Opening Position
January 2006
AS we know,
the market is notorious for changing its mind quickly. Because of this,
it is important to create a trading system that recognizes when these swift
turns take place. For example, from May to August 2005, the NASDAQ Composite
was trending upward. From August to October 2005, the market corrected.
From October 2005 till now, it has resumed its upward trend. Was your trading
system able to identify these changes in a timely manner? If you don't
know, the start of a new year is a good time to take a look.
Designing a trading system is extremely challenging but if it is done
well, it can make all the difference in your trading results. It's not
easy, as Jeffrey Owen Katz reminds us in this month's Technical Analysis
of STOCKS & COMMODITIES interview, starting on page 56. You have
to constantly monitor your systems, adapt them to changing market conditions,
create different ones for different markets, create different ones for
different time frames, or completely abandon them if you feel they no longer
work. The key is to create one that sets itself apart.
BUT where can
you begin? To find out, read our feature article, "Developing Your Own
Indicators" by Lee Leibfarth. If you've hesitated in taking those first
steps toward designing a trading system, this article will rid you of that
hesitation and you'll be well on your way to creating a logical and profitable
trading system. And those of you who are beyond this stage will find gold
in John Ehlers's piece, "The Swiss Army Knife Indicator." Why "Swiss Army
Knife"? You guessed it ... it's an indicator that does all things. The
article begins on page 28. And even though you may have created a solid
trading system, don't forget that a system is only one, although important,
part of the trading profession. You need to have a good trading plan. You
can find out how to create one by reading Vadym Graifer's article, "Trading
Plan: A Blueprint For Your Trading." That article starts on page 72.
We hope our collection of articles in this issue will prepare you for
a profitable year. Even if you have a trading system that produces the
results you want, there may be some new ideas in this issue that you may
wish to incorporate into your trading.
Here's to a successful trading year.
Jayanthi Gopalakrishnan,
Editor
Originally published in the January 2006 issue of Technical Analysis
of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright
2005, Technical Analysis, Inc.
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