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Technically Speaking, December, 2005

From the Editor’s Desk

Happy Holidays to all our Technically Speaking readers. Since this is the season for giving and also for giving thanks, I’m going to use a little of this space to request the former and do the latter. First of all, many thanks to people like Ashton Dorkins, Garry Rissman and Matt Blackman, who have been a huge asset for the Newsletter since I have been Editor. They have been providing content almost every month. Also, thanks to people like Jeannette Young in New York City and Ross Leinweber in Chicago, we are now starting to get some newsletter participation from the MTA’s regional chapters. That’s the good news. However, there are 16 more Chapters out there that we have not heard from yet, so we clearly can do much better. So, to those involved with a regional group, please drop me a line at editor@mta.org and let me know that you are willing to give a gift to your fellow MTA colleagues by covering your Chapter’s next meeting. For those of you that are relatively new to the business

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What's Inside...

From the President’s Desk “Dear Santa”

by Jordan Kotick, CMT

Every month since becoming President, I have been able to report to you the successes we have had as an organization. I wanted to change tunes and do something different, something that I do not...

From the Executive Director “Go Live”

by John R. Kirby

The newest event to take place with the MTA was the GO LIVE of your NEW technology platform and the NEW MTA website. Over the last month literally hundreds of thousands of records and pages of...

Risk Equalization

by Michael Covel

In the quest for trading success, many traders are seduced into a fruitless search for a perfect entry or exit technique. While they hunt in vain, they miss some very simple strategies that enhance...

The Importance Of The 200-Day Moving Average

by Rob Hanna

How significant is a move in the S&P 500 below its 200-day moving average? To answer this let’s first consider what the 200-day moving average signifies, and then look at some statistics. The...

Product Review

by Matt Blackman, CMT

VantagePoint 6.3 by Market Technologies, LLC Like newborn babes, traders enter the market with high hopes and great expectations. Among their first tasks is to find the ‘best’ method to trade,...

The Face of Trading: Recreating the Box

by Active Trader Staff

Name: Jeffery E. Lay Age: 41 Lives and work in: Cinncinnati, Ohio As a teenager in rural Ohio, Jeffery dreamt of being a Navy Pilot.  Not many people get to fulfill childhood fantasies, but Lay...

Grading of the CMT Level 3 Exam

A rather small but dedicated group of CMTs met in Newark, New Jersey this past November to grade 154 CMT 3 exams. This provided an opportunity for this group of experienced technicians to give back...

From the President’s Desk “Dear Santa”

From the President’s Desk “Dear Santa”

Every month since becoming President, I have been able to report to you the successes we have had as an organization. I wanted to change tunes and do something different, something that I do not think has been done before and something that should be done. I wanted to briefly highlight where, as President, I have not done well, things I have failed to do. I do this not only to be totally transparent but more importantly, to highlight what is on my MTA plate as my Presidential term winds down in its final six months.

We have further work and negotiations to do with the Canadian Securities Institute. They are currently offering a very successful technical analysis course and we need to continue to work closer with them. The Long Term Planning committed has been inactive since well before I became President. This needs to be reinvigorated. The call from

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

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From the Executive Director “Go Live”

From the Executive Director “Go Live”

The newest event to take place with the MTA was the GO LIVE of your NEW technology platform and the NEW MTA website. Over the last month literally hundreds of thousands of records and pages of content were imported into the new Net Forum tool.

What you see in the front page and the private member home pages of the site is not much changed from the old site. That is intentional. The old site was a template for the new one. We are still bringing over tons of additional content each day.

Our primary concern right now is not the look. It is the functionality. We need to make sure that people can join, that they can register for events, that their dues get updated, that they are offered the right level of the exam, that they can purchase from the shopping carts, that they can post to the discussion groups,

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

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Risk Equalization

Risk Equalization

In the quest for trading success, many traders are seduced into a fruitless search for a perfect entry or exit technique. While they hunt in vain, they miss some very simple strategies that enhance trading returns yet do not involve entry or exit. One strategy most traders overlook altogether is risk equalization. Risk equalization allows a speculator to make proportional adjustments to their account while staying within their tolerance for risk.

Risk equalization means you adjust the number of contracts or shares to stay within pre-determined risk guidelines. For instance, a trader wouldn’t trade a Corn futures contract the same as he would trade an S&P 500 futures contract. The two contracts are dissimilar in size and move differently.

Frequently however, traders get a ‘lot size’ mentality. They are comfortable trading one contract of many markets, but get skittish at the possibility of having 10 contracts on one instrument and 2 on

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

Michael Covel

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The Importance Of The 200-Day Moving Average

The Importance Of The 200-Day Moving Average

How significant is a move in the S&P 500 below its 200-day moving average?

To answer this let’s first consider what the 200-day moving average signifies, and then look at some statistics.

The 200-day moving average is simply the average closing price of a market over the last 200-days. When the market is in a long-term uptrend, you will generally be trading above this line. When the market is in a long-term downtrend, you will generally be trading below this line. While a crossing of the line doesn’t necessarily mean the market is changing from uptrend to downtrend or vice-versa, it can be used as a useful barometer.

Let’s look at a mechanical entry technique to better understand the difference between trading in an uptrend versus trading in a downtrend (above or below the line). Entering the market on pullbacks is a well-known and simple strategy that has proven effective over time. The

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

Rob Hanna

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Product Review

Product Review

VantagePoint 6.3 by Market Technologies, LLC

Like newborn babes, traders enter the market with high hopes and great expectations. Among their first tasks is to find the ‘best’ method to trade, and this is something they will spend anywhere from six months to as much as five years doing. Armed with little more than hope and a dream, they scan the literature, enroll in seminars, buy a truckload of books on the topic and then either choose a charting program or for the more technically advanced, create a system that they believe suits their desired trading style.

During your first year (if you are lucky), you come to the grim realization that backtesting produces great results, especially if you fall into the curve-fitting trap but try such a system in real-time with real money and you usually get slaughtered. Indicators like the zigzag, available in most charting programs, are a great example.

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

Matt Blackman, CMT

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The Face of Trading: Recreating the Box

The Face of Trading: Recreating the Box

Name: Jeffery E. Lay

Age: 41

Lives and work in: Cinncinnati, Ohio

As a teenager in rural Ohio, Jeffery dreamt of being a Navy Pilot.  Not many people get to fulfill childhood fantasies, but Lay achieved his goal, attending the Naval Academy and the famous Top Gun training school.

However, after years of successful flying, Lay experienced a few key life events, including a successful bout with cancer and becoming a father.  He decided it was time to get serious about his finances.

He found his natural math abilities and visual skills, which had been honored during his flight training and Navy experience, gave him an edge in the trading world. Lay says pilots must develop the ability to assimilate massive amounts of information with a quick glance.

“Situational awareness comes naturally to a fighter pilot,” he says. “Pilots are good at

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

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Grading of the CMT Level 3 Exam

Grading of the CMT Level 3 Exam

A rather small but dedicated group of CMTs met in Newark, New Jersey this past November to grade 154 CMT 3 exams. This provided an opportunity for this group of experienced technicians to give back to our profession though the grading process, and build on the friendships that have developed both during and after the daily grading. Their involvement and commitment to technical analysis is critical to the mission of both the CMT program and the Market Technicians Association. Thank you for your hard work.

If you are interested in serving as a grader or becoming involved with the Accreditation Committee, please contact Marie at the MTA office to inform her of your interest. I believe you will find your participation both rewarding and enjoyable.

PASS RATES FOR FALL CMT EXAMS

Level 1: 69.8% passed
Level 2: 75.3% passed
Level 3: 59% passed

On balance, over time, these results are similar to

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

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New Educational Content This Month

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