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  • Technical Trading: The Winners and Losers March 24, 2012

    Technical trading is not as easy to define nowadays as it was in the 1980s when it become popular. It is no longer limited to technical analysis and indicators but encompasses a wide variety of methods. Most of the methods are well-known, ...

  • Margin, Leverage and Trading Account Capitalization [Premium Articles] February 13, 2012

    This is a short introduction to the use of margin and leverage. After defining the relevant terms and clarifying common misconceptions I present a simple formula for calculating the amount of capital that is required for minimizing the probability of ruin when trading highly volatile markets ...

  • What is so Special About the 200-Day Moving Average? The GLD Case December 23, 2011

    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.

  • Trading is a Useful Zero-Sum Game December 17, 2011

    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 ...

  • Trading Based on Classical Chart Patterns is Modern Alchemy December 15, 2011

    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 ...

  • More on Games with Fancy Names that People Play December 12, 2011

    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 ...

  • Games with Fancy Names December 9, 2011

    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 ...

  • Is Chart Analysis Modern Alchemy? December 8, 2011

    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 ...

  • Reality Says I Do Not Need to Defend Myself December 1, 2011

    Reality provides the ultimate test of all ideas. Since Monday of this week, the DJIA has gained 813 points or about 7.42%. But someone could claim that a recent call for Dow dropping to 4,000 by a well-respected analyst regarded only the longer term. Well, my ...

  • Dow 4,000? What Technical Analysis Says or Doesn’t Say About Such Possibility November 26, 2011

    Recently I read an analysis about the possibility of Dow dropping to 4,000 or even as low as 1,000. The claim was that technical analysis of long-term charts supports such a possibility. I argue here that it is not pure technical analysis that ...