Trading Systems blogs

I can't remember the last time Barron's had so many useful little nuggets of information, here I am talking little details that might be useful sometime.

Starting in 2002 the Bank of Japan ( the central bank) bought Y2.02 trillion worth of stock to help the banking system. That Y2.02 trillion is now worth Y3.15 trillion. If you take two zeros off you can see that it is not a great deal of money for the government of a big country but nonetheless. The government can start to sell those equities in 2007.

The Fund of Information column had some interesting content on commodity mutual funds. Credit Suisse did a study that found between 1970 and 2004 a 100% equity portfolio (content not defined) had an average annual return of 10.1% and a standard deviation of 9.5% but that a portfolio with 20% in commodities had an average annual return of 10.5% with a standard deviation of 8.5%. Higher returns less volatility.

The standard

The Big Picture For The Week Of December 4, 2005
at 2005-12-04 19:51:27

I seem to recall writing about the Merk Hard Currency Fund (MERKX) a few months ago. Gregg Greenberg at TSCM just had an interview with fund manager Axel Merk. According to Morningstar the fund only has $6 million. If this is true, my understanding of mutual fund administration means the fund is not profitable.

The fund's primary purpose is to hedge against declines in the dollar. To that end it owns gold, Swiss bonds and currency from places like Canada, Australia, New Zealand and Euros. Actually, its position in Euros is the largest holding at 42%.

I took the word Hard, in the name, to mean more commodity based but that is not the case.

Viewer mail...end of November
at 2005-12-04 19:51:27

"could you elaborate on how you take a trade on both the 15 and 30-minute chart in the same stock on the same day?"

X - I have two charts on my screen - a 15 and a 30-minute chart. I do not care if I already have a position on one timeframe...if there is a valid set-up on another timeframe, I treat it as a new position with it's own entry, stop, and target (which may or may not be the same as the other position).

"you take a lot of trades in the morning, but not so many in the afternoon. Why?"

X - most of my trades occur in the morning because - over my years of trading - I have found those set-ups to be the most reliable in terms of consistency and follow-through. I do sometimes take set-ups in the afternoon, but the ratio of morning to afternoon trades is easily 3 to 1...maybe more. Bottom-line - I make money more consistently in the morning!

"Why don't you make more posts intra-day? I would love to

ESRX - 112905; 15-minute chart
at 2005-12-04 19:51:27

Great trade.

1.) What did I see?
A gap up with the first seven bars "bouncing" around the opening range high set by the first bar. The eighth bar caught my attention as it pushed above the OR high for the second time and closed strong. The ninth bar was a narrow range, inside bar - although it was weak, it still closed above the OR high (bullish sign). The tenth bar was a narrow range (NR3), inside bar that bounced off the OR high and closed strong.
2.) What is the entry?
A break of the tenth bar high.
3.) What is the exit?
1/2 closed after $1 gain. The other 1/2 was closed at the Fibonacci extension of the previous day's low to the ope

FRNT - 112905; 15-minute chart
at 2005-12-04 19:51:27

Almost 5% in 3 hours.

1.) What did I see?
A gap down and wide range first bar - notice how it bounces off the low and leaves a "lower tail/wick" (bullish sign). The second and third bar are narrow range, and the third bar is a nice, "hammer-like" bar.
2.) What is the entry?
A break of the third bar high. An alternate entry (if you missed the original) was a break of the sixth bar high (note the continued narrowing range as price inched up).
3.) What is the exit?
The target was the retracement zone from the previous day's high to the opening range low. The target was hit around 12:30.

Notes - this was a low pr