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2 | ATMASPHERE NOVEMBER 2012
CONTENTS
Letter from the President - Page 3
Editor’s Note - Page 4
GuruMeeting with John Bollinger, an Interview by Sushil Kedia - Page 5
Why not Sloped Retracements by B Krishnakumar - Page 15
Market Cycles - How the Market really works by Chetan Potdar- Page 18
P&F 3-Box Catapult Patterns and Nifty by Prashant Shah - Page 22
Book Review - Reminiscences of a Stock Operator by Ankit Chaudhary - Page 28
Forthcoming Events - Page 31
Past Events’ Update - Page 33
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.
NOVEMBER 2012 ATMASPHERE | 3
LETTER FROM THE PRESIDENT
Dear Colleagues,
ATMA is undergoing a rapid identity change. From an organization that started with a decent base in Mumbai, we have spread out all
over India. Now we have started receiving new members from Nepal, Bangladesh and Sri Lanka too. We are racing against time to
setup vibrant chapters in these three neighboring countries too. The first step in this repositioning of our identity is a brand new logo
that reflects our expanded scope of work and not just the expanded geography in which ATMA is now working. Any contributions for a
new logo design may be sent to our executive team at [email protected]. I will be way happier if the father of our new identity is an existing member
who puts her or his own creativity to work in devising a new logo of the ATMA.
Our E-library of Technical Analysis has received a wide acceptance and admiration. I solicit continued volunteer support to take over ownership of the curating
process of this library. Like a garden a library too needs to be continuously curated for it to be significant value to its stakeholders.
In the GuruMeeting series I have this month interviewed the legendary John Bollinger. I thoroughly enjoyed the conversation with him and I am sure you will
find some key insights from this interview enclosed in the present issue of ATMASphere. In the coming months I am likely to interview Robert Prechter as well
as Michael Covel.
ATMA has been rapidly expanding its Executive Team so as to be able to meet well very high levels of demand for our work across expanded geographies and
enriching activities. Any referrals from our membership for suitable candidates across Accounting, Member Services, Knowledge Management, and Business
Development are going to be very highly valuable.
The next feather in the cap that our Executive Team is working on is an immediate implementation of high quality webinar tools so as we start producing at
least three highly educative webinars of our own each month for our membership and other interested learners.
Sincerely,
Sushil Kedia
4 | ATMASPHERE NOVEMBER 2012
EDITOR’S NOTE
In the GuruMeeting feature of this issue, our President interviews the legend - John Bollinger, the man who presented the world with the
famous Bollinger Bands. Amongst other things, John shares his experiences while creating the legendary bands, discusses the confluence
of seasonality and the bands and also delivers some insightful tips for newcomers in the field of technical analysis.
B Krishnakumar explains the concept of Pitchfork which is more a method of drawing up retracements in a non-static manner.
Chetan Potdar strikingly describes the Market Cycles by explaining the various stages of Bull and Bear markets.
3-Box Catapult Patterns in Point & Figure Charts are described in detail by Prashant Shah. He explains the characteristics and parameters of the patterns across
various charts.
Ankit Chaudhary reviews the book ‘Reminiscences of a Stock Operator’ by Edwin Lefèvre.
Please share your thoughts on ATMASphere by sending an email to [email protected]. You can subscribe to ATMASphere completely free by clicking here.
Sincerely,
Meghana V Malkan
NOVEMBER 2012 ATMASPHERE | 5
GURUMEETING
MEET WITH JOHN BOLLINGER, AN INTERVIEW BY SUSHIL
KEDIA
John Bollinger Sushil Kedia, President, ATMA
Interview Transcript
JB: John Bollinger SK: Sushil Kedia
SK: Hello, this is Sushil Kedia from Association of Technical Market Analysts in
India here to interview a legend today in our GuruMeeting series that we
host every month for our monthly publication the ATMASphere. The man I
have for you this evening is none but the legend Mr. John Bollinger himself. A
warm welcome to you Mr. Bollinger.
JB: Thank you so much for inviting me to interview with you today.
SK: Even though I would believe the whole world of technical analysis and
financial markets knows you but for the sake for posterity allow me the
opportunity to have a quick introduction for some of our readers. Mr.
Bollinger is the President and Founder of Bollinger Capital Management an
Investment Management company that provides technically driven money
management services. Bollinger Capital Management also develops and
provides proprietary research for institutions and individuals. Mr. Bollinger is
a Chartered Financial Analyst (CFA) and a Chartered Market Technician
(CMT). He is perhaps best known to the public for his many years of market
analysis and commentary on television - first on Financial News Network,
where he was the Chief Market Analyst - and subsequently on FNN's
successor, CNBC. Mr. Bollinger is also well known to professional investors.
An avid researcher, he has developed a number of widely used investment
tools and analytical techniques. His Bollinger Bands have been integrated
into most of the analytical softwares currently in use. His book, "Bollinger on
Bollinger Bands" was published by McGraw Hill in 2001 and has been
translated into eight languages. His Capital Growth newsletter is a 12-page
newsletter published monthly and updated weekly via a hotline which
provides market commentaries, charts and investment advice for the
average investor employing technically driven asset allocation approach. Mr.
Bollinger is a speaker at financial conferences worldwide and he is also a
founder of several websites for investors. He is visiting Mumbai on a
speaking seminar hosted by MetaStock in early 2013. So, once again Mr.
Bollinger formally, thank you very much for finding the time to make yourself
available to speak to us. Let me come straight and quick to the point, which
year did you offer the world your famous popular bands?
JB: Bollinger Bands were created very early in my career in technical analysis,
probably 1982-1983. I say probably because it was a process and not an
6 | ATMASPHERE NOVEMBER 2012
instantaneous creation. I had been thinking about the factors that went into
Bollinger Bands for a long time and experimenting with various versions. It
took maybe a year or so before I hit the right combination of factors.
SK: Mr. Bollinger you mentioned about the process and experiments in
reaching where you offered the bands to the world. Until these Bollinger
Bands were revealed to the world from whatever I could read on evolution of
Modern Finance, the assumption was that volatility is constant. Isn’t it right
then that until the Bollinger Bands came, academicians believed that
volatility was constant?
JB: That is correct. In the early 1980s and before that, volatility was assumed
to be a characteristic of a market or of a security. For example, beta is one
measure of volatility for a stock; it gauges the stock’s responsiveness in
relation to the market. A stock that has a beta of 1 responds more or less to
the market step per step; a stock that has a beta of 2 moves about twice as
much as the market and a stock that has a beta of 0.5 moves about half as
much as the market. In those days it was thought that beta was a property of
a stock. For example, if IBM’s beta was 1.2 it would not change over time, or
if it changed, it changed very slowly, over the life cycle of the company. A
young company might have a higher beta and as it matured the beta might
gradually move towards 1. That was the only sense in which volatility was
thought to be volatile, and at that time many of the academicians were just
discovering that volatility was in fact volatile. Several years ago the Nobel
Prize was given for that discovery, so, it was not so much that I discovered
that volatility was volatile - it was in the air! In the very early 1980s people
were coming to realize that our old assumptions about volatility for stocks
and markets were simply wrong and a new regime of thinking about volatility
was coming into being.
SK: Mr. Bollinger, even though with your achievements and what you have
given to our world of analysis - a revolutionary idea formally presented as
Bollinger Bands - wherein you argue volatility is not constant even though
many people might have been feeling it your era, then I notice the fact that
the Nobel Prize for Black and Scholes famous Option Pricing Model was
granted only in 1997. Can we at least say that the formal refurbishing process
in academia has lagged your contribution in markets by 15 years? Black and
Scholes assumed volatility was constant and won a Nobel Prize on it and you
provided us with Bollinger Bands in 1982! How does this feel?
JB: Well, by definition a Nobel Prize process is a lagging process. They wait
for a long time to award these prizes to make sure that the work has had a
major impact. Black and Scholes work was done before Bollinger Bands were
created. When I first came into business we were already using the Black and
Scholes model for pricing options; it was by studying option pricing that I got
the clue that volatility was in fact volatile. I started investing as an options
trader and to price options one has to have an estimate of volatility. I had
spent a lot of time thinking and working on those estimates of volatility that
were used to price options. I was very lucky to have one of the early personal
computers - it was not what we call a personal computer today – they were
called microcomputers at the time. I copied the formula for volatility into a
spreadsheet called ‘Super Calc’ and I noticed that it changed over time. That
was the key that got me thinking about how volatility changes. At the time
we used ‘trading bands’ but they were fixed bands. We call them ‘Percentage
NOVEMBER 2012 ATMASPHERE | 7
Bands’ today – say the 20-day moving average of Dow Jones Industrial
shifted up and down by 5% or another fixed percentage. That was the type of
trading bands that were used. I was looking to create adaptive trading bands
because the problem was when you used fixed-width trading bands you had
to change them from issue to issue. A stock like a small technology start-up
might require very wide bands – say 12 or 15%, whereas a utility stock might
require bands of only 2 or 3% wide, and a market index might require bands
which are over 5% wide. Each item you looked at had to be examined to
determine what band width to use, and in that examination and
determination process one allowed their emotions into the trading process.
If one was bullish on the stock, one drew bands to present a bullish picture
and if you were bearish on an index you might draw the bands to present a
bearish picture. So what I was looking for was an adaptive mechanism - a
way to ask the market how the bands should be set. It turned out that
volatility was the perfect answer to that question.
SK: Mr. Bollinger in terms of the utility of Bollinger Bands in confluence with
a number of other indicators, you suggested that adding more than one
indicator or study of the screen time may not enhance the value but when
created with a confluence of indicators of various types that could, in fact,
enhance the value. Is there any kind of statistical principal that underlines
this proposition you make?
JB: The mathematical term would be multi-co-linearity but let’s not go there
for the moment. Let’s think about the sorts of errors that traders typically
make. Often at conferences somebody comes up to me with a chart. They
will have 5 or 6 indicators drawn underneath the chart and say “This was a
good set up and I had a lot of confirmation but the trade failed! Why was
that?” If you look at the indicators you will see they were all momentum
indicators of various types - maybe momentum itself, maybe an RSI, maybe
some other variation! But momentum was the major factor in all the
indicators. So the trader thought he had 5 or 6 independent pieces of
confirmation while he had only one piece of confirmation and it gave him a
false sense of security. You can avoid that by breaking up the indicators you
use so that each comes from a different category. For example, you can use a
sentiment indicator, a momentum indicator, a volume indicator; those are 3
different indicators that would not exhibit this mathematical probability of
multi-co-linearity. They would not be telling the same story. If those
indicators confirm the trade then you have three independent voices
confirming your trade and you have much higher degree of confidence - real
confidence not false confidence.
SK: Mr. Bollinger when we talk about whom has been central to selection of
indicators in getting the best out of Bollinger Bands, have you noticed
anyone experimenting with capturing momentum, equalizing seasonality as
well as Bollinger Bands? The confluence of seasonality and Bollinger Bands?
JB: Well, seasonality is obviously a very popular technique amongst
technicians and there are many different ways of going at it. There are at
least 3 major research firms here in the US that focus on seasonality and
create seasonality studies. These can be very handy to use with trading
because they provide a sense of the background and the environment that
you are trading in. I would class seasonality as what I call a long term
indicator and in order to understand that we have to talk a little bit the time
8 | ATMASPHERE NOVEMBER 2012
frame of indicators. For me there are 3 time frames for indicators; short-term
indicators, intermediate-term indicators and long-term indicators. It may be
easier to understand this breakdown if you look at the tasks of traders. The
short-term for one trader may be a minute or two, and for another trader it
may be a half hour, or for another trader it may be days. In the same way
intermediate may be different values for different traders, but the tasks that
one does in each of these different time frames are exactly the same for all
traders. For example, the tasks one does in the intermediate-term time
frame are decision making, one decides whether one is going to buy or one is
going to sell. The tasks that one does in the short-term time frame have to do
only with execution of the trades, and the tasks assigned to the long-term
time are the background - factors like the seasonality, money supply, and the
big macro factors in the economy. So, it is very important to take those
different tasks and do them in a way that is consistent with the time frames
that you have chosen. For example, the biggest mistake the traders make is
they make a decision in the intermediate-term time frame using their
intermediate-term tools. Then they probably shift to the short-term time
frame to execute that decision. Once having made that execution and having
gotten the position, they forget to shift back to the intermediate-term time
frame to monitor the position. They stay watching the position in the short-
term time frame. This is a mistake because short-term market action can
shake them out of the position but if they instead focused on the
intermediate-term time frame where they had proper decision-making tools
to determine whether they should be in or out of the position they would
not get shaken out. So the seasonality that you talk about is an example of a
long-term time frame tool. It gives you background information to feed into
your intermediate-term trading process.
SK: Which time frame would be a good enough intermediate time frame?
JB: This is totally dependent on the trader. Some traders are very short-term
traders so their short-term time frame may be tick charts, and their
intermediate-term time frame may be 5 or 10 minute bars, and their long-
term time frame would be half hour or one hour bars. For a trader like myself
the short-term time frame is hourly bars, and the intermediate-term time
frame is the daily bars, and long-term time frame is weekly and sometimes
monthly bars. So these time frames are more descriptive of the tasks that we
accomplish in each time frame - not the actual amounts of time that we are
there.
SK: In terms of the fusion of various technical analysis schools, have you
found Bollinger Bands to be working as well in relative value trades, dividing
the stock price of one security say with the prices of another, one log-normal
distribution divided by another log-normal distribution? Do you think
Bollinger bands have worked as effectively on pair trades or ratio trades?
JB: We have had a fair amount of feedback from users who do pairs trading
that suggests they believe that Bollinger Bands actually work best on pairs
trading. I think that makes sense because you have de-trended the pair by
looking at the ratio. So you actually have higher information content when
you are looking at a ratio than when you are looking at a simple price series
that has more noise associated with it. When you have a greater signal it
makes sense to me that the approach would work better with Bollinger
NOVEMBER 2012 ATMASPHERE | 9
Bands or any other types of trading bands or technical analysis approach. I
think that is why many hedge funds who are often very active in hedged
positions or pairs are often more successful than people trying to take
positions in individual securities. They simply have less noise to deal with and
more signal.
SK: Mr. Bollinger let me jump quickly to your keen interest in computers,
right from the very early days of your career. I believe today you have done a
lot of your work in Python. You have seen the entire evolutionary cycle of
computer languages and as a keen technician and a money manager if you
can throw some light on why do you prefer Python and apart from Python
which other computing languages the newcomers in the business should be
exploring?
JB: When I started computing I started using BASIC language and that was
many, many years ago. I went through a number of variations of BASIC and
as more features were added it finally evolved to a place where I was not
comfortable with the environment any more. It became too complex and
was no longer a productive environment for me; I was spending more time
with the language and less time with the problems I was trying to solve. So I
looked for a replacement and Python suggested itself to me. It is a very high
level language with very strong libraries. I was able to focus more on the
problems by switching to Python and less on the environment, less on
language. Another excellent language for traders that I also use quite
extensively is ‘R’. It is just the single letter ‘R’. It is a statistical modeling
language in open source like Python. It also has extensive libraries and is very
heavily used in the quantitative finance world. There are some excellent
tools in ‘R’ that are useful. But we have gone actually one step beyond that
and finally wrote our own language for traders. It was originally called ‘Trade’
and it was an open source effort but we wanted to bring it in-house so
renamed it ‘BB Script’. It is the scripting language that sits behind all of our
major websites. You can use it on EquityTrader.com where it allows you to
write your own indicators at very high level and then run the indicators on
EquityTrader charts. You don’t need to know anything about programming. It
just allows you to flush out any ideas that you may want to realize in very
simple English-like logical phrases and then immediately see the results on
the chart. We have taken steps from a low level language to intermediate
level languages to very high level languages. In each step we tried to improve
the efficiency of the trading process. And we have done exactly the same
thing with the Bollinger Band indicators. When I started with Bollinger Bands
there were only two indicators that we used, one was %b and the other
BandWidth. %b tells us where we are in the trading bands and BandWidth
tells us how wide the bands are. In the past several years I have extended
that quite a bit and created a momentum indicator using Bollinger Bands and
a trend indicator using Bollinger Bands. I have gone into each area of
technical analysis, whether it is sentiment, or momentum, or trend analysis,
or seasonality, and created a tool derived from Bollinger Bands so we can
have a logically consistent set of tools to use, all of which are derived from
the same rational framework. This has been a very interesting area of
exploration for me and it is still ongoing.
SK: That is an awesome story about how you got your explorations into these
vistas of Technical Analysis. And I am sure when you are in Mumbai at the
10 | ATMASPHERE NOVEMBER 2012
speaking seminar we will get far deeper insights. And for the scope of
interview allows me to jump quickly to some personal things that help us
understand the man and the mind behind this awesome story of Bollinger
Bands.
Mr. Bollinger I believe you started your career as a journalist! When and how
did that transform you into the making you into a Technical Analyst? I am
sure that has some insights for us.
JB: Actually I started my career as a cameraman in the movie business. I went
to film school and spent the first ten years of my career working on film sets
doing special effects photography. I started transitioning into investing after I
was active in the film business for 5 or 6 years. By the time I was in the film
business for about ten years I realized that I was not taking any film jobs
anymore but was spending increasingly more of my time investing. The
market was always a passion for me and I just became more and more
interested in it. The major factor was probably the introduction of the micro-
computer. In 1978 I purchased a micro-computer kit and built a very small
computer and almost immediately I realized it would be very useful to
employ that computer in Technical Analysis. That was just the beginning of a
new career for me and I have focused on it extensively ever since.
SK: Very quickly Mr. Bollinger what are the few key hobbies you pursued
over the years and how they might have transformed your
perceptions/analysis of markets?
JB: Well my hobbies are music, which I find to be very interesting in terms of
Technical Analysis. I also have electronics as a hobby; I build vacuum tube
amplifiers. And I like to cook, so these different interests serve to round me
out as an individual. Perhaps the most directly related would be music which
I think is very important for trading. I always have music on in the office. I
find that it provides a wonderful environment, and it allows one to think and
focus on the problems at hand.
SK: Mr. Bollinger some quick advice in Do’s and Don’ts for the new comers in
the business of technical analysis.
JB: I think these days you need to learn at least a little bit of programming,
not a lot, because most of the platforms now provide some programming
capabilities. There is a platform like our own EquityTrader.com where you
can use BB Script to program your own indicators. And there are other
platforms like MetaStock, TradeStation and Amibroker. These platforms
allow the analyst to create their own indicators or modify existing ones. I
think a little bit of programming is an important piece of the puzzle. I think
the study of statistics can help tremendously. But I think the most important
thing for the young analyst is to study is the history of technical analysis.
Technical analysis has existed for a very-very long time. There is a huge
collection of literature about technical analysis! You can see a little bit of my
library behind me; I collect books on technical analysis and have done so all
my career. If anything has helped me it has been the study of the great
masters of the past and their books. Their techniques and their approaches
have been absolutely invaluable. So it is a little bit of programming, a little bit
of basic math and statistics, and a broad and deep study of the history of
technical analysis - these are the three things would help the young people
starting out as analysts.
NOVEMBER 2012 ATMASPHERE | 11
SK: Couple of top two or three recommendations of books that are a must
read for new comers?
JB: You know it really depends on the analysts and what they are interested
in. Some analysts are more interested in momentum, some analysts are
more interested in the work of Gann and other analysts are interested in the
work of Elliott. So it depends a tremendous amount on what the interests of
the analyst are. As a great survey book on the subject try Charles Kirkpatrick
and Julie Dahlquist’s book on Technical analysis. It is a great introduction to
the field; it covers an enormous amount of material and does so very well.
There are any number of books on the history of technical analysis; one that
started me thinking about a lot of the major issues was Robert Rhea’s book
on Dow Theory. This is an early technical analysis book that was very
important to me. Another book is JM Hurst’s wonderful book on cycles in the
market. This was a very instructive book about trading bands because he had
an approach to trading bands I found very interesting. I was never able to
realize his work but he provided a lot of room for my exploration. Then there
is Treasury of Wall Street Wisdom that was written by John Schultz, excellent
work again! Garfield Drew’s wonderful survey of Technical Analysis, which is
another interesting book that introduces a lot of historical aspects of
Technical Analysis.
SK: Mr. Bollinger I don’t think I can ever have enough of the satisfaction in
any length of the conversation that will ever happen with you. There is so
much that can be found and learnt from you. But respecting the constraints
of time I am jumping on to one facet of history in technical analysis that has
been created in this part of the world in India. Perhaps you might recall that
way back in 2004 when I had approached you, while you were a Director at
the Board of MTA, requesting that the CMT exam be brought into India, you
played an instrumental role in introducing me to Jordan Kotek then, and the
creation of ATMA on those grounds, and within some years the largest
number of CMT candidates outside of United States are now happening out
of India. The fastest growth of candidature of CMT is happening out of India.
So the seed that you helped sow in this new territory so to say is flourishing.
How does it feel to know this now?
JB: Well, It feels great. But for a seed to grow, it has to be planted in fertile
soil, and India has a long tradition of technical analysis, and technical
analysis-like ideas. So I think that it was a natural sort of combination. But
you know the seed was not planted by me, I merely provided the
introduction, you have done all the hard work.
SK: I am sensing one quality that you are perhaps likely going to convey to all
the students that it carries well to have the currency of humility, do you
believe humility and ability to take stop losses is what makes good technical
analyst into a successful trader?
JB: I do not know if you have to be humble. There are many successful
traders who are not. But the one thing you really have to understand is that
the market is always right and you are likely to be wrong. So you better be in
a hurry to correct your mistakes in relation to the market because otherwise
the market will correct them for you. I personally believe there should be
respect for the market and respect for the works of others. It is an important
part of my psyche. I think it is important to retain a certain amount of
12 | ATMASPHERE NOVEMBER 2012
recognition that we need to be able to come back and play again, to keep all
the stakes in check, so we do not jeopardize the privilege of being in this
wonderful business.
SK: Mr. Bollinger on this very exciting aspect of markets will only be right and
one will be wrong, one final question, you might be having some other
engagements and appointments I am aware. If I remember it right you were
the first person in the world to have both CFA as well as CMT. Is that right?
JB: I was already a CFA and I took the very first exam that was offered for the
CMT, and of the 30 some odd of us that took and passed that exam, I was the
only CFA. So in fact I am the first CFA, CMT, but again it was more by accident
than by design.
SK: OK, allow my greed to present you the one final question - as the person
to qualify a CMT in the first batch of CMTs and who was already a CFA, thus
becoming the 1st CMT in the world with a long enriched career, do you advice
people to be purists and purely focus on price action or do you suggest that
keeping in the back of the mind looking at the factors that influence the price
works best? Should perhaps pure study of price action be pursued or you
should be a more of a holistic analyst looking at everything in the markets?
JB: You know, the answer to that question will be different for each analyst.
Some analysts are going to be very dependent on the fundamentals; they are
really going to need to understand the companies, their environment, and
their economic operations. They will then use technical analysis to get in and
out of the securities that they already decided they want to own or that they
don’t want to own.
Others are not going to want any fundamental input at all. They are just
going to want to focus purely on price action. So it is really up to the
individual. Years ago I created the term Rational Analysis to describe using
the best tools in the overlapping set of technical analysis tools and
fundamental analysis tools, and frankly over the years I have come to focus
increasingly more on technical analysis and less on fundamental analysis. But
you know that is my bias. There are many people who have the opposite
approach. What is more important is that each analyst finds the correct mix
for him/her.
SK: Thank you very much Mr. Bollinger for this wonderful and insightful
conversation! We look forward to be able to learn more from you when you
are in Mumbai in 2013 to attend the MetaStock conference and we really
look forward to meeting you. In the interim wish you very warm greetings of
the season and a very good health to you.
JB: Well thank you very much for chatting with me. I will be in Mumbai on
the 23rd and 24th of February, 2013 with MetaStock to speak at their
conference and delve into these matters pretty deeply, including many of the
new Bollinger Band indicators. I would like to invite the people who are
watching / reading this to visit at least one of our websites. I think they could
learn a lot. We have some free videos and tutorials on our websites that they
could use, the best one for them to start with would be BBands.com. There is
a lot of free tutorial information there – information about Bollinger Bands
and also lots of technical analysis material that they might find useful. And
for traders that use forex, BBForex.com has Bollinger Band analytics for that
market.
NOVEMBER 2012 ATMASPHERE | 13
SK: Thank you very much Sir. We will publish all the information about these
sites and we will eagerly await you in Mumbai.
JB: My pleasure. Thank you.
To view the video of the GuruMeeting click on the image above or click
here.
14 | ATMASPHERE NOVEMBER 2012
www.BollingerBands.com provides comprehensive information about
Bollinger Bands including a free tutorial. On the home page you will
find free videos, webinars and interviews. The site is also the portal
for John Bollinger’s monthly newsletter, The Capital Growth Letter.
www.BollingerOnBollingerBands.com (www.BBands.com) supports
John Bollinger's book of the same name and presents four trading
systems based on the Bands. Lists of US stocks that meet the criteria
for each of those trading systems and many other signals are updated
on a daily basis, including both long and short positions. The site
features a powerful custom charting program presenting a wide
variety of indicators including John Bollinger’s newest work, a unique
pattern recognition system that categorizes stocks into a series of M
and W patterns, and an extensive stock-screening program that allows
investors to do custom searches to fit their own criteria.
www.BBForex.com is the only website dedicated to providing Bollinger Band
analytics for the forex market. The site provide technical analysis tools forex
traders can rely on, including charts, news updates and a portfolio section for
easy tracking of selected symbol pairs. Just added to BBForex is a patent-
pending 3-D model which provides a unique new way of comparing and
visualizing currency price changes relative to one another. The model allows
for rotation along different axes, zooming and out, and shifting the model in 3-
D space. This exciting new way to visualize and evaluate currencies is only
available at BBForex. BBScript allows users to program their own indicators
and run them on BBForex charts.
For more information about the MetaStock conference in Mumbai in
February please see http://go.metastock.com/Mumbai13
NOVEMBER 2012 ATMASPHERE | 15
WHY NOT SLOPED RETRACEMENTS
BY B KRISHNAKUMAR
Almost everyone initiated into technical analysis would have read and / or
used Fibonacci Retracement to identify where price would take support /
resistance in a counter-trend move. Am sure most analysts would also be
conversant with the popular Fib-ratios of 0.382, 0.5 and 0.618.
Here is the daily chart of Nifty with the popular retracement
The problem with these support / resistance derived from these retracement
levels is that they are static in nature. Price action is seldom static and it is in
this context that “sloped retracements” come in handy.
Alan Andrews, Thermo Dynamics Professor from MIT, developed a handy
tool called the Andrews Pitchfork which helps resolve the static retracement
problem. Featured below is the weekly chart of Nifty with the Andrew
Pitchfork tool. The line in the middle, also known as the Medianline, is the
50% dynamic retracement of the “BC” swing.
Notice how price reacts from the dynamic 50% retracement represented by
the Medianline. The Andrews Pitchfork operates on the premise that price
oscillates around the mean value or fair value or balance. Unlike popular
perception, this fair value or balance is a dynamic concept and not static. And
this is where most analysts get stumped.
What the pitchfork does is that it takes the extreme points of a swing and
calculates the dynamic 50% retracement. The slope of the retracement line is
governed by the starting pivot. Take a re-look at the chart 2 featured above.
The same concept is demonstrated here in the daily chart of Tata Motors,
with a down-sloping Pitchfork.
16 | ATMASPHERE NOVEMBER 2012
We have chosen three alternating pivots A, B & C. The medianline bisects the
“BC” swing with the slope of the lines being determined by the placement of
the “A” pivot. Once the logical pivots are identified, drawing the pitchfork is
taken care of by the charting software.
According to Alan Andrews, price has a “high probability” of reaching the
centerline or the medianline. As a corollary, from a trading perspective, the
medianline may be used as a highly reliable target. Now that the target is
known, the next step from a trading perspective is to identify the entry and
stop-loss.
For an entry, any of the standard technical analysis tools may be used. A
moving average / MACD combo is a good choice. In an uptrend, wait for the
price to retrace either to the moving average or below it and go long when a
MACD buy signal is triggered.
Profit-stops may be trailed until the price hits the target which is the
medianline. Medianlines / Pitchfork can also be used as an entry mechanism,
but that it is a subject matter of another discussion. Await the next part soon.
B. Krishnakumar is working as Head-Equity Research
at FundsIndia.com which is an online financial services
platform for investors. Specializing in Mutual funds,
FundsIndia also offers other services including equities
and NPS. The author may be reached at
NOVEMBER 2012 ATMASPHERE | 17
The Dream... has come True! Almost!
World's FIRST E-Library of Technical Analysis
; |
, ||
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.
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 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.
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!
This vendor has digitized 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.
The work ahead, for all of us..
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.
18 | ATMASPHERE NOVEMBER 2012
MARKET CYCLES - HOW THE MARKET
REALLY WORKS
BY CHETAN POTDAR
In financial markets, the “majority is always wrong.” When the investing
majority or the crowd is overly bearish, this is the best time to be buying
stocks. When the crowd is overly exuberant, this is the time to be selling
stocks. The financial markets always work in this ironic way.
The Start of a Bull Market
The bottom of the market starts at a time when the stock market is weak and
the general population is pessimistic. At this point most investors sell after
having endured a long and torturous bear market. This extreme pessimism
found at a bottom is always irrational and undeserved. Now the market is
undervalued and is a bargain. Savvy investors, the “smart money”, buy
bargain stocks knowing that they will be able to sell them higher in the near
future. Smart money buying, called accumulation, causes stocks to rise.
The smart money often consists of operators, and corporate insiders
(promoters of companies). These traders have access to information that the
general public does not.
Rising stocks is eventually noticed by institutional investors, as billions are
introduced into the market place. Mutual fund investment causes the stock
market to advance in a powerful manner. Much of the steady large trends
are powered by institutional investors. After the stock market has gained,
stocks are now fairly valued and are no longer considered bargains. The
smart money is now sitting on a large profit, as well. The average investor is
still skeptical, however.
As bull market events unfold, retail investors begin to take interest in stocks.
Retail investors, or the unsophisticated little guy, make up the vast majority
of investors. This group does not invest for a living. Retail investors often
make investment decisions based on what they read in financial magazines,
from their brokers and from tips from friends. As the flood of retail capital is
invested, the market soars, causing great euphoria. At this point in the cycle,
many companies become public, or launch an IPO. Companies go public
when investor sentiment is most optimistic so as to gain the highest possible
stock price. IPO’s generate even more optimism as unsophisticated investors
buy into the fallacious thoughts of instant riches. Now is the time when many
small investors become wealthy. In this phase, stocks are doubling and
tripling as the media cheers on the advancing bull market.
NOVEMBER 2012 ATMASPHERE | 19
At this point, the smart money sells, or distributes, the now overvalued
stocks to overconfident retail investors. The smart money knows that
overvalued stocks are no longer worthy investments, and will soon drop in
value. Widespread greed always occurs, in some form, at stock market tops.
Sometimes this greed takes form as stock market scams and fraud. These
immoral activities can take place because irrational retail investors will buy a
stock simply because it is glamorous. To compound the problems, investors
will now start to use margin, or leverage, to further accelerate gains. All
caution is thrown to the wind as "investors" think “the old rules don’t apply”.
The Start of a Bear Market
After mutual funds and retail investors are fully invested, the market is
overbought. This means that there is no more cash to fuel the rally. The
market can only go in one direction: down. All it takes is just a hint of
negative news and the market collapses under its own weight. Up trends are
fueled by greed, but down trend is only fueled by fear. Investors quickly
realize the market is made of smoke and mirrors, as frauds or other scams
come to light.
When panic selling starts, a market will always fall quicker than it had risen.
Oftentimes, as everyone heads for the exit at the same time, there isn’t
anyone willing to buy the stock. This can be especially disastrous for margin
users as they grow deeply indebted to their brokers. Bankruptcy is the usual
result for these foolish gamblers. The majority of retail investors don’t sell
even as the market is plummeting. This crowd keeps holding on to stocks in
hopes that the market will recover. As the market plummets 25%, then 50%
the average retail investor foolishly holds on, in complete denial that the bull
market is over. Finally retail investors sell every stock they own plummeting
the market even further. This mass exodus is called capitulation.
The Cycle Starts Again
It is at this point that stocks are undervalued once again. The smart money is
accumulating and stocks rise. The majority of retail investors bought at the
top and sold at the very bottom. This is the very essence of the “dumb
money”. They are perpetually late into the game. This cycle continues over
and over. Only the smart money actually “buys low and sells high”. After
trading in this manner, the dumb money will adhere to adages such as, “the
stock market is risky”. In reality, however, the stock market is only risky if you
trade like the mindless majority!
Markets are never risky. It is your attitude, beliefs, thoughts and behavior in
the markets that are risky. The only way to correct these points is by
continuous education.
Chetan Potdar, is an ex-banker with 12 years of work
experience across multiple countries including Singapore
and Dubai and super HNI segment. Having managed
investment businesses across seven countries he is well
versed with multiple markets. A trader for the past 8 years in multiple
segments, he has worked for institutional desks and proprietary
discretionary desks. He currently teaches trading and runs mentoring
programs in multiple Institutes. His specialty is Demand - Supply.
20 | ATMASPHERE NOVEMBER 2012
NOVEMBER 2012 ATMASPHERE | 21
ATMA Social Awards
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...
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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....
Competition is good…
More so when one is competing in
a win win enterprise such as the
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You can notice the points earned
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Growing Catalogue...
Redeeming of points as per the
catalogue to claim valuable gifts
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Wide variety of useful materials to win, any day, any time...
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
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The MyATMA private network on our website is in full swing too. Have you
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oh I see, you don’t see how the points on MyATMA can be encashed....
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22 | ATMASPHERE NOVEMBER 2012
P&F 3 BOX CATAPULT PATTERNS AND
NIFTY
BY PRASHANT SHAH
Point & Figure Catapult pattern is the breakout and pullback pattern that was
first described as a 3 box pattern by A.W.Cohen. It is essentially a 3 box
reversal chart pattern and not applicable to other box reversal charts.
Below are the points that describe the catapult pattern:
A triple or multi or extended multi top / bottom breakout (A double
top / bottom breakout is not enough)
Price must pull back
Pull back must not generate reverse signal
It must then turn around and breakout
In brief, it’s a breakout from multi tested box, a pull back and then the
breakout again. The essence of the pattern is reassertion. It gives us
information about the strength of the trend as having been pushed back
after the first breakout, they are strong enough to reassert their position and
drive the price past the previous resistance or support level, leading to
another breakout.
Width is an important aspect of the pattern. Wider patterns indicate a longer
congestion phase that makes the subsequent breakout or breakdown all the
more important.
Having been convinced with the logic of the pattern, I decided to observe the
same on the various charts of Nifty. The most difficult part of P&F analysis is
about plotting it. And probably the major reason that most of the analysts
prefer to keep away from this method of analysis.
We can plot absolute or log box sizes. Which one to be plotted first? What
should be the box value? Then we have ‘close only’ and ‘high/low’ charts.
People draw ‘low/ high’ charts as well!! Which is the one to be plotted? Then
we have various reversal sizes. 1 box chart is entirely different method of
analysis. So the confusion begins with plotting itself.
But probably this is the unique feature of P&F analysis. By using various
combinations, we get the opportunity to analyze the structure of pattern
(fractal analysis?). Plot any P&F chart first and there begins the process of
analyzing higher and lower box size (Degrees?) charts.
Let’s begin with 1% x 3 Nifty close only chart. I usually start with 1%.
NOVEMBER 2012 ATMASPHERE | 23
Observation of patterns helps us to get the information about the market
structure and to decide the approaches to find the affordable trading
opportunities. For example, in case of bullish catapults, Triple top in itself is a
pattern and a signal to buy. But formation of catapult tells us more about
strength of the trend. We might find a catapult signal in lower box charts
while there is a triple top / bottom in higher box chart. This is the pattern or
structure that tells us that breakout is from tested resistance and squared
nature of a pattern.
While observing the pattern, one would always be interested in knowing the
success ratio of the occurrence. So it is important to decide the entry & exit
points of it. Breakout box value is the entry point in case of catapults but
there can be two ways to put a stop. Low box value of the previous column
of ‘O’ of catapult breakout in case of Bullish catapult and high box value of
previous column of ‘X’ in the case of Bearish Catapult would be the one type
of stop (Risk 1). Pattern low in case of Bullish catapult and Pattern high in
case of Bearish catapult is another kind of stop (Risk 2).
Target would be the vertical count from the triple top/bottom column
breakout. Horizontal counts would make sense because the pattern is a kind
of horizontal, but there are two reasons for considering vertical count from
the breakout column. One is that you can have only continuation horizontal
counts in the case of 3 box charts and second point is that the greater the
demand or supply at the breakout column of this pattern, stronger the
participants creating the column. Also we might find mini tops and bottoms
in many cases of the column from where we are taking the count in this
pattern. The column also becomes significant because essence of this
pattern is regaining the control that was initially formed by the participants
of this column.
Figure 1: 1% x 3 (cl) Nifty Point and Figure Chart
Figure 1 is 3 box reversal chart of closing prices of 1% box value of Nifty of
last 10 years. I could find 3 catapults during this period which are shown in
the chart! Targets from the column we discussed are also shown. Now let’s
see how 0.05% chart looks with catapult.
24 | ATMASPHERE NOVEMBER 2012
Figure 2: 0.05% x 3 (cl) Nifty Point and Figure Chart
Figure 2 is close only 0.05% box chart of Nifty of the same period. Interesting
observation is that there was no such pattern in the trends of 2007 and 2008
of Nifty in this chart. And appearance is more in the other half of the chart.
This observation tells us more about the structure of the pattern and trend.
Lets’ see how high/low charts of the above box values looks like with
catapult.
Figure 3: 1% x 3 (h/l) Nifty Point and Figure Chart
Figure 3 is the 3 box reversal chart of high/low prices of 1% box value of Nifty
for the same period. Many occurrences!
Observe and compare the above chart with 1% close only chart. The pattern
is spreaded across more columns in case of high low charts compared to
close only. Catapult is basically a horizontal pattern and so it is seen more in
high /low charts than close only charts. High/low chart becomes
advantageous in this case!
Also observe that there are simple double top/bottom breakouts in close
only charts at times, which are indeed possessing the horizontal structure
which can be seen with high low charts.
You would often see that when you have found a catapult in higher box
charts, there is multi broadening pattern at lower box size charts and double
or multi top/ bottom breakouts in higher box charts. Each chart gives you
NOVEMBER 2012 ATMASPHERE | 25
different counts and stops. This clustering of patterns and counts helps us in
analyzing the structure and decide the treatment.
Figure 4: 0.05% x 3 (h/l) Nifty Point and Figure Chart
Figure 4 is Nifty high/low 3 box reversal chart of 0.05% box value. Enough of
information and opportunities can be seen in this chart with this pattern!!
Catapults will not be seen much in higher box charts and not even in very
lower box size charts. Lower box charts at times will have unusual long
columns of Xs and Os.
You can try other box values for identifying catapults but you would find that
these are the only chart values that are to be plotted for it. One can use
absolute box value of 25 boxes close only and high low charts as well. No
other absolute value chart will show significant number of catapults.
Table 1 shows the success ratio of occurrences of catapults in 1% and 0.05%
high / low charts shown above.
Table 1
Gross profit and risk reward ratio is shown from trading point of view for Risk
1 and Risk 2 discussed elsewhere in this report. Many other columns can be
added but we are testing the pattern and not a trading system. But more
number of positive trades and lesser risk reward compared to Risk 1 tell us
that the holding period would be more in case of trades taken with Risk 2.
Many other interesting things can be observed about trend and the structure
after comparing these 4 charts. P&F surely would complement any method
of analysis.
We analysts like to think of variations and using filters. Let’s welcome all such
ideas, filters and anticipations. It is sometimes possible to anticipate a
catapult pattern with the 3-box reversal that forms the last column. This
would be the seventh column for a classic catapult. I have failed enough
number of times by trading in such anticipations even with other methods of
analysis. I still need to learn the art.
26 | ATMASPHERE NOVEMBER 2012
But yes, I think two major advantages of P&F analysis are 45 degree trends
and Counts. I am not aware of any other method to asses these and hence I
think it’s something no analyst can afford to let go.
All above charts are daily point and figure charts. The work further for
inspired readers is to observe the same in hourly and other time period P&F
charts.
Prashant Shah is a Chartered Market Technician (CMT)
and Certified Financial Technician (CFTe) recognized by
MTA and IFTA respectively. He holds more than 8 years’
of Capital Market experience and is currently working
as Associate Vice President with IIFL in Pune. You can
reach him at [email protected].
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NOVEMBER 2012 ATMASPHERE | 27
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.
Now, the more important point:
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?
28 | ATMASPHERE NOVEMBER 2012
BOOK REVIEW - REMINISCENCES OF A
STOCK OPERATOR
REVIEWED BY ANKIT CHAUDHARY
Reminiscences of a Stock Operator
written and first published nearly 90
years ago is a novel by American
Author Edwin Lefèvre based on
biography of Jesse Lauriston Livermore
famously known as the Boy Plunger
who made and lost many multi-million
dollar fortunes during his lifetime.
Despite being written in the early
1920's, it’s incredible that the advice,
lessons and the quotes mentioned in
the book are just as relevant & valuable as it was upon its publication.
Reminiscences of a Stock Operator shares the first-person account of the
career of a “Lawrence Livingston” (a fictionalized Jesse Livermore), who
begins his trading career in the 1890s via the "bucket shops". These shops
were prevalent prior to government enforced security regulations where
speculators could trade on very thin margins. The book's protagonist, Larry
Livingston at the age of 14 was a devoted tape reader who developed an
exceptionally accurate ability to anticipate price fluctuations. He would
watch a constant flow of price quotes off the ticker and get a feel for how
strong or weak a stock or commodity was behaving. This ability helped him
to earn $10000 in cash at such an early stage of his life when he was around
20, all this was achieved by him despite getting double crossed by “ bucket
shop owners “ who added a three-point margin and a point-and-a half
premium to all his trades. Livingston soon became so well known among the
bucket shop operators that he was banned from “playing the game”. This
forced him to move to New York to do legitimate trading that resulted in
profits of $50000 which lasted for only 2 days. Due to rotten execution of his
trades all the wealth he generated fell flat. He went to New York to make it
big in this game only to realize that he was only beating the bucket shops
rather than beating the actual game. He made many mistakes all his life but
he always believed that one should not make the same mistake again. In this
book the author depicts a raw & honest account of a Livermore's life. This
book is not a full memoir of his personal life and instead focuses only on his
"business." i.e. trading in markets. It is only learnt that he had a wife who
was used by someone to bring Livermore into stock manipulation. Edwin
Lefevre does a great job of capturing the highs and lows of Livermore’s
exciting life, right from being a boy trader, day trading at the bucket shops to
market speculator to market manipulator and finally to Wall Street. Edwin
Lefevre in his book also introduces many principles that were told by
Livermore and some of them are mentioned below:
1. “SPECULATION IN STOCKS IS AS OLD AS HILLS & WILL NEVER
DISAPPEAR”
2. “WHATEVER HAPPENS IN THE STOCK MARKET TODAY HAS HAPPENED
BEFORE, AND WILL HAPPEN AGAIN.”
NOVEMBER 2012 ATMASPHERE | 29
3. “WEAPONS CHANGE, BUT STRATEGY REMAINS STRATEGY.”
4. “NO STOCK IS TOO HIGH TO BUY OR TOO LOW TO SELL”
5. “THOU SHALL NEVER FIGHT THE TREND”
6. “LET YOUR PROFITS RUN AND CUT YOUR LOSSES SHORT”
The second one being one of my favourites, all these principles were
transferred from one generation to another and are nowadays being used in
newly published general stock markets’ books in one form or the other.
This book discusses most of the principles & techniques directly but there are
some portions in this book in which you have to read between the lines to
get a better sense of what Livermore is referring to. His gain and loss and
then followed by gain and loss of wealth is sort of funny, but It took a lifetime
for one of the greatest traders in history to learn about the markets the hard
way and now it’s up to you whether u want to take a leaf out of Livermore’s
book and use it in your daily trading
I would strongly recommend the book to be read at least twice as you will
certainly learn new things from the re-reads and you will start to notice all
sorts of information that wasn’t apparent the first time around. Read it when
you are having trouble with your trading and consider it as a best way to stay
motivated.
Don't pass this one up!!!
Mr. Ankit Chaudhary is an Engineer by qualification
and Technical Analyst & Options Strategist by
profession. An NSE certified Market Professional -
Level 5 with five years of markets' experience, he is
currently working with Analyse India for the past 2
years. His amalgamation of Technical with Option
studies has produced great returns for short term traders and that too with
a minimal risk.
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 +91-22-
2272 2862 and renew over the telephone with any of the ATMA Staff
members.
30 | ATMASPHERE NOVEMBER 2012
"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
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!
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!
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.
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.
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.
Oh the Women Technical Analysts of India, write
to us for membership enquiries on:
[email protected] and for
volunteering on [email protected]!
NOVEMBER 2012 ATMASPHERE | 31
8th
ATMA JAIPUR MEETING
Date: 15th December, 2012
Venue: Seminar Hall, Women Teacher Training
College (Modern Education Society)
Timing: 4.30 pm to 7.00 pm
Presenter: Mr. Arpit Sethi, a affiliate to MTA, Member of ATMA
and pursuing CMT.
Topic of study: Make Profit from Candlestick
Focus of the Meeting:
How to understand insight of candlestick.
Use Western technical tools in combination with
candlestick to make profit.
Understand Umbrella pattern for bullish and bearish
reversal.
26th
ATMA MUMBAI MEETING
Date: 22nd December, 2012
Venue: St. Xaviers College
Assembly Hall, Mumbai
Timing: 1.45 pm to 5.00 pm
Presenter: Mr. Nooresh Merani, an ace Technical Analyst as well
as an active member of prestigious forums and groups dedicated to
equities. He started his own blog - www.nooreshtech.co.in the Equity
and Commodity markets in 2005.
Topic of study: Sensex v/s Dow Jones
Focus of the Meeting:
Cyclical Nature of Markets - 13 year cycle on Sensex and 17
on Dow Jones.
Comparative Study
A Mirror Image Analysis
Dividend Adjustment
Using Semi-Log Scale on Long Term charts
Midcaps & Volumes
FORTHCOMING EVENTS
32 | ATMASPHERE NOVEMBER 2012
27th
ATMA MUMBAI MEETING
Date: 12th January, 2013
Venue: M C Ghia Hall, Mumbai
Timing: 1.45 pm to 6.00 pm
Presenter:
Mr. Sushil Kedia (B.Com. Grad. CWA, PGDBM, FRM, CAIA, CMT) -
Founder President of ATMA
Topic of study: Art of War & Technical Analysis
Focus of the Meeting:
War is the highest embodiment of human conflict
Every decision is a resolution of some conflict
Principles of warfare are applied to all business achievement
processes
As Technical Analysts, whether we trade or we invest, there
are meals for a lifetime in studying parallels between war and
our work
Sun Tzu’s Art of War is on the top-10, must read list of books
of Mr. Kedia and he will likely take the gathered through a
delectable journey of numbers, charts, philosophy, sociology,
mathematics, anthropology, physics and all of it centered
around how knowing the Art of War improves each piece of
work we do as Technical Analysts.
FORTHCOMING EVENTS (CONTD.)
NOVEMBER 2012 ATMASPHERE | 33
17th
ATMA DELHI MEETING
3rd
ATMA AHMEDABAD MEETING
PAST EVENTS’ UPDATE
Date - 24th
November, 2012
Held at - India International Centre
Attended By - 15 Participants
Topic of study – “Investment Psychology
/ Crowd Behavior and Effect of Interest rates on the Economy &
Stock Market”
Presented by – Mr. Varun Malhotra, a Director and Instructor at
EIFS. A Mechanical Engineer from Pune university, he has
worked for Technip, a French Multinational & a global leader in
Oil & Gas Engineering projects with a turnover of above $8.5
billion.
Points of study in brief:
TOPIC I : Investment Psychology / Crowd Behavior
What leads to formation of bubbles in Financial Markets.
Case Studies and Identifying next bubbles and how to
profit from them and more...
TOPIC II : Effect of Interest rates on the Economy &
Stock Market
Phases of an economic cycle.
Inter-market analysis: Relation among bonds, stocks &
commodities (special focus on gold) and more...
Date: 10th
November, 2012
Held at: Hotel Maan Residency
Attended By: 22 Participants
Topic of study: Role Of Global Database Analysis Theory In
Movement Of Stock, Commodities Or Forex
Presented by - Mr. Rajesh Prajapati working in “Reymount
Commodities Pvt. Ltd”
Points of study in brief:
• Database analysis theory for equity commodities and forex.
• Global fundamental data for stocks
• Global fundamental data for commodities
• Global fundamental data for forex
• Basic forex movement and commodity moves
• Relation between fundamental data of USA & India
• Economic Indicator
• Inflation/ Deflation
• Manufacturing Index etc.
• Housing Price Index (HPI)
• Consumer Confidence Index ( CCI)
• Consumer Price Index( CPI)
34 | ATMASPHERE NOVEMBER 2012
6th
ATMA PUNE MEETING
9th
ATMA BENGALURU MEETING
PAST EVENTS’ UPDATE (CONTD…)
Date - 25th
November, 2012
Held at - B.V. Rao Conference Hall at
Deccan Gymkhana Club
Attended By - 30 participants
Topic of study – Trading Systems and Money Management”
Presented by – Mr.Vivek Marne, a qualified Chartered Accountant.
He is passionate about Technical Analysis, and a self taught
Elliott Wave Technician. He currently runs his own firm.
Points of study in brief:
• Segregating trading and analysis
• Trading system & its pre-requisites
• Overview of one of the popular Trading
System-- Turtle Trading System
• Key money management rules
• Back-testing data and quantifying risks
Date – 25th
November, 2012
Held at – Sri Bhagwan Mahaveer Jain College
Attended By- 40 Participants
Topic of Study – “Investment Psychology / Crowd Behavior and Effect of Interest rates on the Economy & Stock Market”
Presented by – Mr. Jagdish Ahuja,a well known figure in the Capital
market . He has been the President of the Bangalore Stock Exchange Ltd
and has also been the Chairman of its well known subsidiary Bgse
Financials Ltd.
Points of Study in brief:
• Day Trading
• Swing Trading
• Applying Technical Analysis in Day trading & Swing
36 | ATMASPHERE NOVEMBER 2012
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