Monthly Archives: December 2011

What is so Special About the 200-Day Moving Average? The GLD Case

The importance of the 200-day simple moving average as a trend indicator is well-known and indisputable. Even those who do not use technical analysis pay attention to this average. But why 200 days and not 250, for example? The latter should better describe a yearly … Continue reading

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Trading is a Useful Zero-Sum Game

There are two main issues with heated discussions one can find in trading forums about zero-sum games. The first issue is that most people believe that a zero-sum game is a useless one and its only aim is to redistribute … Continue reading

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Trading Based on Classical Chart Patterns is Modern Alchemy

Medieval alchemy aimed, amongst other things, at the transmutation of base metals into gold. Trading based on classical chart patterns, like triangles, head and shoulders, pennants, etc. is a form of modern alchemy because it aims at the transformation of simple geometrical shapes found on price charts … Continue reading

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More on Games with Fancy Names that People Play

Following the very popular post of last week on Games with Fancy Names, today I have a new game.  A biased coin will be tossed 1807 times. The coin bias is only 51.96%, meaning that on the average, heads will come … Continue reading

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Games with Fancy Names

Someone asks you if you would like to play the following game: A biased coin will be tossed 1778 times. The coin bias is 54.78%, meaning that on the average, heads will come up 54.78% of the time. You win $85.50 each time … Continue reading

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Is Chart Analysis Modern Alchemy?

Recently there have been many chart pattern failures in several markets. One must be very careful with chart analysis because the market rarely rewards predictions that are obvious to anyone with a book on technical analysis and a personal computer running a charting program. Examples … Continue reading

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