VolumeVII, Number3 March1991 $r0.00 BankingOn CSI Seasonal Charts (A Blueprint Into TheFuture) A professional work or writing on effort,I wanted share ourread- to wittr Bankins CSIOn Seasona-l Charts.............. 1 commoditytrading is not complete erssome theresults ourwork on of of Managing without an indepth examination of A seasonals.seasonal analysis used is Expecled)-osses ............. 2 seasonalpricebehavior. Anyagdcul- with Unfair Advantage helpmea- to Do CandlestickCharts turai productthat is a candidate for surethe tendency a marketto be of ImproveYour Market tradingshouldnot beconsidered un- conraseasonal wherein oppomrnides Peiformance?.................. 3 less seasonal the pattem thegiven for for profrtarcmoreevidenl The New IRM productis reviewed. Mostseasonal analysisconsidered StudyRave......,,.............. 4 oncommodity hasbeen data Perpetual Contract throughthe useof monthly DathSa1e......................... 4 data.Jusltwelvepointsper Ask Customer Service,.. 5 yearis whattheaverage au- thorusuallyprovides the in standard technicalaralysis tery aboutour work, I would like to publication. saythatI hadaninteresting conversa- We have developed an tion with a fi:iendwhodisagreed with 251 annualized tradlng day thetechnique proposed I beforeactu- seasonal patternfor every ally undetaking the analysis. My commodity.It is derived on friend, a former winner in intema- a relativebasisthroughan tional competition of the World indexingmethod, it ex- Economistof the Year Award, sug- and actly pictureseach com- gested thatday+o-day information was modity's annualprice pat- not sufficiently preciseto bother tem. I thoughtit would be breaking it down any finer than helpfulto reveala CSI sea- monthly. Perhaps this is why few sonalchartfrom amongup examples are available where to 40commodities sothat deseasonalizationdoneon a more or is to wecalculated helpmake a detailed basis.My friend hasnot yet for case seasonal analysis. seenthe rcsultsof our work which The methodsused to absolutely suggests muchgreater that We know our readersare patiently our compute seasonal indices involve precision warranted, is waiting for our Unfair Advantage@ a few interesting calculations which Thesecharls were derivedfrom sofrwareproject to be completed,and seemed quitenormalo us,butwhich three-month-forwad (#46)Perpetual i a because studyofseasonalcharacter- we havenot seen usedelsewhere. @ In Contract data which assumes con- vistics is part and parcel to the total fact,at therisk of introducing mys- tractexpiration the 10thdayof the a on delivery month. We have shown This is only one suggestion offer software whichwill address tl Chicago corn (figure 1) in our ex- irmong many. An analysis sea- abovematter. But tbr now *" ubt of ample. It is unlikely that you will sonal is characteristicsanimportant contentto simply suggest there that findamore comprehensive seasonal requirement the study of a com- are,in fact, many ways to view the in chart.CSI's full data resources were modity's pricemovement, there market that are significantly more but used develop seasonal to our indices aremanyothercharacteristics which powerful than the typical zem-sum thatin manycases reach backbefore should considered be beforea trad- less commissionmethodsfound in 1950on a historical basis. ing decision made. We hopeto technicaltoolkits. is Wehave saidmany It is fafulyobviousfrom thischat, give our readers moreinsightinto times that zero-sumproductsare that one could have profitedquite this area subsequent in NewsJour- readilyavailablein the form of low- handsomely anticipatingthecorn nals to add to yow generalmarket priced by glitzygraphical public domain market movement usingtheseasonal knowledge. tool kits or expensive real-timesys- index as a forecasting tool. High In pursuingour policy to help tems. These products usuallyof- me readings the com index andhigh readers in graspfundanrentals trad-of readingsin relative corn prices ing thatmakesense, have we tended theywill produce regularnetprofits. (April, 1990) suggested eventual to get ahead ourselves there- Unfortunately, an of in nothingcould befur- downturnin pricesof com. Simi- Iease newproducts.We plan to therfrom the tnrthl E of larly low com index readings and relativelylow corn price readings (Sept., 1990) suggested strong a Losses Expected Managing moveup in prices. To profit most Theidea forthis briefanicle comes theprobabilityof loggingapmfit that heavily,one shouldhaverotained from our iong term loyal customer is outside a breakeven of envelope.- long or shortpositionsin the un- Mr. H. Green. Mr. Green poseda A histogram profits andloss\r, of derlying commodity until a price situationwhereitwouldbeinteresting for a given systemcould appear as reversal how signaled positionshould to determine manymarginal the follows: be closed. The corn index was fades one might reasonably be compiled from data over the 40 - forcedto experience a before sub- F B yearspan from 1949through1989. stantial profitcoulddevelop that 0 U The corn chart shown in would move an account into a tl QuickPlot's@ windowcovers top the solidly acceptable position. c credit period April, 1990 through Febru- Mr. Greensaidhe wasaccus- DOTLARS DOLLARS 8I O @indiee+ion tomed+otading according thecom seasonal to index historicallyhas delivered 407o that Thearcaof thehistogram is to is to favor the long side of com if profitsagainst 607o losses. we can theleft of thezeropointwouldrepre- If you haveremained com's long assume successive on that trades in- sentlosses(60Vo, our example). are for sidefrom the September, 1990en- dependent that the and gamehas a Giventhatthesystem whichproduces try. If you areneutralat the present positiveexpected value,thenwe can the histogramhas a positive math- time,theseasonal indexsuggests at easily introducesomeprobability ematical X expectation, couldrepre- "breakeven least a month or more wait before generalizations will helpto mea- sentthe dght end of the that taking a short position. (Note the surethe likely numberof losses one envelope", point wherelosses the are indexfromJanuarythruApril,1990.)mustsuffer before larger a by thannor- matched equivalent profits. The Also pleasenotice that the sea- malprofit will occur. pointX alsodefines percentage the of sonalindex is replicatedyear after To realistically zuralyze prob- the total histogram'sarea where dris year and the index waveformdoes lem one mustexamine distribu- breakeven the resultsare expected. T( not change. tion of profits andlosses compute place somenumbers the chartY to on --lease assume that the areaof the lGhaded portion of the histogram to ChartsImprove Do Candlestick be 907oof the total. Therefore,to Your Market Performance? answerour question about the number of trials to suffer before Tradersare always reviewing, to weakness the situationwherethe a experiencingsignificantprofit, we recalculating, seeking newindi- out openandclosearethe same,indi- it cananswer by simplyraising.9 to catorsand new interpretations of catingaprobable in themarket. turn apowerofN where Nrepresents the existing As ones. such, significant a These ninetypesof"PoleLines"are of number trades should you expect amount attention been of has given further broken down into other to sustain bfore a substantial profit recentlyto the Japanese form of variationsand are given unique charting called "Candlestick namesfor easierrecognition. A wrll appew99Vo the time. of Since.93 is.0097and Charts". cenainamount pattemrecogni- of .94 is.0108 Somesources datethis form of tion is possiblewhen studyingthe whichbounds 1%objective the then chafiingto theJapanese mar-rice tstl a 43 or 44 traderun of breakeven or ketinthemid-1700's. Others trace 91&15 5 lessperformance the areabelow in its inception theYokohama to sil- X is possible (100-99) the l7o of ver marketsof the late 1800's. t3 time. Howeverit may havegottenits 1Z Don't be surprised find that, to staft.it is an interesting ofway 00 25 for suchan example,a fairly long pofiraying pricemovement. one If 2g wait could be the norm beforethe doesnotusea tradingsystem, but reads pricecharts maketrad- the to n hoped-for larseorofit could move ?3 Qou, u..oun,ialance rheblack. into ing decisions, Candlestick Charts 22 r6 The aboveassessment could be candisclose information may that I t4 solvedin otherways usingthe full not be obviouson a standard bar 30 24 capability the binomialdistribu- of chart. The Candlestick charts arc tion which is designedto handle sometimes drawn with red and suchdichotomous events. I will blackink with themainbodycon- zs leaveit up to thereaderapplyingthe sistingof thepricemovement be- same principles estimate capi- to the tweenthe openand close. The 03 tal necessary suffer throughthe to mainbody is thencoloredred or losses. couge,lsersofthe Trad- Of black depending-otr whether the ing SystemPerformance Evalua- is close higherthan openthe (Red) or the reverse (Black). QuickPlot "PoleLines"in a collective manner. torfr, in its employment simula- of providea quick uses hollowcandle placeof the a in Patterns "ThreeMountains" tion methods, can suchas answer this question. to for redcandle theCandlestick chats which traditional methodsidentify Incidentally, ifany otheruser has shownthere.Shadow linesextend as a "Head and Shoulders", anideaheor shewouldlike to have from themainbodyup and/ordown "Nabezoko" "Saucer"andmany or addressed, jot please it down and to showthetotaldaily pricemove- others are recognizedwith similar sendit in. We would be happyto ment.Thereareninedifferenttypes to implications ourwestern waysof considersuggested topicsin a sub- orcategories whicharecalled "Pole charting. Lines" or daily price movements. 'H:*"F;;::'r sequent NewsJournal. E Theserangefrom the long red or Recently lookingoverT-Bond we in to action, decided analyze some t! blacklineswithcharacteristics catingexfemesfengthor exffeme indi- of thecharting at a numberof examoles will Looking similarities. we illustrate only one where on Wednesday marketaction a the "PaperUmbrella" or "Red Lower was 'J :1,'."*:- JlT,lil *I:::": ;::*: Yp Shadow"(a long line below the from satisfiedcustomers who have shouldbepleasantly E surprised. body).Thisindicates youshould that the uncovered manyadvantages of be a seller. The following day we QuickStudy's@ new Intermarket hada"Tsutsumi" where longblack a RelativeMovementrustudy. All Index Data Seasonal line engulfed prior daysaction the callersapparentlyfollowedthe ad- Now thatwe havedeveloped the indicatinganendto therise andthe viseof theFebruary 1991(Vol Vtr, Seasonal Index Data for all com- startof a fall. This was to be fol- No. 2) NewsJournal drovethe and moditie we canoffer it ashistori- s, lowed the next day, Friday, by a studywith 10yearsof weeklyPer- caldataor asupdates yourdaily for lower openingand a much higher petualContract data. file. If you havean interest please close" So, the traderwould have Hereis yourchance introduce to 1etus know so that we canprepare been ifhe verysurprised or she were some id sol fundamen research tal into for an exoeditious releaseof this to blindly follow the Candlestick your analysis. Boot up your new information. E symbols. Every methodsuffersa failurerateandCandlestick Charts areasvulnerableasany othertech- nicalapproach. Reviewing only a few number of data points is not adequate to drawany firm conclusions.How- Regularreaders theCSINewsJoumal of havebeen leamingmuch ever,the advantages observed we abouttheadvantages long-term of customers marketanalysis.Several for predictingthe future using have approached seeking us on discounts Perpetual to Contractdata help candlestick charlsin lieu of stan- them getsurted.Theyplanto use Contract in implement- Perpetual data dard price-time charts are not that ing theideas have we suggested. havebeen We happyto accommodate significant. Theyaremoredescrip- tlese customers discounts, we feel we shouldoffer the same with but tive of market behavior, but at a savings to all our subscribers. price.They usemore space tellto their story. and many usersgive Discounts: themgreat endorsements. However Perpetual 20%Discount anylGYear on Contract if you area good-techdcalatallsl, histo4r Data your fortunemay not improveby 10o/o on contract Perpetual Discount any6-mon!h spending tirne and money to the switch your system market of vrew- history Data ing to Japanese Candlesticks.E These prices sale applyto historical only.Please dataondiskettes notetharthe20Ea is discount to beappliedto Contract Perpetual series for whichat leasta ten-year T\e historyis ordered. l0vo discount will applyto PerpetualContractseries whichlessthantenyears moIE for but than6 months historyarcordered. of Last month our February 1991 All historical dnta disksare subject to a $50.00 minimum order. News Journal, Vol. VII, No. 2 This saleendsJune 1, 1991. was incorrectly dated as Janu- ary 1991.We regretthis mistake. Ask Customer Service macro.WhentheEnterQA#prompt appears,enter the numberor letter you namedyour macro. For our Eachmonthin this column,the is computer on and at the Quick- example,we would enter <A> to CSICustomer Servicestaffaddresses Trieve Main Menu whenthat time pick upthemostrecent tradingday. a subject interest manyusen. of to comes. This monthDave,Karen,Rudi,Su- With QuickTrieveAutoma- san and Tami will answer some tion, you can update your files common questionsabout Quick- whenever is convenient you. it for How canQuickTrieveAu- Trieve@ Automation. This macro Threesimple keystrokes the weekly helpwith updating tomation execute feature lets users of QuickTrieve entireprocess. macrocango on A andmonthly files? version4.0 or 4.01 automate many to otherfunction afterdata s retrieval. softwarefunctions. This featurelendsitseHto QuickTrieve Automationquite well. It lets you automatically updateall What types of things can update macro? your weekly andmonthly files with QuickTrieveAutomation do? threequick keystrokes. To make this macro, press Start at the QuickTrieve <ALT> <L> at the QuickTrieve QuickTrieve Automation can executealmost every normal MainMenu.Holddownthe<ALT> Main Menu. At the ENTER QA # pro$am function. If you canpress key while you press<L>. Quick- prompt, enter the letter or number Trievewill beready learnamacro. to you wish to namethis macro, , .he keys to get QuickTrieve to do \4omething, thisfeature replicate can TheENTERQA # promptat thetop Proceed the through necessary youl keystrokesto repeat the pro- ofthescreen youname macro. lets this the stepsto condense data. Start cess.Somecofirmon uses are: Enteranysingle-digit number any or with <F> Enter QuickManager and l. Retrteve distribute and daily letter. This will be the permanent <H> Move/Splita DataFile. Select updates. namefor your macro,soremember paths moveFROMandTO.Press to 2. Automaticallyupdate allyour it or writeit down! (We'11 this call <F1> to move all to weekly and weeklyand monthlyftles. sample macroA.) monthly. Answer the next few 3. Execute series a oftechnical Now gothrough process the of questionsas they apply to your sndies with QuickPlotl QuickStudy. a collecting dailyupdate. Selectthe needs.Enter<Q> to quit askingif CURRENT week ard day G (the you want to changestart and end rotating cunentday)whenidenti- dates.Press key to proceed any and fying thedatato retrieve.Whenthe finally, marktheendof yourmacro What is the advantaseof is update finished, proceed through by pressing <ALT> <L> again. using QuickTrieve Automation for thedistribution process. is a good It You can use this macro retrievingdaily updatesover using idea to request autocreation the of you whenever wantto update your unattended collection? anyfile typesyou may need. weekly and monthly files. Press After collectionanddistribu- <ALT> <P> at the QuickTrieve tion,marktheendof yourmacro by MainMenuto playbackthis macro, Both choices uodate can the pressing <ALT> <L> again. beingsureto enterthecorrectQA # most recent trading day with little The next time you want to for this setof keystrokes. yoTpp. efforl-on collect a daily update, hold down Next Month watch for an ar- , . retrievalwill pick <ALT> andpress \- Unattended <P>.QuickTrieve ticle on technical analysis with up data at a specified time if your will be ready to play back your QuickTrieve Automation.!
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