PDF - Association of Technical Market Analysts.

Transcription

CONTENTS
 Letter from the President - Page 3
 Editor’s Note - Page 4
 GuruMeeting with Fred Meissner, an Interview by Sushil Kedia - Page 5
 The Art of Chess and Trading by Ashwani Tiwari - Page 19
 Technical Analysis: Cognitive Biases, Global Macro & You summarized by Meghana V Malkan - Page 24
 Testy Bytes by Kora Reddy - Page 27
 Spread Trading-II by Andy Jordan - Page 32
 Book Review - Investment Psychology Explained by Vishal B Malkan - Page 36
 Forthcoming Events - Page 39
 Past Events’ Update - Page 41
This newsletter is produced by the Association of Technical Market Analysts. All comments and editorial material do not necessarily reflect the organization's
opinion nor does it constitute an endorsement by the Association of Technical Market Analysts or any of its officers, of any products or services mentioned.
Sources are believed to be reliable at time of publication, but not guaranteed. The Association of Technical Market Analysts and its officers, assume no
responsibility for errors or omissions.
2 | ATMASPHERE
SEPTEMBER 2012
LETTER FROM THE PRESIDENT
Dear Colleagues,
ATMA inaugurated its 8th Chapter in India, at Ahmedabad this month. The 9th chapter is coming up very soon at Hyderabad. Our all
India roll-out will be complete before this year goes with the completion of ongoing search for the appropriate founder volunteers for
the Chennai Chapter materializing. There is a lot of positive change in the air around ATMA, coming up. A revision of the collaboration
agreement between the ATMA and the MTA is going to now facilitate ATMA to start implementing chapter roll-outs in Nepal, Bangladesh and Sri Lanka as we
achieve an all India presence in some more months. ATMA has found a larger, more productive office now within the Bombay Stock Exchange Building.
Strategic partnerships and relationships with key market organizations such as the BSE Brokers’ Forum have reached the next level. ATMA is proud to be able
to host the world’s first E-library in Technical Analysis. We have chosen to name it as the R N Elliott ATMA E-library of Technical Analysis. On 6th October Mr.
Robert Prechter will inaugurate this Library live from Chicago in an e-ribbon cutting ceremony! We will witness this historic moment within the Seminar to be
presented by Mr. David Keller, President of MTA the same day at the BSE Trading Hall. I am looking forward to meeting with each and every ATMA member.
Register soon!
ATMA Social Awards is a simple idea that values the power of incentives in modern economics. Anyone who visits our sites and takes interest in sharing our
content over their social networks is acknowledged by a rising score of points, daily. Points can be exchanged for valuable items and gifts. This catalogue will
be keeping growing and through very cost conscious and ethical means ATMA shall continue to facilitate being discovered by wide-spread networks of market
professionals. In the old world groups and associations developed by existing stakeholders spreading the word of mouth over the phone or in a personal
conversation face to face. In the world today you do it much more effectively and quickly using social media. ATMA thus remains ahead on the adaptivity
curve.
Sincerely,
Sushil Kedia
SEPTEMBER 2012
ATMASPHERE | 3
EDITOR’S NOTE
In this month’s issue, we provide you the summary of the presentation made by Larry Berman at the BSE Convention Hall on 1st
September, 2012. A dynamic speaker, Larry’s seminar was highly educative, thought-provoking and enthralling.
In the GuruMeeting feature of this issue, our President interviews Mr. Fred Meissner, CMT. Having been the President of the MTA for
four years in the past, Fred has to his credit the task of assigning the Technical Analyst a status equal to that of a Fundamental Analyst.
He shares his perception on the changes that have swept the field of Technical Analysis over the last 27 years. He also discusses his three
market principles, his analysis of the world markets, including the US Dollar Index as well as commodities.
Also in this issue Ashwani Tiwari, a FIDE Master in Chess points out the similarities between the game of Chess and the practice of technical analysis by assessing and comparing
the various aspects of the two.
In the last issue, we had introduced the concept of Spread Trading by Andy Jordan. This time he explains the spread movements with illustrations in currencies
and commodities charts.
Kora Reddy back-tests various Gap Trading strategies in ‘Testy Bytes’.
Martin J Pring’s intriguing work ‘Investment Psychology Explained’ is reviewed by Vishal B Malkan, CMT.
After the grand success of the Larry Berman Seminar in 1st September, 2012, the members of ATMA will gather at the BSE Trading Hall on 6th October, 2012 to
listen to MTA President David Keller speak on a very interesting topic - ‘Technical Research at Fidelity - Behind the Scenes’. This event too, a joint collaboration
between ATMA and the BSE Brokers’ Forum, is expected to be well-attended by the members of both the Forums.
Looking forward to know what you think about ATMASphere. Email me at [email protected]. You can also subscribe to ATMASphere completely free by
clicking here.
Sincerely,
Meghana V Malkan
4 | ATMASPHERE
SEPTEMBER 2012
GURUMEETING
professional career spans 27 years in the investment business. He has a
MEET WITH FRED MEISSNER, AN INTERVIEW BY SUSHIL
KEDIA
strategies/portfolio management and business development in diverse
multifaceted
background
encompassing
market
analysis,
trading
environments. Fred’s working career includes senior market analysis
positions at The Robinson – Humphrey Company, Merrill Lynch and Co., Inc.
and he was for four years a President of the Market Technicians Association
which of course is the largest association of professional technical analysts in
the world. While President of the MTA, this organization moved to a new
structure encompassing the hiring of professional managers, and successfully
incorporated within the Sarbanes-Oxley the inclusion of CMT (Chartered
Market Technician) designation as being good for an exemption to the Series
Fred Meissner
Sushil Kedia, President, ATMA
86 requirement for Financial Analysts. This effectively brought recognition to
Technical Analysis being complete in itself as a Market Analyst as much as
Interview Transcript
FM: Fred Meissner
Fundamental Analysts have been accorded the status of an Analyst before
SK: Sushil Kedia
this occurrence. Fred holds a BS degree in Business Administration from
Trinity University in San Antonio, Texas, and an MA degree from The
SK: Hello Everyone! Welcome to the September 2012 edition of the Guru
University of California, Los Angeles in Latin American Studies encompassing
Meeting, I am very privileged to be hosting Mr. Fred Meissner.
an interdisciplinary curriculum of International Business, History, and
Sociology.
Welcome Mr. Meissner.
And I am of course Sushil Kedia the founder President of the ATMA holding
FM: Well, thank you Sushil! It is nice to be on with you. I hope everyone in
India is having a wonderful day.
SK: Let me introduce Mr. Meissner. He holds the Chartered Market
Technician charter. He is the founder and President of The FRED Report and
these interviews every month with individuals who have shaped the current
course of Technical Analysis globally.
A very warm welcome to Mr. Meissner. In 27 years of your career what you
think has changed in Technical Analysis?
on his website it is stated that the ‘E’ in FRED stands for Education. His
SEPTEMBER 2012
ATMASPHERE | 5
FM: Yeah, I think the biggest change in Technical Analysis is been the advent
Technical Analysis. When this all started, something like 90% of all
of the personal computer and computerization of the older flows in the
commodity traders lost money. After the advent of the computers and all
market which is the outgrowth of the course of personal computer coming in
this testing and such; it still is statistical that 90% of the commodity traders
but Sushil my career spanned out uniquely. I did my very first indicators on
still lose money. So, in that sense there has not been a big change but I think
an HP 12c calculator and drew them on charts by hand and about 6-7 months
that one of the things that computers have done is enable me to figure out
after that I got my first Apple Macintosh computer which was an old Mac
things that don’t work more quickly.
128K and beta tested the software called Microsoft Excel which at the time
was brand new and that basically has changed everything. I had some of the
first wide quote systems on a Mac for stock analysis. The original trading
computers were only for commodities, the old commodity quote graphics
machine. I was able to do everything on my Mackintosh and that put me
ahead of almost everybody, there was like 10 of us in Los Angeles and frankly
in many ways we changed the world. It was really exciting.
SK: So, Fred technology is the biggest change in these 20 years impacting
Technical Analysis. Let me paraphrase my question: how this technological
growth impacted the art and science of Technical Analysis?
SK: So, Fred this brings me to your three market principles – the
psychological, the internal momentum and the external momentum. It would
be so useful if you help us learn what you mean by these three market
principles. How they many have evolved over this technological shift?
FM: Certainly I will make sure you get a copy of my latest monthly review for
your membership that explains these principles more fully. Basically, I look at
the markets in terms of three principles – internal momentum which is
indicators such has breath, new highs, new lows; some of the things that are
going on in the market under the surface - relative performance of the
indexes with each other such as the Russell 2000 to the S&P 500 and that
FM: Well, in terms of science of Technical Analysis Sushil it has made fairly
sort of the thing. And that is important to judge the health of the market
rigorous testing of trading systems and indicators and such more easy and
because what you want to see is the broad market leading and smaller
within the grasp of every person that has a computer rather than the big
indexes lagging if you will. External momentum indicators are indicators like
brokerage firms but in terms of the art it really has not done very much and I
the Stochastic, the Relative Strength Index - both Wilder’s (not relative price
am a believer that Technical Analysis is combination of science and art sort of
but Relative Strength Index), etc. Those are the sort of indicators that
like a great chess player, anyone can learn how to play chess but a truly great
everyone has on their computers and is readily available to them to make
chess player has got that artistic flair that enables him to be more creative
test and then the third – psychological - are some of the sentiment
and more adept than others. So in that sense there still relatively few great
indicators. I use two different types of sentiment indicators generally, I use
technicians although there are a lot more practitioners in interest in
6 | ATMASPHERE
sentiment calls like investors intelligence and I use put/call ratios which show
SEPTEMBER 2012
exactly what people are doing at any given time. But sentiment - regardless
Composite which is 2200 stocks on the New York Stock Exchange, all of the
of how you look at it is a contrary indicator. I like to have an intermediate or
S&P 500 stocks except for stocks like Apple and Microsoft and Intel are in the
short term view of it and that is why for short term sentiment I usually
New York composite so that is lagging. This shows that the broad market is
measure put/call index. So, those three things to me make up the framework
lagging the two other indices and then of course the Russell 2000 which is
of being able to analyze the market and seeing where you are in the cycle.
smaller more speculative stocks is lagging even more so that suggests that
our forecast which is been from last April that we would have a summer rally
SK: So, say Fred if we took where the markets are currently in this world and
using your framework how would you, place your diagnosis of the market
across these three types of indicators at the current moment? On any time
frame you are comfortable talking about.
FM: Well, let us take a look at the last 3 or 4 months and what has happened
and that would enable you to sort of put the view I have of the stock market
in the context right now. In terms of the sentiment indicators, what you are
seeing on the intermediate term sentiment is - it is still a relatively positive
environment, there are a lot of bears out there still. I only use an Investors
Intelligence to present bears numbers because my understanding of the way
those numbers are formulated is that bears actually do something whereas
people expecting a correction or bulls may already be invested in the side not
from May to August is probably just about over. We have to be nervous
about what happens after the end of August in the marketplace. In terms of
the external momentum like the Stochastic and all those sorts of indicators,
they are overbought suggesting that we are in a range to have a correction should something happen externally. So, the bottom line is the market
internally seems to be expecting a correction, externally is overbought
because there are still a lot of bears out there. It may be choppy and less of a
straight down type of a movement people would be expecting.
SK: Fred, in terms of the framework in which you look at a specific market,
we got a clear understanding from what you just taught us. Now did you
connect markets with some kind of inter-market study relationships and if
you do how do you place them across these three market principles?
to do anything. In terms of internal momentum, you are starting to see and
have been seeing over last few months’ weakness in the market. You are
FM: Well, what I do is, I do not do a lot of inter-market analysis objectively
seeing that the big cap indices are leading the broad market and you can see
but of course I look at other markets. One of the things you are seeing is
this just by looking at the combination of three indices or let us say four. The
emerging markets are much weaker than US stock markets. So, one of the
OEX is making new highs that are S&P 100 biggest market capitalization
things I am telling my subscribers is, even for speculative money you should
stocks; the S&P 500 has made new highs but is trading more weakly than the
be getting out of emerging markets and putting money in US small and mid-
S&P 100. It is important to note that all of the S&P 100 is in the S&P 500 so
cap stocks. Now if I am right about a correction, US small and mid will do
you can see there is a big cap skew. Then you look at the New York
worse than big cap S&P 100 or S&P 500 indexes but they should still do
ATMASPHERE | 7
SEPTEMBER 2012
better than emerging markets. And sadly looking at your Indian market; it
if we go through the head that whole pattern will be gone and you will have
has been one of the weaker ones and again the way I measure that - and I
a good shot with the emerging markets. But I also believe you have to
am not an expert on your market - I use PIN which is the Power Shares Indian
construct strategic scenarios. It is very difficult for me to come up with a
Market ETF and that is trading a little bit weaker in some respects than the
strategic scenario where emerging markets will suddenly start to do well and
US market is.
the US stock market will do badly. I just do not see a way that could happen.
So I think that any move in the emerging markets would actually benefit US
SK: Fred, is there a way we can correlate between different markets and try
to look at leads and lags so that you know why one set of markets is weaker?
The idea is to move away from weakness to strength as you say but could it
not be the case that US markets are laggard markets of the world and maybe
emerging markets being far more volatile to maybe something similar to
being a higher beta market, they tend to make their bottoms and tops ahead
of the US markets. Can you evaluate if emerging markets are already trading
much lower and trend is down on them and then maybe the US market is
markets too, and then the question will be relative performance of the two
markets. I do not know if you follow a lot of US Brokerage research but
everyone in the United States is talking about how you have to buy the
emerging markets because “they are the coming thing” and they are cheap.
Now, this usually means a lot of people are in and that there is not a lot of
buying left over for that space. So the concern I have is the people are in and
with the liquidity in these they may be stuck as well just being in and a
potential for decline is there because of that.
lagging behind them and is just about getting closer to a top? How do you
distinguish that from your put/call ratios? If you can afford to get into more
SK: Fred, what’s you analyzed view on the US Dollar index or the US Dollar in
detail on the sentiment indicators?
general and what’s your call on the whole?
FM: Well, first of all the only put/call ratios I follow are on US markets, so I do
FM: I actually think that the US Dollar looks pretty appealing relative to the
not know what those are on Indian or emerging markets. What I also do is, I
Euro and Yen both. The Yen is going to come down and actually the Euro
have some fairly rigid benchmarks and I will give you an example of that. I
could come down sharply into the fall but after that I am not so sure. We did
look at EEM, which is the main emerging markets ETF we use here in the
a study at the FRED Report - which I would be glad to get to you - showing
United States. When I look at that market and I see that the whole pattern of
that if you look at the entire history of commodities and the entire history of
trading since 2011 could be a Head and Shoulders Pattern and if that EEM
stocks going back to the 60’s; the correlation between them - the
breaks 35, you can have what looks like a Head and Shoulders Top which
commodities, the dollar and the stocks is exactly zero! Those relationships
would target below the 2008 lows on emerging markets. Now, the good
change over time, you do get runs in some years but then those relationships
thing about that is that market is around 40 right now, the head is at 45 and
8 | ATMASPHERE
can change. I am of the opinion that the Dollar and Gold can actually go up a
SEPTEMBER 2012
little bit together especially if there is more inflation. And one of the things
SK: Fred would you like to sort of place a range on the S&P 500 say for the
about the US inflation numbers that people are not talking about is there is
next 12 months? What is the maximum upside, what is the downside you
still weakness in the housing market and that is slowing the inflation
look at?
numbers down. So that is 23% of our inflation indices but actually if you take
housing out of the inflation indices, things are looking like we had inflation
here and that is basically good for gold and that is what I think gold is
reflecting.
FM: Yeah, I think the Spider can go make a new high at say 156 and I think
we can trade to 110 to 115 or say 110 to 117. There is a gap on the Spider on
117 from last thanksgiving which is late November which I think could fill. So
that would be my range. I do think this is a long-term bull market, I think it is
SK: Fred, within this framework what is the importance of the movement in
worth noting that the small-cap index made an all time high this year and it is
copper for you to be looking at stocks. Lots of people have been talking
very rare for the small-cap index to make an all time high and have the next
about Copper as the metal with a PhD in Economics and it has a predictive
year not be a good year at least in part. At the same time, most people in the
value for stocks. What is your stand on that?
United States know that the first year of a new President’s term is often the
most difficult year for the 4-year Presidential cycle for stocks and at the same
FM: Well, again since I am seeing signs that the market is setting up for the
most significant correction that we had since 2011 after this summer rally
which we forecast. I agree, Copper is suggesting we will have a correction in
stocks. By the way very, very interesting is this – the average summer rally
goes from a close in May to a close in August and it is around 8.25%. That
time the first year of a re-elected President’s second term can be the most
difficult year for the stocks of that term; the reason being the President has
finally got the ability to do the things that he feels he should have done but
could not do before he was re-elected and your guess is as good as mine as
to what those some of the things will be.
would say if the Spider - the S&P 500 ETF - if the Spider closes at 142.27
roughly you completed an average summer rally and look at the close on
SK: So, Fred this brings me to the idea that you do look at gaps and why do
Friday; we were very, very close to that! We actually hit that number
you think gaps work and how do they work?
intraday to within a couple of cents! So, this concern with copper I think is a
valid one and I would not be concerned if the market starts to come down –
September, October, November, December, January, February and March
and we have a difficult market for that period.
FM: Well, if you look at gaps there are three basic types of gaps – there are
Exhaustion Gaps, Continuation Gaps and Breakaway Gaps. Most people say
all gaps are filled but that is not true! Breakaway gaps are very rarely filled.
Exhaustion Gaps are always filled and Continuation Gaps are filled probably
60% of the time. There are more continuation gaps than other kinds of gaps.
SEPTEMBER 2012
ATMASPHERE | 9
That is where that comes from. But in this case, there is a lot of support and
moved up in anticipation of those events. The only way the stock would have
price projections do come in on the Spider from 115 to 177 ½-118 and that
done something if for some reason events did not occurred. Eventually, the
gap is sitting there. So that would be a good place I think, if markets were to
fundamentals caught up and Home Depot embarked on to some other things
correct to look for a stop.
and the stock advanced. So, that happens enough that if you are investing
just based on Fundamental Analysis, you can be stuck in stuff and wait for a
SK: Fred I read a very interesting paragraph on your website, where you say
long time assuming those fundamentals have been anticipated.
that Technical Analysis studies supply and demand for stocks while
Fundamental Analysis studies the management and the business of
SK: Fred, let me jump off a little bit on the types of Technical Analysis. From
companies. And in the same context you have also written that Technical
the classical Technical Analysis – patterns, momentum indicators. What’s
Analysis is the analysis of the behavior of investors while fundamental
your take on utility of Elliot Wave Analysis? Does it work?
analysis studies the behavior of corporations. Is this divide going to be
bridged somewhere, a lot of fundamental variables are price driven - price to
earnings, price to cash flow, and price to book value – is there really any true
Fundamental Analysis independent of Technical Analysis? What is your take
on this?
FM: Sushil, Elliot Wave has worked for several friends of mine and it is mostly
that they have used Elliot as an indicator and not as a dogmatic predicator of
price action. I know I cannot make Elliot Wave Analysis work for me; I have
never been able to count waves properly but that does not mean that it does
not necessarily work. But my indicators are a lot simpler. The only thing that I
FM: Well, you know that is a very interesting question which technicians and
do that lot people do not do is I have a very solid trend following component
fundamentalists have debated for years. I think the two are very definitely
built into my indicators. What that enables me to do is say, even if I am
interrelated but part of the problem that you have with Fundamental
negative the trend is up and you should not be selling or shorting into that
Analysis is the stock market is a discounting mechanism and how much of
and that is where I think Elliot can sometimes fall down as they do not have
those fundamentals have been discounted is always a question. The only way
an objective method to say the trend is ‘X’ or the trend is ‘Y’. So, that would
you can come to an answer to that for me is the use of technical tools. A
be my problem I have with Elliot. The same with Point and Figure analysis.
really good example of that is a move in Home Depot stock from 1986-87 to
Point and Figure analysis does not really have a time component so it is very
1992. Home Depot basically rallied very strongly from 1986-87 to 1992 and
difficult to use say Moving Averages on Point and Figure charts. A lot of Point
then went sideways for a long period of time while the fundamentals caught
and Figure has to do with Relative Strength and the problem with Relative
up. In other words the company was expanding, they were opening more
Strength in this environment is the things have gotten to be so quick that just
stores but the stock did not do much and reason for that was the stock had
10 | ATMASPHERE
when you get a Relative Strength buy signal or Relative Performance buy
SEPTEMBER 2012
signal the trend actually changes! So, for me any good technical system has
FM: I started in the business as a stock broker in 1983, and like a lot of
to have a way to identify areas where the market has risk because it is
American stock brokers the very first thing I did was get the fundamental
overbought or oversold and at the same time tell you when the trend is up or
research reports and read those and say these make sense to me. The
down. That is what I have endeavored to do with that basic chart that you
problem I had when I was doing that was often times stocks would go down
see in my monthly report which is Moving Averages combined with
immediately after I bought them, and that was of course because of those
Stochastic.
fundamentals were anticipated. A couple of people in the office of the
company that I was working with were using Technical Analysis and I looked
SK: Within that context what do you feel is there any advantage using the
Japanese candlesticks over the usual Bar charts?
FM: I like working with candles more than bars because I have relatively bad
at it and began to learn about it and then decided that it was an approach
that made sense to me as an investor.
SK: How has your journey so far been into Technical Analysis?
eyesight and that tells me whether the market is going up on buying or
selling. I am a great believer that the specialists want stock prices where they
FM: This year has been a great year for me. We in the Fred report started the
want to and if I am on the side of specials or market makers I am going to do
year in November with a target of 140 to 143 on the Spyder. So we got there,
well. So I like to buy stocks when they are buying which is usually near the
we basically sold and said we were looking for a correction to the 132 area
open and sell them when they are selling them which are usually near the
and then a summer rally. We corrected a little bit far than 132 but buying at
close. So I like to see a pattern of down opens and up closes, in an up market
132 certainly hasn’t been a bad mistake and if we stay in this general area
and up opens and down closes in a downtrend. I tried to turn that into an
until the end of August that will be my second positive maneuver for the
indicator, there is no way really to do that, but it is something I like to look at
year. And then as I say we will probably reach for our traders and advocate
and candlestick charting makes that very easy. What I do not do is use some
selling again and wait for a chance to re-enter the markets sometime next
of the candlestick patterns, because frankly I think people are too enamored
year. So this has been a great year for me. I understand people have had a
with the names of those patterns.
hard time but I have not.
SK: Fred how did you discover Technical Analysis? Or rather when did you
SK: Wonderful! I hope you maintain this streak of year that is going on very
start taking Technical Analysis so seriously in your career?
well! Fred, which year or roughly how many years it has been since you
earned the Chartered Market Technician qualification?
SEPTEMBER 2012
ATMASPHERE | 11
FM: I was one of the very first around 1991-1992! One of the former co-
Technical Analysis there were no university classes; there was no CMT
founders of the MTA - John Brooks was a good friend of mine. Johnny called
Program - there was nothing! So I learned a lot through reading and studying
me up and asked me get it. He said we want technicians on major fronts to
and talking to people. Now the person coming into the business has got the
get this. I was at Robins and Humphrey. Since John was a good friend, I said
CMT as the way to learn, MTA meetings all around the world, and various
of course I will get that for you, no problem. It turned out to be one of the
other classes and universities around the world to learn from. So it a much
best things I ever did! I loved the MTA and in fact ended up being the
different environment and in the net I think the broad exposure to Technical
President for several years. But that was not the intended one; I just got the
Analysis as the CMT gives can only be then official for the average investor.
designation! I do recommend the designation very highly. I think it is a great
way for people to learn about the markets. The biggest group of people
actually getting CMTs is the CFAs right now! That was true at least when I
was the President in the early 2000 and I think it is still going on.
SK: Fred this brings to my mind, what is the advice, a piece of advice you
have for younger people getting into the profession of Technical Analysis?
The top three things they must not do and the top three things they should
do.
SK: So Fred If I can ask you slightly more specifically around the time you
completed and achieved your CMT what are the things you felt then that the
CMT has done for you, the process of doing the CMT, how it has empowered
your thinking and analysis process ?
FM: I would not divide it into top three, but I would certainly tell you, the
first thing to do with any technical approach that you look at is to determine
if you are emotionally comfortable using it. In other words ask yourself if you
are willing to accept the kind of risk that will be encountered, because
FM: Well I guess the first thing it did was it expose me to more types of
everything has risk and reward. I like trend following, I think trend following
Technical Analyses than I was used to. When I did my CMT, back in my time;
makes sense and I attempt to enter trends when there is a counter trend
we had to write a research paper instead of having the third exam. I did my
move, that I think it is going to change back in the direction of the trend. That
research paper on International Markets ADRs versus Stocks being traded in
is my style; that is what I do. But if you are uncomfortable with that, look at
their local currencies and that taught me a lot about international markets I
Elliott Wave Theory or something like that. But I have found out that if I am
did not know! You know that most of the Americans only work in the
in tune with the trend I do well and I will never forget that. By the way I met
American markets, we do not have good international point of view. And I
a fellow at the Newport Beach in 1986. He was a commodity advisor just
will tell you that the CMT broadened that out for me. In terms of what I
starting out, named John Henry. He had a couple of hundred thousand
actually do in Technical Analysis, I figured out a lot of indicators I like and I
dollars under management. He was also into trend following. So you have to
use and I still use those indicators today! And again, when I started in
12 | ATMASPHERE
look at that method very seriously. I am not that great, I have to make
SEPTEMBER 2012
forecasts in my business, but any forecast that I make has to be confirmed by
SK: So Fred, if one is to be looking at new areas to explore Technical analysis
the indicators in a reasonable amount of time before changing.
or trading or investing, an age old question comes - what is it that is missing
between a great analyst and a great trader? What does a great analyst need
In terms of things not to do - definitely do not pick a method you are
to do to become a great trader?
uncomfortable with because you are not going to stick to it; you are not
going to use it! And make sure that if you do adopt a method or a trading
FM: I think that the great traders are different from great analysts. Analysts
system; check what the maximum drawdown is and ideally start to use it
are usually looking at all sorts of different things that can go wrong where as
during a period of time when it is losing and not winning.
traders are basically looking at a stop loss. They assume that they are going
to lose on a certain amount of trades. They are very definitely different types
SK: Fred in terms of spare time and leisure activities and hobbies that you
may have pursued over years, how your hobbies or leisure pursuits may have
influenced your thinking on markets and your approach on Technical
analysis? What are your hobbies and how they have influenced your
technical approach?
FM: Well, in terms of hobbies I read a lot and that obviously that has helped
me with technical analysis because I have read a lot of technical analysis
books. I love playing table tennis; I played for the UCLA table tennis team. I
do not know what that has really done in terms of with Technical Analysis
except that you have to be a little more strategic in terms of shorts
placement. Chess has been a major hobby and chess is very good and a lot
like Technical analysis because it employs strategic thinking and forecasting.
And Sushil one of my favorite things to do to relax is to take a long walk. I
found myself that a long walk outside, when I am not really actively thinking
about the markets causes the problems or questions that I had to come
together in my mind and I have a good answer to something after I have
been walking.
SEPTEMBER 2012
of people. One of my good friends is one of the best traders I have ever seen!
He has not even graduated from high school but trades extremely well. But I
have a master’s degree and two bachelor’s degrees and I am not a successful
trader, but I am a much better analyst. So that is what I would say – two
different types of persons. Most important thing if you are going to be a
trader is - you need to figure out what time frame you will be comfortable
trading. Some people are comfortable trading a six-month time frame; some
people are comfortable trading a six-hour time frame. But you need what
that time frame is and what your trading plan is and stay true to that. An old
friend of mine has often said that the definition of a long term investment is
a day trade that went badly. And there is a lot of truth to that even though if
it is funny.
SK: Fred let me go back slightly to a question that we had earlier within this
conversation, the art versus science element of Technical Analysis as much as
it gets. With so much of computerization, Algorithms and robots and ultrahigh frequency trading coming, do you see a possibility ever in how so ever
distant a future that a human Technical Analyst will ever do Algo trading?
ATMASPHERE | 13
FM: The short answer to that question is NO! I think that there are so many
SK: Fred it’s never enough to be speaking to you, there always will be
varied factors that go into analyzing a market or what a market can do, that
something new to learn from you, and since time amongst all the things is
are outside of the things a computer can look at. And that is where the art of
always the most precious and keeps running out, I would still like to ask you 2
fundamental or technical analysis comes in; being able to synthesize these
more quick questions on this call, rather let us say 3 questions. One question
factors and say - most important thing to the market right now is “X”!
is in two parts, what are some of the most important books you would
Sometimes that is easy, for example, during the first Persian Gulf War, it was
recommend to new entrants to this profession, and part two of this question
fairly clear that oil prices were what was driving the markets. So as soon as
is - what are the books you would recommend to every technical analyst?
Oil turned down on the first bombing attempt you knew that the market was
going to do very very well. But at other times that is not so clear. So what you
have to do is to figure out what is most important to the market and I do not
think there is any way in which a computer is going to be able to do that.
FM: Ok. For a new person there are two books that I really like, one of them
is - Charles Kirkpatrick and Julie Dahlquist book of Technical Analysis
recommended for the CMT program. The other book that I really like is John
Murphy book, Technical Analysis for the Financial Markets. Those are two
SK: Fred, the one thing that comes to my mind here is - going into the future,
good introductory books that give everybody a good solid broad overview of
the way Technical Analysis and the markets have evolved - do you see any
what Technical Analysis is.
competition to Technical analysis in any way?
For existing technicians as well as new ones there are two other books that I
FM: NO. I think there will always be a place for Technical Analysis. We have
would recommend. The first one is a book by Norman Fosback called The
seen all sorts of changes in the fundamentals rules around stocks. That
Stock Market Logic. It is a great book! The way this book is formatted is Mr.
changed the landscape for Fundamental Analysis completely, because as a
Fosback takes a technical indicator per chapter, describes what that indicator
fundamental analyst if you got any information that can be thought of as
is, how does it work and whether or not he likes it and why. I do not agree
insider privilege, it has to be immediately broadcasted and the Company has
with all of his conclusions but there is a lot of data in there. It is an older
to broadcast it as well. That really changed the ability of the company to
book and you have to update it, because there is a lot of data in there that
really do something and then surprise everybody with a research report like
makes for a very interesting read and makes you think.
we used to see in the 90s. That is all gone and technical analysis to me is still
the same!
The other book that I would recommend for existing technicians is sort of an
odd one. But it has something to do with the commodity markets and most
of the technicians nowadays do not fully understand the commodity
14 | ATMASPHERE
SEPTEMBER 2012
markets. Those markets are going to be of much importance in the years
And he would periodically change the prices and of course during the Cuban
ahead. That book is a book by a friend of mine, Ken Shaleen. It is called
missile crisis the prices were going down rather than up! So people were
Volume and Open interest. It deals with how volume and open interest in the
nervous. And every once in a while when he would change the price on
futures markets work.
something one of the person in the audience would say something like “Man
that is getting really-really cheap”. And there was an old guy in the back who
SK: We will surely look after this book. Fred now one question that keeps
entering my mind. Do you recall some anecdote or some episode through
your career that you would always share with rookies in the business that are
looking forward to a longer career here? Something illustrative like an
anecdote that has a monumental learning value for younger people in the
business.
FM: I have got just something for you. I have a good friend named Jim Hirsch,
who was an opera singer in the 60s and he became a stock market person. It
is not the Jim Hirsch that wrote the Cycles book, it is another Jim Hirsch. Jim
was an opera singer and he was young and in New York City. Like a lot of
young actors and opera singers in New York, he needed a part time job. And
the job he ended up with was working in a board room of a brokerage firm.
And back then the way you looked at stocks was you went into a board room
and there was a person that would change the prices on a board manually.
They did not have computers or screens; you had to do it manually. And Jim
was that person in the early 60s. And Jim was working during the Cuban
missile crisis, and he said it was really funny. He said he felt like a monkey in
a zoo. He was looking at all these people and he really did not understand
would always yell “If you think it is cheap; go ahead and buy it! It is ok! You
have got to be in; I am buying everything!” Finally someone looked at this
guy and said “You know we are having a missile crisis with Cuba, we should
all be obliterated by atomic bombs in next 5 days?” Where upon the guy
jumped up and said “Then we do not have to pay for any of it. You might as
well buy!” And that story really explains the sentiments in the markets to me.
The other one that I would say is I was working when President Regan was
shot. I was in my office when President Regan was shot and the markets
went straight down and closed essentially. One of the brokers in my office
who was outside the office at that time, called me up and asked me I wonder
this would change president Regan’s opinion on gun control? Which I
thought was pretty funny given that he had just been shot! But immediately
after he was OK the markets opened and took all of the losses back in form
of the gains. In other words, there was no way to capitalize on that event.
And that to me was - if you have a plan to trade and invest, and it is a good
plan, you should not just drop it because of an extraneous event. You should
just stick with whatever it is you are doing. I hope that this satisfies your
quest for anecdotes.
why they were so excited or nervous about what was going on? All he
understood was that when new prices came in he had to change these
SK: Yes true. Very illustrative anecdotes and I am sure we will be reading
boards. He was looking at the people and the people were looking at him.
again and again over time. Fred many thanks for taking your time out and
ATMASPHERE | 15
SEPTEMBER 2012
sharing so many insightful things. Things that I am sure will add a lot of value
subscribers on that call, it is at 10.15 EST. We record that call so that people
to us looking ahead to a career as long as yours. All the best for your
who are in a different time zone can listen to that. You also get a
endeavors. Fred quickly on a parting note you did mention about sharing one
comprehensive sector review with stocks in it and also a comprehensive
of your reports when you studied about the ten-year relationship between
monthly report as a part of that free trail. That is basically the service and
stocks and commodities, for your members; would it be ok if we publish
you get a full month of it! And as I say you are more than welcome to send
them in the September issue of our ATMASphere along with your interview?
that out. There is a newsletter version which is stripped down, it does not
Perhaps over time you will keep contributing to this publication which goes
give you the conference call, does not give you all the sectors and stocks but
to thousands and thousands of Technical Analysts in India. And with your
does the sectors once a month, instead of twice a month. That is only $30 a
permission I would like to send you a link to the archives of the newsletter on
month and a lot of people that are interested in technical analysis subscribe
our website.
to that.
FM: Well Sushil please do that. Let me mention two things, first of all any of
SK: Thank you very much Fred. It has been such a wonderful conversation
your listeners and readers would like to have a free trail of the Fred report
after almost a year that I have met you and I do look forward to having more
can go to www.thefredreport.com, and click on join now and type on the
of these in the coming months and quarters and years. And we do hope to
word free and it also tells you have to do that on the website. I will send you
spend some time and find the opportunity to educate our members with
two monthly reports one of which has the commodities article in it and you
many new ideas.
are welcome to strip that article out and publish it. And I will also send you
my latest monthly report which has an article on bonds and interest rates as
a research piece. It also shows about how I think about the markets. You are
welcome to send that report or both of those reports out to your
membership entirely if you wish.
FM: Absolutely, it is a pleasure! I am so excited of what is going on with
Technical Analysis in India and around the world. And if I can contribute to
anything that you guys are doing I would be very happy to do so.
SK: Thank you Fred. Thank you very much and have a lovely day ahead!
SK: Fred the free trial is for how many days?
FM: It is a 30-day free trial. What you get for that 30 day free trail is - two
reports a week, a six-page weekly report, and a two-page midweek update to
that. There is a conference call that I do with financial advisors and
16 | ATMASPHERE
SEPTEMBER 2012
To view the video of the GuruMeeting click on the image above or click
here.
SEPTEMBER 2012
ATMASPHERE | 17
International Seminar on
Technical Research at Fidelity: Behind the Scenes
brought to you together by:
What to expect at the seminar:
Technical Research at Fidelity: Behind the Scenes
Why would a traditional mutual fund management company employ a team
of technical analysts?
He will give you a behind-the-scenes look at how Fidelity fund managers
incorporate technical analysis into their investment process, how his
department adapts a technical toolkit to a long-term investment strategy,
and how they apply their analytical techniques to the global financial
markets.
on 6th October '12, Saturday - At BSE Convention Hall
Mr. Keller will also discuss how the Fidelity Chart Room allows them to
analyze market history through advanced visualizations of market dynamics
David Keller, CMT, is a Managing Director of Research for Fidelity
Investments in Boston. He manages the Technical Analysis team at Fidelity
Management and Research, as well as the legendary Fidelity Chart Room. He
is currently serving as President of the Market Technicians Association and a
Director of the MTA Educational Foundation.
David was formerly a Technical Analysis Application Specialist with
Bloomberg L.P. in New York, and was a regular contributor to Bloomberg
Markets magazine. He is the editor of the book "Breakthroughs in Technical
Analysis: New Thinking from the World's Top Minds", published August 2007
by Bloomberg Press.
Bombay Stock Exchange
International Convention Centre
Phiroze Jeejeebhoy Towers
Dalal Street, Mumbai- 400001
18 | ATMASPHERE
SEPTEMBER 2012
THE ART OF CHESS AND TRADING
Now let us try to understand each phase:
BY ASHWANI TIWARI
a) Trade entry v/s Opening: Trade entry constitutes the price point at which
a long or short trade is initiated. It is paramount that a trader initiates a trade
Dear Reader, through this article I
close to a favourable entry point having a good risk reward ratio. At times
intend to bring out certain similarities
slight deviation is not so catastrophic but trade entry needs good plan and
between the game of chess and
preparation. Similarly a chess player needs to have a balanced and well
practice of technical analysis. A trader
prepared opening repertoire. Although opening alone doesn't constitute the
uses predominantly technical analysis
outcome in the game of chess but it is an important component as to how
as a tool to identify price trends, it is
the remaining phases of the game will most likely follow and this clearly
a well known fact that technical analysis is a scientific method of analyzing
highlights how important trade entry can be for the success of entire trade.
markets but it is also well accepted fact that practice of technical analysis is
more of an art than science. Similarly game of chess is an expression of
b) Trade Environment v/s Middlegame: While in trade, a trader is tested
intellectual ability and creativity. So let us try to draw a comparison of this
against whole backdrop of factors like market environment, news flow, risk
game with trading and technical analysis.
management strategy and his own psychology. The whole trading
environment plays a crucial role. On similar lines, a good chess player
1) Trading is like playing a game of chess - There are three phases of
trading:
Trade Entry
showcases all his skills and talent in the middlegame. Chess strategy and
tactics play a crucial role in the middlegame and so is the traders plan,
Trade
Environment
Trade Exit
response to trading environment crucial to trading success.
c) Trade exit v/s Endgame: A chess player may have done well both in the
A sample flow Chart of the trading process
commanding position but the job is not done till he converts those
There are broadly three phases in the game of chess:
Opening
Middlegame
opening and middlegame part of chess and actually may have reached a
advantages into a win in the endgame. On the other hand, all the fruits of
Endgame
hard work are rewarded to the trader when he exits at the right point as per
his trading plan. It is a common phenomenon for traders to see their profits
A sample flow chart depicting various phases in the game of Chess
SEPTEMBER 2012
evaporate right in front of their eyes when greed takes over rationality and
ATMASPHERE | 19
markets move against them in no time. So it is very important to carry home
the advantages and convert them to a win.
3) Initiative is the master key
A good trader knows this well. Catching a trend and riding the trend till the
price action tells otherwise is an important trait of a successful trader. A
2) Prophylaxis in Chess and Trading
I think this is one of the most
important keys of success in chess
as well as trading. Prophylaxis
implies
opponents
thinking
against
plan
before
proceeding with one's own plan;
this implies that one needs to act
in a manner so that one outthinks the opponent. This is a very well
established trait in successful chess player and a good trader. The tendency
to think against the herd is a top quality of successful trader. A very real life
analogy is when a breakout/breakdown of price happens; a good trader
simply doesn't jump on the trade immediately. He knows when to read
between those lines and avoid false breakouts/breakdowns. Many traders
have a strategy not to take a trade when the price breaks out in either
direction rather they take a trade when the retest of the breakout line
happens, this is pure prophylaxis. On a similar note, a good chess player
works out the opponents plan all the time and tries to play against it. Former
World Champion Anatoly Karpov is known to be one of the most successful
prophylactic thinkers of all times in the game of chess. I am fortunate that I
met up with this chess legend in 2007 at Moscow!
trader who doesn't fully utilize his initiative may miss the price action
altogether. A seasoned chess player always keeps initiative on top of his
agenda. Chess moves which strengthen his own initiative and neutralize his
opponent’s initiative always have preponderance against moves which lose
initiative. Former World Champion Mikhail Tal of Russia was a great
proponent of
utilizing initiative to the maximum and always tried to
transform it into a winning attack. Jessie Livermore, a great trader in 1920's
was a great example of a trader who utilized his initiative in the great
depression to be on the right side of the market.
4) Pattern Recognition
I think this trait has a big similarity between a trader and a chess player. How
a trader goes about learning price patterns like head &shoulders, various
triangles, cup & handle etc... by studying the price history is very similar to
how a chess player goes about his preparation. A chess player studies various
opening, middlegame and endgame positions to bolster his understanding
and analytical abilities. Study of historical prices and their behaviour at
important turning points is paramount for trading success and this is exactly
what a chess player does when he studies classical games and positions. The
moment a good chess player figures out a certain chess pattern, the
response is spontaneous and this is the way a good trader takes price action
in his stride when he recognizes a price pattern in play.
20 | ATMASPHERE
SEPTEMBER 2012
Although there is no empirical evidence which proves that a good chess
player will be eventually a good trader or vice versa, but there are many
common threads which bind both the subjects closely. Boaz Weinstein,
Founder of Saba Capital Management and former managing Director of
Deutche bank, has been one of the most successful hedge fund managers in
modern times has been a strong expert level chess player. According to his
Want to feature in ATMASphere which is
perhaps one of the largest circulated
Technical Analysis Newsletter of its kind, in
the whole world? Here is your chance.
company policy, "an affinity for the game of chess is favoured in hiring as
games of strategy mirror the strategy of financial decision making" ( As told
to author Maneet Ahuja for her book " The Alpha Masters-Unlocking the
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Ashwani Tiwari is a Certified Financial PlannerCM
(CFP) from Financial Planning Standards board
India & holds a Masters in Business Administration.
He is a FIDE Master (FM) in chess and is member of
the Chess Selection Committee for India.
He has been an Independent Financial advisor since 2003 & founder
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SEPTEMBER 2012
ATMASPHERE | 21
The Dream... has come True! Almost!
World's FIRST E-Library of Technical Analysis
;
|
,
||
Endless evaluations of legal structures,
payment formalities, technologies and this
sweat and toil of nearly 20 months is now
fructifying! The world's most reputed,
largest and oldest vendor of E-libraries has
considered positively all our pitching and
discussing and despite the fact that we may
be there smallest customer today agreed to
mail over a contract to us!
Giving food to a hungry person is indeed a great donation, but the
greatest donation of all is to give a person education. Food gives but a
momentary satisfaction whereas education empowers the person for his
entire life.
This vendor has digitised the top 10000 libraries around the world! And yes,
your very ATMA is going to be now served by this very vendor! Not only are
we going to buy and stock up E-books and audio books we will be in time
able to generate funds to have training videos in this online library.
Each ATMA Member is at this point going to be able to give as much to each
other as each is going to be receiving in course.
The work ahead, for all of us..
The Dream, that is how I have always called it for myself, the establishment
of an E-Library that contains not just research papers and manuscripts but
commercially published good books on subject areas related to us, is now
within reach. Almost there..! Yes! Books on Technical Analysis, Trading
Strategies, Quantitative Finance, Back-testing, Algorithmic Trading,
Investment Psychology, Hedge Funds, Behavioral Finance & lots more!
Even before succeeding at launching ATMA, I have aspired with my blood,
flesh and soul to be able to bring up this concept. In fact, right at the day of
our launch we inaugurated an E-library that contains many decades of
research papers and journals! But the commercially published books could
not be integrated so far and a true professional self-service e-library has
had to wait. With painstaking work some of us scrounged and searched
endless websites, made endless calls liaisioning and networking with some
of the best publishers across the globe trying impressing upon them India is
a safe country and we are as ethical as any other professional enterprise in
any other corner of the world to be allowed to host a digital library of books
- both e-books as well as audio books.
22 | ATMASPHERE
The world's most reputed, largest and oldest vendor of E-libraries has
Make out a list of the top 20 books you wish to see
on this library and if you wish to make the list of top
20 books you have read as a Technical Analyst, trader
or a markets person make that too! Make a list of top
authors if full names of books don’t come to mind
immediately. Make your wish lists! Mail them to
[email protected]
&
they
will
automatically be forwarded to all volunteers working
with me and Gunjan Dua on this DREAM PROJECT.
Write out your lists
Email to TEAM
Let team compile
Team draws map
Evolutionary Goal
Charity begins at
home and do the
now! Let
your opinion, ideas,
desires be known.
The Challenges ahead..!
To build a highly useful collection of e-books that make our money work well for us in
this massive ongoing investment, we have to carefully select every good book
available and yet also avoid frivolous or very esoteric purchases. Building a great
library is an evolutionary goal. Come participate in this path-breaking initiative that
will change the orbit of our Association, forever. Well, there may not be enough
money, enough books, enough types of books, enough of this or enough of that, yet
what you will along with patience over time to live through when there will be
enough of everything, have one thing now which will never come again: be the
architects of the world's first e-library on Technical Analysis.
SEPTEMBER 2012
SEPTEMBER 2012
ATMASPHERE | 23
TECHNICAL
ANALYSIS:
COGNITIVE
BIASES, GLOBAL MACRO & YOU
such as lack of confidence, depending upon others for confirmation of one’s
opinion, etc.
Various interactive tests were conducted with the participants throughout
SUMMARIZED BY MEGHANA V MALKAN, CMT
the session.
This is a summary of Larry Berman’s presentation made at the BSE Trading
In the second part of the presentation Larry discussed the Global Macros. He
Hall on 1st September, 2012. The event was organised by the Association of
explained the concept of Beta for individual equities, gradually discussing
Technical Market Analysts, The BSE Brokers Forum & the Market Technicians
how to assess risks that are not company specific. Macro environment was
Association, Inc.
discussed in detail, including its structural trends, longer term events and
major market drivers in this environment. He then discussed the concept of
Larry Berman’s presentation was divided into the following key aspects –
1. Understanding How Your Cognitive Biases Affect Your Investment
Decisions
2. Understanding Global Macro and Technical Analysis
cycles, the secular equity market cycles in particular. The session on Macros
concluded with the discussion of the concept of relative risk in this
environment and market performance based on sectors.
The concluding part of the seminar centred upon building a trading plan to
suit each individual’s specific trading style – (a) Long Term Traders (b) Short
3. Building a Trading Plan That Fits Your Cognitive Ability
Term Traders (c) Day Traders. He discussed the difference between the two
Larry began his presentation with the session on Behavioural Investing. This
approaches – Buy & Hold approach and Active Portfolio Management
session focused on how investors think about trading and why each trader is
approach. Active Portfolio Management is all about – Capital Preservation,
different. Understanding who you are as a trader improves one’s
obtaining Risk Adjusted Returns and Continuous Education. Evaluating one’s
effectiveness. Each trader is wired to think in a different way. Since
risk-reward profile is very crucial. He then discussed various tools and
understanding oneself as a trader is one of the most essential facets of
Indicators that work and why we need diversification amongst them to
successful trading; Larry explained this with the entire cycle of emotions a
increase the probability of success. While selecting an indicator, one should
trader passes through. The discussion then proceeded with Larry very
focus on risk management and the ability to execute it well. Excellence in
elaborately going through the various psychological pitfalls investors face
execution considers Cost of Trading, Cost of Diversification and the Bid/Offer
Spreads. Your Profit & Loss statement is most imperative.
24 | ATMASPHERE
SEPTEMBER 2012
The seminar then concluded with a highly interactive Question & Answer
session.
The photographs of the event can be viewed by clicking here.
Larry M Berman, CFA, CMT is the Co-Founder of ETF
Capital Management, and brings almost twenty-five years
of industry experience to the role of Chief Investment
Officer. Larry has been ranked as one of Canada’s “Top 3
Analysts” according to institutional investor surveys. Larry
began his career as a Toronto based investment advisor in 1989 and
completed a technical internship in New York with the Market Technicians
Association in 1994. Larry is a Chartered Market Technician (CMT), a
Chartered Financial Analyst (CFA), and is a US registered Commodity Trading
Advisor (CTA).in their decisions.
Meghana V Malkan, a graduate in Law and a CMT,
trains and coaches professional traders. She is the cofounder
of
Malkansview
(http://www.malkansview.com) - an Institute which
conducts training programmes on Technical Analysis
and Behavioural Finance. She is a proprietary trader across asset classes.
SEPTEMBER 2012
ATMASPHERE | 25
Wide variety of useful materials to win, any day, any time...
ATMA Social Awards
So many good things to win. Ramki Ramkrishnan, an ATMA trustee has kindly
added five copies of his best-seller E-book, the Five Waves to Financial
Freedom recently for all to win. Kora Reddy has promised to the catalogue
Winning is so important, for all us,
every day. Yet a winning attitude is
ever more important throughout our
lives. How about a win-win. You win,
your fraternity wins and everyone
can win? Well that’s exactly what is
happening with the ATMA Social
Rewards...
Competition is good…
More so when one is competing in
a win win enterprise such as the
ATMA Social Rewards.
five copies of personalized in your name, autographed copies of his book on
Quantitative Trading too. More and more is coming. Polish your social media
skills and do visit the website of an organization you own, daily. Win-Win....
yes you can win.
You can notice the points earned
by you and others in the
Leaderboard. You can earn points
every day.
The MyATMA private network on our website is in full swing too. Have you
been not posting things on the groups you have joined there, have you not
been sharing videos or other content on your Facebook type walls, have you
ATMA Social Rewards
not been inviting friends and using the Personal Messaging feature there....
This simple idea is in full swing now.
You will notice the Activities in
ATMA Social Rewards information
box on the www.atma-india.net on
almost every page and yes on the
home page itself too. Just click on
the button in there and start
winning. Simple as that. A Reward is
the award and the best thing is you
can choose which one....
oh I see, you don’t see how the points on MyATMA can be encashed....
26 | ATMASPHERE
hmmm... that is going to be coming too soon. Keep polishing your social
networking skills on MyATMA and keep accumulating those points, they will
be usable as a very very private and special MyATMA Rewards also start,
Growing Catalogue...
which only our members can participate in. Oh yes, the karma points on the
Redeeming of points as per the
catalogue to claim valuable gifts
and prizes is simple. Try it, today.
Discussion Forum too will be encashable in some grand scheme. ATMA is a
winning idea and a win-win with each of its owner the larger design of things
in the pipeline.
SEPTEMBER 2012
TESTY BYTES
1) Simply because BSE has done many favours to ATMA, be it
providing the BSE seminar hall for various ATMA meetings, and
BY KORA REDDY
lending their library space to ATMA members, so on so forth, and
Gap Trading Strategies
I as an ATMA member merely returning the favour.
As the readers of my articles are now equipped to understand and appreciate
PS: I will use Nifty index data when I’m demonstrating the trading strategies
how to read backtesting performance summary and extract the key metrics
around volume and gaps.
to validate a trading strategy, I’ll proceed presenting trading strategies,
Definitions
mainly around gap trading.
What is a Gap?
The reasons for selecting the gap trading strategies are
1)
As you may know the parent body of the Association of Technical
Market Analysts Association (ATMA), the Market Technicians
Association awarded the 2011 Charles H. Dow Award to, Julie R.
Dahlquist, Ph.D., CMT and Richard J. Bauer, Jr., Ph.D., CFA, CMT for
their paper “Analyzing Gaps for Profitable Trading Strategies” (who
knows I’m attempting the same through these series gap trading
strategies that I write for the next one year!!)
2)
In my experience of coding and testing various testing strategies ,
Gap trading strategies are the simplest , and are the easiest to
implement and identify quickly , even in the sleep !!
I will base all the gap trading strategies that am going to present on BSE
Sensex data. You may ask why I chose Sensex against Nifty index, in spite of
the fact that Nifty is indeed the favourite benchmark amongst the Indian
market participants?
SEPTEMBER 2012
A Gap is a change in price levels between the close and open of two
consecutive days.
1) A “Full Gap Up” is defined as one when the opening price of a
day is higher than the previous day’s high price.
2) A “Gap Up” is one when a day’s opening price is higher than the
previous day’s close, but not higher than the previous day’s high.
3) A “Full Gap Down” is defined as one when the opening price of a
day is lower than the previous day’s low price.
4) A “Gap Down” is one when a day’s opening price is lower than
the previous day’s close, but not lower than the previous day’s
low.
Strategy 1: Enter at Open upon a Full Gap Up open and exit and Close
Trading strategy rules
1) Sensex opens with a “Full gap up open”, Open[0]>High[1]
2) Entry at Open price
ATMASPHERE | 27
3) Exit at Close price same day
4) Profitable trading action based on the historical backtest
performance - SHORT
performance - SHORT
Below is the trading strategy performance summary, since 1st Jan 2000 till
21st Sep 2012.
21st Sep 2012.
Conclusion: the strategy doesn’t have a trading edge, as highlighted in bold
Conclusion: That above performance summary would have come as a
by the Outlier adjusted profit factor and other key metrics in a trading
surprise to many; fading the Sensex full gap down in its plain form (i.e.
performance summary report.
buying at open and exiting on close on the same day) is not profitable.
Strategy 2: Enter at Open upon a Full Gap Down open and exit and Close
1) Sensex opens with a “Full gap down open” Open[0]<Low[1]
28 | ATMASPHERE
Indeed it makes sense to short the full gap down open and exiting at the
close. However the trading strategy doesn’t have a trading edge, as
highlighted in bold by the Outlier adjusted profit factor and other key metrics
in a trading performance summary report.
SEPTEMBER 2012
Strategy 3: Enter at Open upon a Gap Up and exit and Close
Conclusion: The trading strategy doesn’t have a trading edge, as highlighted
in bold by the Outlier adjusted profit factor and other key metrics in a trading
1) Sensex
opens
with
a
“gap
up
open”
performance summary report.
Open[0]>Close[1]&Open[0]<High[1]
Strategy 4: Enter at Open upon a Gap Down and exit and Close
performance – SHORT
1) Sensex
opens
with
a
“gap
up
down”
Open[0]<Close[1]&Open[0]>Low[1]
21st Sep 2012.
performance – SHORT
21st Sep 2012.
Table given in next page
SEPTEMBER 2012
ATMASPHERE | 29
Kora Reddy is the author of the recently released
book High Profit Trading Patterns published by
Vision Books and is currently co-founder of a
quantitative trading portal (http://stocksiq.in) for
analyzing and back testing of listed stocks on the
Indian Stock Market.
Conclusion: The above trading strategy at least is better than any other
strategies presented in this article, as the outlier adjusted profit factor is little
better at 1.31, and is profitable 6/7 of years, the only drawback being the
median profit expectation is at 21 points on Sensex or about 0.13%, which
can merely recover the brokerage and slippage for the trades.
Don’t get disheartened that we haven’t found profitable trading strategies in
this article , once we start applying a secondary parameter , we will find the
trading strategies the way want , i.e. statistically significant meeting all the
criteria for the key metrics of trading performance summary report.
30 | ATMASPHERE
Membership Renewal
The Association of Technical Market Analysts always strives to evolve
its member services at all times. We look forward to continuing our
initiatives in the years to come and to serve you as members and
working with you as volunteers. We believe memberships of many of
our members would be due for a renewal.
To renew your membership, you can call the ATMA Office at +91-222272 2862 and renew over the telephone with any of the ATMA Staff
members.
SEPTEMBER 2012
Free ATMA Twitter Hour Seminars are Back!
Learning never stops! We do hear the duet "The Best Things in Life Are Free" between singers Luther Vandross and Janet Jackson! So
here it is, a totally unique learning experience that requires no registrations, no payments. Just get a Twitter identity for yourself,
follow @ATMAIndia on twitter and start tweeting your chart-links, our analysis, your recommendations for good readings, your
questions and your answers with the #MyATMA hash-tag. To find the contributions of other participants just search for tweets with
#MyATMA tag as well!
You are invited to the absolutely Free & fabulous learning experience at the Wednesday Evenings @ATMAIndia Twitter hours from 4.30 p.m. to 6.30 p.m.
Come by to discuss with the ATMA Members, expert ideas! No hassles for Registering, No forms to fill up! All you need is a
Twitter Account and just follow @ATMAIndia! That's all! Still don't have a twitter account? It takes you two minutes. Just go
to www.twitter.com and get one!
You know so much about Markets, Technical Analysis, Trading, Investing, Risk Management, Psychology, Coding, and
Strategy & yet always have felt the need to discuss it with like-minded folks at your convenience, at your pace without having
to travel and without having to spend a dime. Well Education like all the best things of life can be free and come in packets of
a size you find convenient, when you are willing to give as much as you take. Here’s then, the @ATMAIndia Twitter Hours.
Come on in & give & take!
We urge that all of us discourage spewing out market views. Everyone already has many! Those are best kept reserved for each of us to
trade with on our own. A Bull & Bear inevitably fight and its best to fight it out in the pits, not at an educational event. Discuss ideas,
strategies, concepts, techniques. The Goal is not to achieve a lunch for just today but to share recipes for a lifetime!
Many ATMA members will be sharing their expertise and answering these queries. All you need to do to follow the massive 2 hour long
conversation from so many people is to keep the profile page of @ATMAIndia opened once you are logged into twitter.
Yes, we do look forward to not only your queries but as much sharing of your own wisdom as you will do with fellow
Technicians! Please focus on sharing wisdom & STRICTLY AVOID selling or promoting yourself!
Yes, start following @ATMAIndia on Twitter & add to your and others ever-increasing knowledge repository of Investing,
Trading, Risk Management & of course Technical Analysis, every Wednesday through @ATMAIndia Wednesday Twitter Hour
meetings! Forward this message to any friends, colleagues or associates you feel are like-minded and can contribute as well
as benefit! Surely then, the ATMA look forward to meeting with you on Twitter every Wednesday Evening 4.30 to 6.30 pm!
SEPTEMBER 2012
ATMASPHERE | 31
SPREAD TRADING - II
BY ANDY JORDAN
What Makes a Spread Move?
Many traders do not fully understand why a spread moves in a specific
direction; let’s find out what causes a spread to move up or down.
Our first example is in the currencies, the Euro FX and the Australian $.
The Euro FX was going down during the last few weeks, at the same time that
the Australian $ was moving up. A spread would have you wanting to be long
the Euro FX and short the Australian $ during the beginning of June 2012, as
While this is a perfect situation for a spread (one market moves up while the
shown on the chart after the Australian $ chart.
other market moves down), we can also trade spreads whenever both
markets are moving in the same direction. Let's look at the Soybean and the
Soybean Meal chart below.
32 | ATMASPHERE
SEPTEMBER 2012
The spread moved up because the Soybeans moved up more strongly than
did Soybean Meal during June and July.
There is only one way an open long position in any one market can make
money, and that is for the price to rise. There is only one way a short
position can make money in any market, and that is for the price to fall. But
there are several ways in which spreads in can make profits:
You will notice that both markets are moving up at the same time. While the
charts look very similar, the spread “long Soybeans and short Soybean Meal”
would have worked out just fine, as you can see on the chart below.
SEPTEMBER 2012
-
One leg rises while the other falls in price.
-
Both legs rise, but one rises more than does the other.
-
Both legs fall, but one falls more than does the other.
-
One leg moves sideways while the other rises.
-
One leg moves sideways while the other falls.
-
One leg can have a greater value per point than the other because of
contract size, and although it doesn’t move as much as the other leg, it
can still make the spread profitable.
ATMASPHERE | 33
Please don't misunderstand, I am not saying that a spread has a higher
probability of moving in a specific direction, but that a trader has more
possibilities to develop trading ideas by using spreads instead of looking only
at the outrights.
While a spread trader has increased possibilities for finding trading ideas, at
the same time the number of possible spreads can be overwhelming. By
following just 10 different outright markets, a spread trader can easily
choose among hundreds of spreads.
Next time I will show you several ways to find the “right” spread trades using
fundamental research or plain chart reading (or a combination of both). Stay
tuned!
Andy Jordan was born in 1965 in Germany, but is
currently
living
mathematics
Regensburg
in
and
and
the
Caribbean.
business
Hagen,
and
He
studied
administration
in
holds
in
a
PhD
mathematics. Even though Andy has demonstrated in
several trading journals that he is able to day trade today's markets, spread
trading has always been his favorite. In addition to his spread trading Andy
is the Managing Editor of Traders Notebook. He also conducts an extensive
mentoring program for spread traders, and he is the developer and
instructor of the entire mentoring program.
34 | ATMASPHERE
SEPTEMBER 2012
Now, the more important point:
Most important priority: Career Development
of ATMA Members
Why are we after all part of this grand
exercise called the ATMA, the Association
of Technical Market Analysts?
To be excellent, to be renowned for our pedigree embellished with great
knowledge and ethical conduct, to be sound in our approach at what we do
in our profession, to be trusted, to be reliable, to be empowered with an all
encompassing feeling of being organized together as a big team?
Yes, perhaps all of this is true! Yet, all of this is aimed at one key goal and all
of these goals will be fulfilled ONLY if each and every ATMA’ite is
empowered with the abilities, skills and attitudes to succeed at the career
each has chosen!
Right at the inception this vision was incorporated into the design of our
website. A powerful JOBS-BOARD exists where not only our members can
build their fully visible CVs they can also build additional CVs with
anonymous values in key fields such as name of current employer etc. etc.
All of us must TORTURE TEST this tool, now and as many problems or
errors or deficiencies are found must be noted and written to
[email protected]. Have patience while you critique the
deficiencies! Don’t stop at just pointing out what is lacking, but have the
tenacity to stretch your thinking into proposing a solution. Difference
between criticism and leadership is that leaders identify what is missing
and figure out how to fix it! Own ATMA now! Some few of us at the fight
are getting bored of being its solitary owners.
SEPTEMBER 2012
Those amongst the ATMA membership who have a vision, a strategic string
of thoughts in place, who have had their brush with changing several jobs
and who would know how the inner world of HRM might be working, please
polish your shoes and step forward your best foot!
I have to build on an EMERGENCY basis a POWERFUL, INDEPENDENT &
FUNCTIONAL Career Development Committee
Why can’t we host some webinars inviting Social Media Gurus who can teach
ATMA members how to promote themselves in a dignified way on Twitter,
Facebook, LinkedIn, Klout, Google Plus? Why can’t we bring in some Partner of
a global recruitment firm to teach our younger ATMA members how to write
good CVs and cover letters and how to network to be on the frontline for
discovering the best jobs?
Go take a look at the Career Development Centre on the website of our parent
organization the http://www.mta.org
I need a team of strong-willed, independent minded mad men and women
who have a solitary goal: beat Sushil Kedia & his early team & create an
admirable Career Development Centre which is at least at par with the MTA
and perhaps way more!!
Get going ATMA! Long way to go and yes the world must yield the place to us
the Technical Analysts that we deserve!
Does ATMA belong to you? If not, who does it belong to?!
Then within the Job-board is a feature for incorporating the profiles of your
companies with a nice write up and logo you can make yourself a featured
employer on this powerful tool that this mad 43 year old man could envision
even at inception when he had no ideas of how a website is built. If I can
stretch my brain and body so far, what stops you mightier younger, energetic
smarter folks to beat me blue and black?
ATMASPHERE | 35
INVESTMENT PSYCHOLOGY EXPLAINED –
that there are no quick, magical paths to market success, Pring draws instead
BOOK REVIEW
Humphrey Neill and Bernard Baruch, as well as from his own experience.
from the intelligence of many creative investors, including Jesse Livermore,
With numerous anecdotes Pring demonstrates that the age-old principles of
REVIEWED BY VISHAL B MALKAN, CMT
investing – hard work, patience, discipline and common sense still have a
robust foothold in the marketplace.
Being a Trading Coach, I have come across
numerous traders and investors where many of
Investment Psychology Explained is written by Martin J Pring.
them although equipped with sound technical
skills lacked the appropriate trading psyche
essential for success. I have always believed
that the tools and indicators of Technical
Analysis can be mastered once and for all, but
an investor needs to constantly keep working
Martin J Pring is publisher of the highly regarded newsletter, The Pring
Market Review. A frequent contributor to Barron's and other leading
investment periodicals, he is the author of The All-Season Investor, the
bestselling Technical Analysis Explained, and a number of other books on
interest rates, international investing, and commodities and futures.
on his psychological traits. Most simple trading
strategies would work perfectly, but the only
thing that fails them is the psychology of a trader.
The Book is divided into three parts –
1. Knowing Oneself
2. The Theory of Contrary Opinion
Every investor, on his path to being successful as such, discovers sooner or
3. Strategies and trading rules to become a successful trader / investor
later that psychology is the most indispensable aspect of good trading.
Investing evokes a host of emotions - fear, greed, panic, hope - all of which
The first section focuses on knowing oneself thoroughly as an investor. To
drives one to make unsound decisions in the marketplace. As an investor, we
begin with, the author opines that there is no holy grail in trading/investing –
are our worst adversaries.
hard work, common, sense, patience, discipline are the only attributes. There
are various myths that people are likely to get trapped into – myth of expert
Investment Psychology Explained highlights the fact that to become
opinion, perfect indicator myth, and perfect system myth to name a few. As
successful, investors need to be more analytical and less impulsive. Arguing
soon as money is committed, emotion too gets in. There are two forces that
36 | ATMASPHERE
SEPTEMBER 2012
constantly keep affecting each trader – external forces such as media,
Finally, how do you define a successful trader/investor? The concluding
events, colleagues etc. and internal forces in the form of one’s psychological
section discusses in detail the beliefs and attributes of successful traders and
make-up. Various traits that confine one from being unprejudiced in the
investors. The author has presented a collation of trading rules of successful
marketplace are discussed in detail – fear, greed, hope, sentimentality, pre-
species from around the globe, which is undeniably very helpful.
conceived notions, overtrading, etc. The Author has stressed upon the idea
To conclude, Investment Psychology Explained hits you exactly where it is
of Independent thinking stating that self-trust is the foundation of successful
meant to be – your trading psyche. The book is a must read for everyone –
traders. Guru, news, gossip, expert opinions, newspaper reports,
be it a day trader, a swing trader or a position trader. It provides an excellent
tips/rumours etc. all have the effect of killing one’s independent opinion. The
analysis of the importance of trading psychology.
chapter on Pride of Opinion would be an eye-opener to each investor. The
section ends with very informative discussions on attributes of patience and
sticking to one’s investment plan.
I strongly recommend the book - it sure is a must-have in every investor’s
library of books.
The Theory of Contrary Opinion formed by Humphrey Neill is discussed in the
second section. Presently, it is popularly believed that since the “crowd” is
Vishal B Malkan, MFM, CMT is a proprietary trader,
wrong at major market turning points, everyone wants to be a contrarian. To
trainer and a trading coach. He is the founder of
be caught with the crowd in this day and age is the equivalent of admitting a
Malkansview (http://www.malkansview.com) - An
terrible sin. But one would do well to remember that the crowd is correct
Institute which conducts training programmes on
most of the time; it is only at turning points that they get things wrong. The
Technical Analysis and Behavioural Finance.
crowd is bigger and stronger than you are. You therefore have only one
choice – to join the crowd or to act independently. The theory of contrary
opinion requires us to go against our natural instincts; which is a difficult task
indeed. To be a true contrarian involves study, creativity, wide experience &
most importantly patience. The Author very strikingly explains with
illustrations how the theory works in the marketplace. He then lists down
various requirements of contrarian thinking.
SEPTEMBER 2012
ATMASPHERE | 37
Women in Technical Analysis
A Necessary Initiative:
Are markets a man’s world? Is Technical
Analysis a man’s domain? Answer is clearly no,
since markets as the final masters are the
ultimate level playing field. Yet, for various
legacy reasons markets have continued to be
dominated by men, so far.
Increasingly a larger and larger percentage of women are excelling at markets
and we do know many good Technicians such as Connie Brown, Louise
Yamada, Katie Stockton to just name a few have made their mark on the
globe! It’s time for India to discover its own Ms. Browne, Ms. Yamada & Ms.
Stockton!
The goal clearly is also to include any number of women Technical Analysts
you know and who are not yet ATMA members, to bring to the main-stream.
Speak to them, let them know the exceptional work ATMA has been
producing and get them to become members so that there are at least a 100
women members of ATMA in the very near future to take your representation
to at least 20% and hopefully as numbers grow the spiral effect will someday
take you closer to 35% or even more than 50%!
Of the 500+ members of ATMA active at this point, only 24 are women. That's
an abysmal number. The truth is a far bigger percentage of women are
technical analysts than the percentage women members in ATMA! Why? I
don’t have any good answer, but would guess that networking, professional
link building and such other extracurricular activities haven’t been easier for
women.
Here is a special initiative for You - the women Technical Analysts of India,
way more organized, crisper and resourceful than what has been done so far
for the general membership, at large.
38 | ATMASPHERE
We've have instituted a separate committee altogether titled, "Women in
Technical Analysis". If you can think of a better name that may be turned
We've have instituted a separate committee
altogether titled, "Women in Technical
Analysis". If you can think of a better name that
may be turned easily into a good &
RESPECTABLE acronym using the first letters of
each word, please do suggest.
ATMA will fund an extra monthly meeting on any good educational topic
EACH Month for AT LEAST the next 12 months under the Women in Technical
Analysis series where the speaker, the delegates and the volunteers will all be
women. A well appointed 80 seater conference hall with all modern business
amenities in perhaps one of the most secure & safe buildings of Mumbai –
right at a well known Commodity Exchange is being worked out as a
permanent venue!
This would make Mumbai the only city in the world of Technical Analysis
where there would now regularly be TWO monthly meetings, it would also be
a first of its kind anywhere in the world, Educational Monthly Meetings only
for women!
So here is a special committee to be comprised
ONLY of women, FOR the women and BY the
Women at the ATMA. Your mandate as a
Committee is way larger: To represent, ascertain,
decipher and then achieve the goals for Women in
Technical Analysis.
"I am surprised & IMPRESSED that you have
critical mass to hold a women-only meeting! It’s
a wonderful thing if you can pull it off. I’d love
to speak to the group someday"
- Katie Stockton , Vice President, MTA
Oh the Women Technical Analysts of India, write
to us for membership enquiries on:
[email protected]
and
for
volunteering on [email protected]!
Soliciting Women
Volunteers:
While a formal new fully
empowered Committee
is being built as “Women
in Technical Analysis”
you are welcome to join
all other Committees
too!
SEPTEMBER 2012
FORTHCOMING EVENTS
16th ATMA DELHI MEETING
7th ATMA JAIPUR MEETING
Date: 29th September, 2012
Venue: India International Centre
Venue: Seminar Hall, Women Teacher Training
(Annex Building), New Delhi
College, Jaipur, Rajasthan
Timing: 9:00 am to 12:30 pm
Timing: 4:30 pm to 7:00 pm
Presenter: Mr. Kunal Saraogi, a consultant technical analyst, fund
manager and renowned market commentator and CEO of
EquityRush.
Presenter: Mr. Rajat Gupta, a member of MTA and ATMA
pursuing CMT. Rajat is an independent market technical
analyst, serving all types of investors in the stock & commodity
market since 2009.
Topic of study: Long/Short Trading Using Technical Analysis
Focus of the Meeting:
Topic of study: Dow Theory & Its applications on Trend Analysis

Rationale for a long and short strategy

Stock selection mechanisms

How to analyze the Trend in all time frame.

Identifying outperformance

Use technical tools in combination with fundamental

Fine tuning strategy

Does timing still have a role?

Role of beta
tools to determine direction of trend.

Use technical tools to spot changes in direction of price
trends.

Identify new and existing trend,
MUMBAI
MEETING
ATMA MUMBAI MEETING
SEPTEMBER 2012
ATMASPHERE | 39
FORTHCOMING EVENTS (CONTD…)
25th ATMA MUMBAI MEETING
Date: 6thOctober, 2012
Venue: BSE Convention Hall, Dalal Street, Fort,
Mumbai, Maharashtra
Timing: 8:30 am to 5:15 pm
Presenter: Mr. David Keller, CMT, Managing Director of Research
for Fidelity Investments in Boston. He is currently serving as
President of the Market Technicians Association and a Director
of the MTA Educational Foundation.
Topic of study: Technical Research at Fidelity: Behind the Scenes

Technical Indicators

Combining Technical and Fundamental Analysis

Visualization
ATMA MUMBAI MEETING
40 | ATMASPHERE
SEPTEMBER 2012
PAST EVENTS’ UPDATE
6th ATMA JAIPUR MEETING
15th ATMA DELHI MEETING
Date: 25th August, 2012
Held at: India International Centre
Held at: Seminar Hall, Women Teacher Training
College (Modern Education Society), Jaipur
(Annexe Building), New Delhi
Attended By: 6 Participants
Topic of study: Point and Figure charting method in Technical
Topic of study: Introduction to Quantitative Trading
Analysis
Presented by - Mr. Kora Reddy, author of the recently released
Presented by: Mr. Manoj Jain, provider of complete Automated
book ‘High Profit Trading Patterns’ & co-founder of a Stock
Trading System (Algorithm – Trading) solutions to retailers. He
Screening and quantitative trading portal http://stocksiq.in, with
also gives training on technical analysis softwares.
features to screen, analyze and back test the listed stocks on the
Points of study in brief:
Indian Stock Market.
Quantitative trading often involves the use of mathematical
models to describe and predict market movements.

Introduction about P & F Charting method

Characteristics and Construction of 1 box & 3 box chart

Understanding Point and Figure Charts

Projecting Price Targets
The session covered the core concepts and quantitative
techniques used in the back testing, along with a hands on
experience of how back testing is done on Nifty Index.
SEPTEMBER 2012
ATMASPHERE | 41
PAST EVENTS’ UPDATE (CONTD…)
4th ATMA PUNE MEETING
24thATMA MUMBAI MEETING
Date: 1st September, 2012
Held at: B.V. Rao Conference Hall at
Deccan Gymkhana Club, Pune, Maharashtra
Held at: BSE Convention Hall, Dalal Street, Fort,
Mumbai, Maharashtra
Topic of study: Fibonacci Magic In Elliot Wave
Presented by - Mr. Amit Samar, a CMT, MBA (Finance) & owner
Topic of study: Technical Analysis: Cognitive Biases, Global
of K. TRENDS which provides Technical research & Technical
Macro & You
strategies to Ultra HNIs, Proprietary Traders in equities,
commodities and currencies
Presented by: Mr. Larry Berman, CMT, CFA, CTA, a Co-Founder
of ETF Capital Management. He brings almost twenty-five years










42 | ATMASPHERE
Basics of Elliot Wave
Alteration
Complete 5 Wave & Corrective Wave Structures
Waves With In Waves
Fibonacci
Fibonacci & Wave Relationship
Fibonacci Retracements
Motive Fibonacci Relationship/Multiples
Corrective Wave Ratios
Putting All together Case study Nifty from 2003-07
of industry experience to the role of Chief Investment Officer.

Understanding How Your Cognitive Biases Affect Your
Investment Decisions

Understanding Global Macro and Technical Analysis

Building a Trading Plan That Fits Your Cognitive Ability
SEPTEMBER 2012
PAST EVENTS’ UPDATE (CONTD...)
7th ATMA BENGALURU MEETING
1st ATMA AHMEDABAD MEETING
Held at: Sri Bhagawan Mahaveer Jain College,
Held at: AMA Seminar Hall, Ahmedabad,
Bangalore, Karnataka
Topic of study: Indicators and Oscillators
Gujarat, India
Attended by : 87 Participants
Topic of study: Introduction to Technical Analysis
Presented By: Mr. Raju Anagadi Vishwanath, MSc (ISM - UK),
B.E (ECE), a co-founder and Sr. Technical Analyst in Fortuna
Presented By: Mr. Bharat Choksi is Co-Founder, Earnwings Algo
Techno Trading Co.
Financial Boutique ( www.fortunfin.com ), which offers
professional tailored investment advisory & management,
training on technical analysis and outsourcing research solutions
to SMEs.





SEPTEMBER 2012
Introduction to oscillators and Indicators
Indicators (Leading & Lagging)
Application of Indicators and Oscillators on price charts
Advantages and disadvantages of Indicators and
Oscillators
The price action and Confirmation








Technical Analysis: An over-view
Role Of Technical Analysis as a Career Building tool
Trading Rules - Goal, Styles & Strategies
Money, Risk, & Trade Management
Dow pattern, Elliot wave, Candlestick patterns, Pivot and
Fibonacci levels
Technical indicators
Time based techniques
Scientific & strategic s-i-p in gold.
ATMASPHERE | 43
44 | ATMASPHERE
SEPTEMBER 2012
Benefits of Membership with the ATMA
Guidance
Education
Networking
ATMA offers Refresher Programs for
candidates appearing for CMT Exams. These
programs offer important guidance to the
candidates on writing the exams.
Become an expert in Technical Analysis
through our self study e-learning tools:
Connect with other professionals from
around the country through Educational
Meetings, Members’ Discussion Forums
and through ATMA network on social
networking sites etc.
ATMA E-Library
- Live Technical Analysis webcasts
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SEPTEMBER 2012
ATMASPHERE | 45
46 | ATMASPHERE
SEPTEMBER 2012

PDF - Association of Technical Market Analysts.

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