prices some of you may not take my forecast seriously. If, however, you see my logic this may be the decline that leads to the buying opportunity of great importance. Would I “catch the falling knife” by entering now? No! I’d wait for my intermediate term timing triggers to turn bullish (also available in the Jake Bernstein MetaStock Plug In).


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Support Tip
How can I scroll through a MetaStock chart one bar at a time?

Contributed by Equis Support

Metastock Pro & MetaStock EOD: 6.52 – 11

Open the desired chart in MetaStock.
Hold down the "Shift" key on the keyboard.
While you are holding down the "Shift" key, left click once on the right or left arrow of the scroll bar of the open MetaStock chart. This will only move one bar to the left or right.

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MetaStock Features
Performance Systems Plus

Contributed by Ken Spelman

MetaStock (7.2 or newer) comes with 26 performance trading systems. Now you can complete the package and add fifty-four new performance systems and seventy new explorations. The makers of Performance Systems Plus tested thousands of trading systems on thousands of securities to develop this select group of systems. Performance Systems Plus will have you trading with a higher level of confidence and expertise than you’ve ever had before. It includes state-of-the art performance tools for ten of these systems to create a trading strategy helping take the guesswork out of your trading and maximizing your profits.

Performance Systems Plus is optimized for swing and position trading. It is not designed to be used with day-trading. This is one of our easiest add-ons to use and works well with commodities or stocks from any market worldwide.

With Performance Systems Plus you can:

Run an all-new type of exploration that performs system tests over an entire database of securities to find those securities with the most profit potential.
Generate daily buy and sell signals and alerts.
Run a comparison test to find out which of the fifty-four trading systems works best for your chosen security.
Run a signal exploration on a chosen system to generate a list of stocks with buy and sell signals for that day.
With Performance Systems Plus you get:

Find out why Performance Systems Plus has been one of the top MetaStock add-ons of all time.

[tigeran]

Biết thế. Đành phải Google tranlate thui bác

[tigeran]

Đây là series những bài nghiên cứu chuyên sâu về phần mềm phân tích kỹ thuật MetaStock

Money Flow Index

Contributed by Steven B. Achelis

Overview
The Money Flow Index ("MFI") is a momentum indicator that measures the strength of money flowing in and out of a security. It is related to the Relative Strength Index, but where the RSI only incorporates prices, the Money Flow Index accounts for volume.

Interpretation
The interpretation of the Money Flow Index is as follows:

Look for divergence between the indicator and the price action. If the price trends higher and the MFI trends lower (or vice versa), a reversal may be imminent.

Look for market tops to occur when the MFI is above 80. Look for market bottoms to occur when the MFI is below 20.
Example
The following chart shows Intel and its 14-day Money Flow Index.



Divergences at points "A" and "B" provided leading indications of the reversals that followed.

Calculation
The Money Flow Index requires a series of calculations. First, the period's Typical Price is calculated.



Next, Money Flow (not the Money Flow Index) is calculated by multiplying the period's Typical Price by the volume.



If today's Typical Price is greater than yesterday's Typical Price, it is considered Positive Money Flow. If today's price is less, it is considered Negative Money Flow. Positive Money Flow is the sum of the Positive Money over the specified number of periods. Negative Money Flow is the sum of the Negative Money over the specified number of periods.
The Money Ratio is then calculated by dividing the Positive Money Flow by the Negative Money Flow.



Finally, the Money Flow Index is calculated using the Money Ratio.


*Excerpt taken from Technical from A to Z by Steven B. Achelis. The Money Flow Index is available in MetaStock 11.
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Support Tip
How do I set up the MetaStock Enhanced System Tester to use no margin when back testing?

Contributed by Equis Support

For MetaStock versions 8-11

1. Open the Enhanced System Tester.
2. On the left side under "systems", highlight the test you would like to run and select New Simulation then hit Next.
3. Add your list of securities to test and hit Next.
4. In the Perform Trading Simulation screen click the More button.



5. In the Interest Rates section, change the Margin to 0.
6. Under the Margin Requirements section change the options to the settings below:
Long Initial: 100%
Long Maintenance: 0%
Short Initial: 200%
Short Maintenance: 101%



7. Hit OK to save your changes and hit Next to continue through the Enhanced System Tester and start the test.


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MetaStock Features
Trade Oracle

Contributed by Greg Allred

In the world of trading we need to keep up with the ever-changing markets. Systems that have worked in the past will not necessarily work in the future. With MetaStock, we have the capability of modifying our trading systems but rewriting a system can take time and effort. Luckily, Trade Oracle, an add-on that includes 90 ready-to-use and proven systems, has already done that work for you.

Trade Oracle has been around for a few years but is so robust that it still applies to current market conditions. In order to create Trade Oracle, the developers tested over 10,000 trading systems in order to compile the most powerful library of trading systems. Only those systems that had a greater than 50% success rate were chosen. The industry average for similar products are based on a 25-33% success rate.

In Trade Oracle, 100% of the trading systems are open code. It is very difficult to have confidence in a system you cannot see. All of the systems Trade Oracle includes will allow you to see why a particular system is winning or failing so you can make the changes necessary to build confidence and in the end, have more success.

Trade Oracle quickly shows you the top performing systems for any security. With the Best System indicator, you immediately see the top three performing systems as well as their ability to perform, just by dragging and dropping one indicator. You also have a choice of measurement methods to choose from:

- Best Equity (Points)
- Best Equity (Percent)
- Best Trade Efficiency (Points)
- Best Trade Efficiency (Percent)

Trade Oracle is the program that will help you take your trading to the next level. It will give you the tools necessary to stay ahead of the markets and be a more successful trader.