Opening Position - March 2005
Trading has come a long way since 1792,
when the first contract was traded under the Buttonwood Tree in lower Manhattan
Island. Since then, the biggest change has been the accessibility of trading
instruments on a global scale. From the comfort of our homes, we can access
all kinds of information that makes it possible for us to trade instruments
around the world, all through the day and night. But we have reached a
stage where the information may be too much to digest.
Take technical analysis, for instance. Technical analysis may not have
been around for as long as trading (at least outside of Japan), but with
the explosion of the Internet has come the websites that offers technical
analysis features. In fact, some of these sites have built up with a dedicated
following - which, if you think about it hard enough, may come as no surprise.
With the markets acting the way they have been, it's difficult for individuals
to stick with the long-term buy and hold strategy. The issue really is,
with all the information out there, how do you identify those sites that
have what you need? It's not really worth your time to go from one website
to another, reading about different strategies, in the hope of finding
that one strategy that's going to make your next trade a success.
In this issue of Technical Analysis of
STOCKS & COMMODITIES, we interviewed Ashwani Gujral, an India-based
technical analyst, about how he uses the Internet to trade on an intraday
basis. There's something to be said about being able to limit yourself
to just one website and actually make money from it. Read more about his
strategy starting on page 64. Some of you may find that a strategy similar
to the one discussed may meet your trading goals.
Some of you may prefer to build custom indicators and perform backtests
that determine their success rates, optimize the indicators, and measure
their performance. In addition, among trading systems, there are a multiple
number of options. How do you determine their validity and significance?
We hope Damir Wallener's article, "Backtesting And Edgetesting," will provide
the answer. The article starts on page 22.
Finally, technical analysis has certainly had a significant impact on
many traders. A good number of indicators have been created since technical
analysis was introduced. One of the pioneers of technical analysis was
Arthur Merrill, who in his lifetime brought useful ideas and techniques
to traders, many through his contributions in STOCKS & COMMODITIES
since its early days. Art Merrill, who passed away on January 4, 2005,
will be remembered fondly, not just as a pioneer but also a mentor, for
an example of what a technician could be.
Jayanthi Gopalakrishnan,
Editor
Originally published in the March 2005 issue of Technical Analysis
of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright
2005, Technical Analysis, Inc.
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