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New Frontiers in Technical Analysis: Effective Tools and Strategies for Trading and Investing

New Frontiers in Technical Analysis: Effective Tools and Strategies for Trading and Investing

Paul Ciana

ISBN: 978-1-118-15559-2 August 2011 352 Pages




An essential guide to the most innovative technical trading tools and strategies available 

In today's investment arena, there is a growing demand to diversify investment strategies through numerous styles of contemporary market analysis, as well as a continuous search for increasing alpha. Paul Ciana, Bloomberg L.P.'s top liason to Technical Analysts worldwide, understands these challenges very well and that is why he has created New Frontiers in Technical Analysis.

Paul, along with in-depth contributions from some of the worlds most accomplished market participants developed this reliable guide that contains some of the newest tools and strategies for analyzing today's markets. The methods discussed are based on the existing body of knowledge of technical analysis and have evolved to support, and appeal to technical, fundamental, and quantitative analysts alike.

• It answers the question "What are other people using?" by quantifying the popularity of the universally accepted studies, and then explains how to use them
• Includes thought provoking material on seasonality, sector rotation, and market distributions that can bolster portfolio performance
• Presents ground-breaking tools and data visualizations that paint a vivid picture of the direction of trend by capitalizing on traditional indicators and eliminating many of their faults
• And much more

Engaging and informative, New Frontiers in Technical Analysis contains innovative insights that will sharpen your investments strategies and the way you view today's market.

Preface xi

Acknowledgments xv

CHAPTER 1: Evidence of the Most Popular Technical Indicators 1
Paul Ciana, CMT

Defining Technical Analysis 2

Defining Chart Types 5

Evidence of Chart Type Popularity 10

Evidence of Technical Indicator Popularity 14

Applying the Most Popular Technical Indicators 18

Conclusion 45

CHAPTER 2: Everything Is Relative Strength Is Everything 49
Julius de Kempenaer

"This Time It's Different" 50

What Is Comparative Relative Strength? 51

The JdK RS-Ratio and JdK RS-Momentum 65

Relative Rotation Graphs 75

Conclusion 83

CHAPTER 3: Applying Seasonality and Erlanger Studies 85
Philip B. Erlanger, CMT

Testing for a Valid Seasonal Cycle 86

Applying Cycles as a Strategy 94

Monitoring Seasonal Data 101

Erlanger Studies: The Art of the Squeeze Play 108

CHAPTER 4: Kase StatWareTM and Studies: Adding Precision to Trading and Investing 155
Cynthia A. Kase, CMT, MFTA

Introduction to KaseSwing 157

Kase DevStops 169

Kase Momentum Divergence Algorithm 177

Kase PeakOscillator and KaseCD 188

Why Use KasePO and KaseCD? 189

Kase Permission Stochastic and Screen 199

Entering Trades and the Kase Easy Entry System 201

About the Kase Easy Entry System 206

Trading with Kase StatWare 209

Kase Bar Chart (Equal TrueRange Bar Chart) 211

Summary 215

CHAPTER 5: Rules-Based Trading andMarket Analysis Using Simplified Market Profile 217
Andrew Kezeli

Technical Analysis Is Simple in Theory—Difficult in Practice 218

Rules-Based Trading: Automated Strategy Trading versus Discretionary Trading 221

Balance versus Imbalance: Distinguishing the Two Phases of Market Activity 222

There Are Only Three Market Segments: Nontrending, Uptrending, and Downtrending 224

Four Market Participants—and Then a Fifth . . . 228

Market Profile 231

Market Movement: The Four Steps of Market Activity 234

Market Structure 236

The Relative Speed of the Market's Building-Block Components 239

Vertical Nondevelopment ("Minus Development") 240

Simplifying Market Profile 245


Rules-Based Trading and Analysis with TAS PRO Navigator 255

TAS PRO Indicator Application Examples 257

Conclusion 280

CHAPTER 6: Advanced TradingMethods 283
Rick Knox

From the CBOT to the Charts 283

Trading by Gut Feeling 287

Understanding the Background of an Opportunity 288

They Say Entry Is Easy, but Not in My Book 295

Trade When the Odds Are in Your Favor 299

Don't Fight the Trend 300

Trade Location Is Key to Long-term Success 301

Adjusting to Volatility 302

Anticipating What Needs to Happen 303

Using Time as Part of Your Risk Management 304

Learning to Control Your Emotions 306

The Hardest Part of Any Strategy Is the Exit 306

Putting It All Together: Two Examples 307

Picking Up the Right Tools 310

Recommended Reading 313

About the Authors 315

Index 319