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The swiss

technical
A n a ly s i s
Journal

Frühling
Herbst
Primavera
Autunno
Printemps
Automne
Autumn
Spring
2013
2014

The Swiss Association of Market Technicians

GenÈvE • Lugano • ZÜrich

l Zürich

Willkommen
Benvenuto
Genève
Bienvenue
Welcome
l
l Genève

l Lugano

Geneva From the President’s Desk Dear SAMT members & industry colleagues,
We are very proud that our SAMT Journal has successfully completed its debut year
Chapter in 2013. A special thanks to our SAMT Journal team; founding editors, Ron William
and Mario Valentino Guffanti. With further gratitude to our design and publication
events specialist, Barbara Gomperts. Collectively they have invested many hours of hard
work to ensure the very best content for members and colleagues.
Our growing SAMT Journal readership of over 5,000 from around the world serves
as a strong recognition. Your ongoing feedback and contribution is very important
for the future our SAMT Journal.
Bruno Estier presenting Martin Pring with Further value can also be found in SAMT’s exclusive technical analysis events. In
SAMT Honorary Member certificate after just the last few months, notable international speakers have included, Ian McAvity
his 18 March presentation to the Geneva of Deliberations and Martin Pring of Pring Turner Capital.
chapter. His slides can found at http:// We look forward to welcoming our special guest Dr. Henry Pruden, during the 10th
samtjournal.uberflip.com/i/292269 and 11th of June, who will be sharing his years of insight of the compelling attributes
of “The 21st Century Technician”.
Lastly, I would like to highlight that SAMT continues to offer educational support
for the CFTe, which is the gold standard diploma of technical analysis, recognized
around the world.
If you are interested in taking your learning to the next level, then we strongly
recommend registering for our upcoming CFTe immersion course which is scheduled
for 13th-14th of September - see page 29. Complete details and registration link -
http://samtjournal.uberflip.com/i/305430
Best wishes,

Daniel
Ian McAvity (center) with
GSCGI member Cosima Daniel Stillhart,
Barone and SAMT Geneva President of the Swiss Association of Market Technicians (SAMT)
head Ron William.

Ian McAvity spoke in

Willkommen Frühling
Geneva on 3 February at a
SAMT/GSCGI collaborative Benvenuta Primavera
presentation. His slides can Bienvenue au Printemps
be found at
Welcome Spring
http://samtjournal.uberflip.
com/i/258886

• Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 •
l Zürich

Willkom m en
Benvenuto
Genève
Bienvenue
Welcome
l
l Genève

l Lugano

Geneva From the president’s Desk Dear SAMT members & industry colleagues,
We are very proud that our SAMT Journal has successfully completed its debut year
chapter in 2013. A special thanks to our SAMT Journal team; founding editors, Ron William
and Mario Valentino Guffanti. With further gratitude to our design and publication
events specialist, Barbara Gomperts. Collectively they have invested many hours of hard
work to ensure the very best content for members and colleagues.
Our growing SAMT Journal readership of over 5,000 from around the world serves
as a strong recognition. Your ongoing feedback and contribution is very important
for the future our SAMT Journal.
Bruno estier presenting Martin pring with Further value can also be found in SAMT’s exclusive technical analysis events. In
SAMT Honorary Member certificate after just the last few months, notable international speakers have included, Ian McAvity
his 18 March presentation to the Geneva of Deliberations and Martin Pring of Pring Turner Capital.
chapter. His slides can found at http:// We look forward to welcoming our special guest Dr. Henry Pruden, during the 10th
samtjournal.uberflip.com/i/292269 and 11th of June, who will be sharing his years of insight of the compelling attributes
of “The 21st Century Technician”.
Lastly, I would like to highlight that SAMT continues to offer educational support
for the CFTe, which is the gold standard diploma of technical analysis, recognized
around the world.
If you are interested in taking your learning to the next level, then we strongly
recommend registering for our upcoming CFTe immersion course which is scheduled
for 13th-14th of September - see page 29. Complete details and registration link -
http://samtjournal.uberflip.com/i/305430
Best wishes,

Daniel
ian Mcavity (center) with
GscGi member cosima Daniel Stillhart,
Barone and saMt Geneva President of the Swiss Association of Market Technicians (SAMT)
head ron William.

ian Mcavity spoke in

Willkommen Frühling
Geneva on 3 February at a
saMt/GscGi collaborative Benvenuta primavera
presentation. his slides can Bienvenue au printemps
be found at
Welcome spring
http://samtjournal.uberflip.
com/i/258886

2 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 3
The swiss
Contents
technical
From the President’s desk
Analysis Daniel Stillhart 3

crafted for: Journal Pearls of Wisdom from a Master

Perry Kaufman 6
portfolio managers
technical analysts An Interview with Hank Purden
fundamental analysts Volume Two, Issue 1 Ron William, CMT, MSTA 8
risk managers
SPRING 2014 A book review & interview with Charles Kirkpatrick:
private traders Mario Valentino Guffanti, CFTe 12
educators
Journal Committee Elliott Wave, Chaos Theory and Fractals
Julien Camberlin, CFTe, MFTA, CEWA Lev I 17
Mario V. Guffanti, CFTe
+ 39 33 691 91 70
Why are Financial Professionals all over the
See the Whole Market in One Picture in One Graph with
[email protected] Relative Rotation GraphsTM
Trevor Neil, MSTA MCSI 21
world switching to Market Analyst? Ron William, CMT, MSTA
Protect against losses by hedging through a simple,
+ 41 78 947 53 87
trend-following strategy
[email protected]
The world of finance can be ruthless. To stay ahead, a financial professional Alberto Vivanti 25
needs to have the right strategy, discipline and tools that support and grow with Design & Production The Swiss association of market technicians
them. Barbara Gomperts Geneva Chapter Events 2
+1 978-745-5944 (USA)
[email protected] CFTe Immersion Course 29
At Market Analyst we see the importance of staying true to the techniques of the
Board of Directors 30
past, all the while embracing the revelations of the future. Market Analyst blends
Follow SAMT on Journal Submission Guidelines and Advertising Rates 31
together cutting edge innovations including 3D charts, RRGTM & Volatility Based
Membership 32
Support & Resistance, while also being the premier product for anyone interest-
ed in more traditional and esoteric studies. Education 33

Partner Societies 34

Financial Professionals all around the world who just want one powerful product Zürich Chapter Events 35
that “does it all”, are finding that Market Analyst is the solution they were look-
ing for.

Market Analyst exists to give you the edge

The Swiss Association of Market Technicians (SAMT) is a not-for-profit organization that does not hold a Swiss Financial Services License. It is the
aim of the SAMT to promote the theory and practice of technical analysis, and to assist members in becoming more knowledgeable and competent
technical analysts, through meetings and encouraging the interchange of materials, ideas and information. In furthering its aims the SAMT offers
general material and information through its publications and other media.
The information provided on this Journal has been compiled for your convenience and made available for general personal use only.
SAMT makes no warranties implied or expressly, as to the accuracy or completeness of any information contained on the Journal. The SAMT

No matter who you are and what you do, Market Analyst will give you access to directors, affiliates, officers, employees, agents, contractors, successors and assigns, will not accept any liability for any loss, damage or other
injury resulting from its use.
The Swiss Association
tools and features that will improve your work-flow, and give you a real edge in
SAMT does not accept any liability for any investment decisions made on the basis of this information, nor any errors or omissions on the Journal.
This Journal does not constitute financial advice and should not be taken as such. SAMT urges you to obtain professional advice before proceeding

of Market Technicians with any investment.

crafted for: Journal Pearls of Wisdom from a Master

Partner Societies 34

Market Analyst exists to give you the edge

of Market Technicians with any investment.

all that you do. Speak to our trained staff now to discover all that Market An- The material may include views and statements of third parties, which do not necessarily reflect the views of the SAMT. Information on this Journal
is maintained by the people and organization to which it relates. The SAMT believes that the material contained on this Journal is based on the
information from sources that are considered reliable. Although all care has been taken to ensure the material contained on this Journal is based
GenÈvE • Lugano • ZÜrich
layst can do for you. With offices all over the world, there is always someone on sources considered reliable we take no responsibility for the relevance and accuracy of this information.
Before relying or acting on the material, users should independently verify its accuracy, currency, completeness and relevance for their purposes.
www.samt-org.ch
ready to help.
• Spring 2014 • The Swiss Technical Analysis Journal
US: +1 800 557 2702 UK: 0800 680 0428 CH: 0800 564 888 mav7.com/samt The Swiss Technical Analysis Journal • Spring 2014 •
Pearls of Wisdom from a Master 4. I should get the same results But with trend following, if you take profits you might miss
trading that I did testing the really big profit, the “fat tail.” If that happens your entire
Nine precious tips to avoid the most common No, you’ll never do as well in real trading as the test results performance is hurt. Profit-taking fights with the trend, so if
errors in developing trading strategies show. That’s because, no matter how much past data you used you get out you also need a rule to get back in. That’s more
for testing, future data will have unexpected patterns. Of course, complicated than just holding the original trend position.
Perry Kaufman we could get a bull market in stocks, as we’ve had in the U.S.
A Leading Expert in Algorithmic Trading Programs for the past four years. Then everything works. But normally, 8. Stops prevent large losses
you will have more losses and lower profits than your tests, so I have a system where a stop is essential, but generally a stop
be sure you have enough profits per share to survive reality. gets you out at the worst point. I can think of only one case
Having made hundreds, if not thousands of errors developing strategies over the where a stop improved results or even protected me from a
course of 40 years, I feel that I’m qualified to share some of them with you, and 5. Using high costs for commissions large loss. That’s an arbitrage, where I buy an undervalued
suggest some solutions. Let’s look at a few common assumptions: and slippage in testing will assure stock relative to an index, and exit when it goes to normal. I
trading success hedge my risk if the broad index turns down. But if I bought
1. Good test results are correct Being conservative about costs is usually good, but using an Enron when it dropped against the S&P, and it kept going
I am always excited when I see great results from testing a new system. Normally, I expect costs that are too high will eliminate some trading systems down while the S&P was trending up, I would be unprotected.
the worst. And when the results are bad, I look carefully at every trade that can be profitable. It’s always best to have realistic costs. So I use a stop of, for example, 15% from entry. Most of the
and every calculation to see if I made any errors because I expected it to If you’ve traded before, then you might know what they are. time it’s still a bad exit, but it’s disaster insurance and I need
work. My experience is that, with a small amount of practice and that.
using limit orders, you can beat the system over time. So
But I was never that diligent when the results were good. I was fast to For a trend follower, a stop has the same problem as profit-
including slippage may be too much of a burden, but accurate
say “Great!” I’ve got another strategy. I would start monitoring the daily taking. If you get out and the trend hasn’t change, you need to
commissions are important.
trading signals (at least I didn’t start trading with real money) and some get back in. That’s not so easy.
odd trade would pop up. Good grief! There’s an error! 6. We’re not likely to see another 2008 For a mean-reverting trader, a stop doesn’t work because you
It turns out that it’s just as likely to make an error that produces good results disaster must give the trade room to develop. A mean reversion system
as bad. In the days before development platforms, like TradeStation, you Of course we won’t have another subprime crisis, but we must should have a high percentage of profitable trades but a small
could look at tomorrow’s data and buy or sell today. It’s difficult to make all know that something else will cause a drop equally as large, profit per trade. When you use a stop you lower the percentage
a bad trade that way. We can still assume an execution on today’s close hopefully not larger. You can’t eliminate risk. When you cover of profitable trades and the system no longer works.
when we should be entering on the next open. For most of us daily traders, up one hole, it pops up somewhere else. So be prepared for
it’s difficult to get prices 15 minutes before the close, run the strategy, and fast, large drops from time-to-time. If you’re trading a system, 9. There are fewer opportunities for
execute on the close. The next open is much more realistic. be sure it gets out, or goes short, during those crises. trading
Nonsense! There are as many opportunities now as there ever
We may also have a bad price in our data that gave us a large profit. It 7. Taking profits is good were. Prices go up, price go down, the government enacts new
pays to check the trade results to see if there are any outliers, then examine
I always take profits with short-term trading but I never take policies and changes interest rates, the weather causes droughts
those for errors. We could have typed a minus sign instead of a plus, or
profits with long-term trends. For fast trading we are dealing and then too much rain, some governments collapse and some
entered a “100” instead of a “10.” Those things happen.
with price noise. We expect short bursts of price movement, emerge successfully. They all move prices and it’s all there
2. Old data isn’t valid any more then sharp reversals. When we look at that from a distance, waiting for you.
with a macrotrend system, that noise seems small, but for
While it’s true that old data is old, and many things have changed, the reason for testing
short-term trading we want to capture those bursts of price
as much data as possible is to put stress on your system. It needs to see as many patterns
movement when they are in our direction. We can then wait
as possible, in as many combinations as possible. We may think now that we won’t see
for a new trade.
markets like that again, but we could be wrong. Either way, a system that works on more
data is more robust.

3. I can pick the parameters that will work in the

future Perry Kaufman began his career as a “rocket scientist,” first working on the Orbiting Astronomical Observatory (OAO-1),
the predecessor of the Hubble Observatory, and then on the navigation for Gemini, later used for Apollo missions, and
If you can, you’re a better person than me. I haven’t been successful in the past, so I subsequently in military reconnaissance.
choose an average. I put equal risk on all my trades (for stocks that’s simply dividing a He then transferred the techniques developed in Aerospace for estimating the path of a missile to his systematic programs for
fixed investment by the price), which gives each trade an equal chance of participating in trading in markets. His programs serve institutional clients in the financial, forex, energy, and agricultural markets.
the returns. If I put more money on one trade then it must give higher returns or I’m just Perry Kaufman is the author of “TradingSystems And Methods” (for a complete Review and Interview see our Journal Summer
adding risk. Also, equal risk is as good as we get to maximizing diversification. 2013 edition), and “Alpha Trading”. He has been the managing director and general partner of investment funds and the chief
architect of their strategies. He is president of KaufmanSignals.com, a website that offers subscriptions to trading strategies
and portfolios.
He may be contacted via his website, www.KaufmanSignals.com, or by email at [email protected].

• Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 •
Pearls of Wisdom from a Master 4. I should get the same results But with trend following, if you take profits you might miss
trading that I did testing the really big profit, the “fat tail.” If that happens your entire
Nine precious tips to avoid the most common No, you’ll never do as well in real trading as the test results performance is hurt. Profit-taking fights with the trend, so if
errors in developing trading strategies show. That’s because, no matter how much past data you used you get out you also need a rule to get back in. That’s more
for testing, future data will have unexpected patterns. Of course, complicated than just holding the original trend position.
Perry Kaufman we could get a bull market in stocks, as we’ve had in the U.S.
A Leading Expert in Algorithmic Trading Programs for the past four years. Then everything works. But normally, 8. Stops prevent large losses
you will have more losses and lower profits than your tests, so I have a system where a stop is essential, but generally a stop
be sure you have enough profits per share to survive reality. gets you out at the worst point. I can think of only one case
Having made hundreds, if not thousands of errors developing strategies over the where a stop improved results or even protected me from a
course of 40 years, I feel that I’m qualified to share some of them with you, and 5. Using high costs for commissions large loss. That’s an arbitrage, where I buy an undervalued
suggest some solutions. Let’s look at a few common assumptions: and slippage in testing will assure stock relative to an index, and exit when it goes to normal. I
trading success hedge my risk if the broad index turns down. But if I bought
1. Good test results are correct Being conservative about costs is usually good, but using an Enron when it dropped against the S&P, and it kept going
I am always excited when I see great results from testing a new system. Normally, I expect costs that are too high will eliminate some trading systems down while the S&P was trending up, I would be unprotected.
the worst. And when the results are bad, I look carefully at every trade that can be profitable. It’s always best to have realistic costs. So I use a stop of, for example, 15% from entry. Most of the
and every calculation to see if I made any errors because I expected it to If you’ve traded before, then you might know what they are. time it’s still a bad exit, but it’s disaster insurance and I need
work. My experience is that, with a small amount of practice and that.
using limit orders, you can beat the system over time. So
But I was never that diligent when the results were good. I was fast to For a trend follower, a stop has the same problem as profit-
including slippage may be too much of a burden, but accurate
say “Great!” I’ve got another strategy. I would start monitoring the daily taking. If you get out and the trend hasn’t change, you need to
commissions are important.
trading signals (at least I didn’t start trading with real money) and some get back in. That’s not so easy.
odd trade would pop up. Good grief! There’s an error! 6. We’re not likely to see another 2008 For a mean-reverting trader, a stop doesn’t work because you
It turns out that it’s just as likely to make an error that produces good results disaster must give the trade room to develop. A mean reversion system
as bad. In the days before development platforms, like TradeStation, you Of course we won’t have another subprime crisis, but we must should have a high percentage of profitable trades but a small
could look at tomorrow’s data and buy or sell today. It’s difficult to make all know that something else will cause a drop equally as large, profit per trade. When you use a stop you lower the percentage
a bad trade that way. We can still assume an execution on today’s close hopefully not larger. You can’t eliminate risk. When you cover of profitable trades and the system no longer works.
when we should be entering on the next open. For most of us daily traders, up one hole, it pops up somewhere else. So be prepared for
it’s difficult to get prices 15 minutes before the close, run the strategy, and fast, large drops from time-to-time. If you’re trading a system, 9. There are fewer opportunities for
execute on the close. The next open is much more realistic. be sure it gets out, or goes short, during those crises. trading
Nonsense! There are as many opportunities now as there ever
We may also have a bad price in our data that gave us a large profit. It 7. Taking profits is good were. Prices go up, price go down, the government enacts new
pays to check the trade results to see if there are any outliers, then examine
I always take profits with short-term trading but I never take policies and changes interest rates, the weather causes droughts
those for errors. We could have typed a minus sign instead of a plus, or
profits with long-term trends. For fast trading we are dealing and then too much rain, some governments collapse and some
entered a “100” instead of a “10.” Those things happen.
with price noise. We expect short bursts of price movement, emerge successfully. They all move prices and it’s all there
2. Old data isn’t valid any more then sharp reversals. When we look at that from a distance, waiting for you.
with a macrotrend system, that noise seems small, but for
While it’s true that old data is old, and many things have changed, the reason for testing
short-term trading we want to capture those bursts of price
as much data as possible is to put stress on your system. It needs to see as many patterns
movement when they are in our direction. We can then wait
as possible, in as many combinations as possible. We may think now that we won’t see
for a new trade.
markets like that again, but we could be wrong. Either way, a system that works on more
data is more robust.

3. I can pick the parameters that will work in the

• Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 •
An Interview with aerial photographs to gain an understanding of tendencies or
trends in aircraft placement and movement. Just as with stock
HP: The TSAASF was founded in 1970 by a group of inspired
brokers, technical analysts, and money managers who felt they
Hank Purden market charts, I would study details on a photo to discern signs
of tell-tale activity. Hence, when I was introduced to charts and
could enhance the quality of their own chart and indicator
work through interacting and sharing with like-minded
Ron William, CMT, MSTA to technical analysis, I felt immediately home. colleagues. From the beginning the TSAASF was dedicated
to education. Soon thereafter it became incorporated as a not-
RW: What key lessons did you learn from the bear market for-profit corporation under the laws of the State of California.
Ron William, Vice President & Head of the Geneva chapter of SAMT hosted an of 1974? Happily, their tradition of monthly meetings in San Francisco
interview in November 2013 with Dr. Henry Pruden, Professor of Business at the
HP: The key lesson I learned from my losses caused during continues.
Ageno School of Business, Golden Gate University, San Francisco, CA, USA and the bear market of 1974 was that market timing was essential
Executive Director of the Institute of Technical Market Analysis (ITMA) A curious coincidence: both the MTA and the TSAASF were
for long-term wealth building and capital preservation. As a officially founded in 1970, but independently. However, the
Hank Pruden is a professor in the
result, I learned about the Dow Theory. I also started following TSAASF was founded several months before the MTA. Those
Ageno School of Business at Golden Ron William: The International Federation of Technical Analysts (IFTA)
recognized you as the recipient for their 2013 Lifetime Achievement Award. How
Trendline charts and studying William L. Jiler’s book, How dates set the stage for an interesting incident when the time
Gate University in San Francisco,
did you feel about being nominated for your lifelong outstanding contribution to Charts Can Help You in the Stock Market (1962). In addition, I came for the founding of the International
California, where he has been
the development of technical analysis? Please select link to review the IFTA learned a great deal from the book by Harvey Federation of Technical Analysts. The net
teaching for 37 years. Hank is more
honorary video of Dr. Henry Pruden’s lifetime achievements. Krow, Stock Market Behavior: The Technical “I was officially trained and result was that the USA at the very founding
than an academic theoretician. He
Approach to Understanding Wall Street (New served as a Photo Interpreter of IFTA was the only nation granted the
has actively traded his own account Henry Pruden: Very gratifying to receive the reward in front of my many appreciative
York: Random House, 1969). in the US Air Force during the privilege of having two technical analysis
for the past 40 years. His personal colleagues, who attended the IFTA 2013 conference in San Francisco. I’m particularly
involvement in the market ensures grateful to Bruce and Ellen Fraser for all of the consideration and care that went into Cold War. ...I would study societies.
RW: How did you develop and further your
that what he teaches is practical for the creation of the video highlighting my preparation for TA and my achievements aerial photographs to gain an
learning of Technical Analysis? A further picturesque story about the growth
the trader, and NOT just abstract over the past 35 plus years. understanding of tendencies or
of TA education during the past four decades
HP: Like most of the other individual trader/
academic theory. trends in aircraft placement
is masterfully told by Bruce (and Ellen)
That award is also the result of the contributions from so many of my colleagues in technicians of that era, I was largely self-
Hank is the Executive Director of the and movement. Just as with Fraser in the video that was presented during
the technical market analysis profession from around the globe. taught, with the market subjecting me to the
Institute of Technical Market Analysis stock market charts, I would October 2013 in San Francisco, CA at the
“school of hard knocks.” No formal courses
(ITMA). At Golden Gate he developed of instruction were available. But I did gain study details on a photo to IFTA Conference. That video was part of my
the accredited courses in technical many useful techniques from the market discern signs of tell-tale IFTA Lifetime Achievement Award and it is
market analysis in 1976. Since then advisory letters that I followed. Of particular activity.” available for your viewing.
the curriculum has expanded to value was The Bank Credit Analyst that had
include advanced topics in technical RW: What is your perspective about the
Martin Pring as its chief technician. The BCA was also my first
analysis and trading, in particular idea behind “Fusion Analysis,” in terms of combining the
exposure to the Elliott Wave Principle. In addition, I studied
the Wyckoff Method. In his courses best of both worlds, technical and fundamental analysis?
Winning Market Systems by Gerald Appel, which later became
Hank emphasizes the psychology of the basic textbook at Golden Gate University. HP: “fusion 1. an act or instance of fusing or melting; 2. a
trading in conjunction with the use of fused mass; 3. The blending of different things into one; 4. a
technical analysis methods. He has Big forward strides in my TA learning came about through coalition (Oxford English Dictionary).”
published extensively in both areas. my formulating and then teaching a collegiate level course
in technical market analysis. I was trading full time for my Fusing technical analysis with fundamentals is a mistake. To
Hank has mentored individual and paraphrase the salty technician Joseph E. Granville, “You don’t
own account in a private office near my home in Marin County
institutional traders in the field of want to mix high octane technical analysis with water, which is
near San Francisco while teaching part-time at Golden Gate
technical analysis for many years. fundamental analysis.” Technical analysis is forward looking.
University. That teaching and learning effort was aided and
Dr. Pruden is presently on the For example, the S&P 500 index is a key component in the
RW: What triggered your learning curve onto the path of Technical Analysis? abetted by my colleagues in the Technical Securities Analysts
Board of Directors of the Technical “Index of Leading Economic Indicators.” That Index is looking
HP: The bear market of 1974 drew my attention to the importance of market timing. I Association of San Francisco. Then, eventually, I took a
Securities Analysts Association of out six months or more into the future. On the other hand,
was at the University of Texas at Austin at that time. My colleagues in the Department correspondence course on the Wyckoff Method that was offered
San Francisco and is past president fundamental analysis focuses upon company- and industry-
of Finance believed in the fundamentals and individual stock selection and holding by the Stock Market Institute. Additionally, I gained exposure
of that association. Hank was also on specific economic and financial data which are mostly recent
for the long term. Their belief in the “economic man” operating in the stock market to Robert Farrell at Merrill Lynch and ultimately I joined and
the Board of Directors of the Market history. It becomes the news followed by the mass of public.
clashed with my belief and use of the behavioral and psychological consumer decision I became involved in the Market Technicians Association of
Technicians Association (MTA). Hank Thus TA and fundamentals are not two elements that should
maker that I used in my teaching and research in marketing. That triggered a search New York.
has served as vice chair, Americas be blended together. TA is forward-looking; TA is discounting
IFTA (International Federation of that soon brought me in contact with technical analysis through a broker in Dallas, tomorrow’s news.
RW: The San Francisco Technical Analysts Association
Technical Analysts): IFTA educates Texas. I was especially drawn to the visual and analytical aspects of charts. of San Francisco (TSAASF) is one of the oldest technical
and certifies analysts worldwide. For analysis societies in the United States. What was the main RW: What is the best way to strike a healthy balance of
eleven years Hank was the editor of RW: Could you share more detail on your professional experience as a photo purpose for establishing a professional body of Technical “Fusion Analysis” between Technical and Fundamental
The Market Technicians Association interpreter at the US Air Force and how it may have aided the study of your Analysis many years ago, during the 1970s? On the East disciplines?
Journal, the premier publication of Technical Analysis interests? Coast of the United States, where the MTA was incorporated HP: The best way to strike a healthy balance between Technical
technical analysts. From 1982 to 1993 HP: Sure, I’ll be glad to. I was officially trained and served as a Photo Interpreter in in 1973, several veteran market technicians have talked and Fundamental disciplines is through a two-step filtering.
he was a member of the Board of the US Air Force during the Cold War. Most of my work was classified as “secret” about the need to create a professional community for the
This is already a common practice on Wall Street. First, a list
Trustees of Golden Gate University. and thus I’ll need to leave out the interesting details. But, in general, I would study sell-side securities community in Wall Street. What was the
story behind establishing the TSAASF? of acceptable industry groups or common stocks, that meet

• Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 •
certain fundamental criteria or standards, is generated. Then (thus technical analysis) with a respect for the emotional and buttressed by concepts and practices that Higher education for TA has matured into such quality
a second step or filter would subject the charts of these same mental discipline. include the modeling of crowd behavior programs as the Graduate Certificate in Technical Market
groups and companies to technical analysis. As a result, some and the accessing by the trader of the Analysis at Golden Gate University, which is now available
Three basic laws, nine tests and four schematics are used by
stocks would be “technically” good or “okay to buy.” As the appropriate mental state for getting in, online around the globe. Professional certification like the CFTe
Wyckoff analysts to ascertain the current position and probable
Street has wisely said, “There is a good time to buy a mediocre staying with, and getting out of a trade. and MFTA have become necessary tickets for job placement,
future direction of a market. Most basic are the law of supply
company and a bad time to buy a good company.” advancement, and profitable performance. Also remember that
and demand, the law of effort vs. result, and the law of cause The mastery of all three aspects of the
“Right Brainers” may rule the future. Hence keep up the nitty
The best from both fundamentals and technicals can be and effect. The first two laws rely upon the bar chart, while Three Skills of Top Trading makes the
gritty practice in the market to get and hold an almost intuitive
obtained by maintaining the integrity of each discipline. That the law of cause and effect is dependent upon the figure chart. Complete Trader.
feel for its actions.
can probably be best accomplished by establishing a separate Then there are checklists of nine buying tests and nine selling
department devoted to technical market tests, plus a host of basic principles dealing with RW: How would you describe the
RW: On a personal note, tell us a little about a day in the life
analysis. “The Wyckoff Method is a support and resistance, trendlines, overbought evolution of technical analysis over the last few decades
of Henry Pruden. What are your passions and inspiration
and oversold conditions, absorption of floating in your career? Has the advancement from paper charts to
Moreover, a technical analysis astute person on straightforward bar chart in life?
computers improved the way we analyze the markets?
supply and an assortment of helpful analogies
a trading desk can become a portfolio manager’s and figure chart analysis HP: On a personal note, I appreciate the
to help the trader or investor cope with market HP: There has occurred a revolution within
most valuable ally. Such a partnership would of markets that understand “I appreciate the stimulation stimulation and learning that come with
action, money management and mental and for the field of technical analysis. One,
be another example of the two-step filtering that the most reliable thinking, teaching, and travelling. Thinking
discipline. it has gained acceptability amongst many and learning that come
system at work. pathway to profitable is expressed through postulating ideas about
academics, most notably Dr. Andrew Lo at with thinking, teaching, and
I was attracted to the Wyckoff Method after
decision making is through
RW: How much value does the Wyckoff a study of the action of the having read Edwin Lefevre’s delightful and the Massachusetts Institute of Technology. travelling. Thinking is expressed the market, verifying those ideas through
methodology provide in the discipline of Two, the computer has helped resuscitate through postulating ideas about market action and then writing about my
market itself.” insightful book, The Reminiscences of a Stock findings in practitioner publications like
technical analysis? How could this benefit charting and TA through widespread ease the market, verifying those
Operator. Wyckoff codified the best practices
many of our readers, members of Technical of usage and availability plus the capacity ideas through market action and the SAMT Journal. Teaching allows me to
of stock operators of the early 20th Century. preach what I practice while at the same
Analysis societies and colleagues within the financial to build and test systems. Three, behavioral
Most all of those same operators informed Lefevre. then writing about my findings time keeping me in contact with the younger
industry around the world? finance concepts and procedures have
Later, Thom Hartle, the editor of The Technical Analysis of helped legitimize TA by providing it with an
in practitioner publications like generation. Travelling out of town to such
HP: The Wyckoff Method is a straightforward bar chart and the SAMT Journal.” places as Paris, Geneva, Milan, London and
figure chart analysis of markets that understand that the most Stocks and Commodities magazine did a masterful job of underlying theoretical rationale. Computers
interviewing me for an article in which he clearly showed the have made market data easier to obtain Zürich brings one
reliable pathway to profitable decision making is through a into contact with the
study of the action of the market itself. The Wyckoff Method Wyckoff Method. More recently, Stocks and Commodities and easier to analyze, but computers can’t do it all. Human
captured the essence of the Wyckoff Method in another judgment is still the key component. people who are making things happen
is a guide to high-reward/low risk trading opportunities over in the world. On many of those trips
a cycle of accumulating markup, distribution and markdown. interview article, “Why Pattern Recognition is Important.”
RW: What words of advice would you give to the next and for my writing and teaching, I like
The method emphasizes price and volume behavior and it has to include my best friend and my love
RW: What is the key premise of your trading book “The generation of Technicians and financial professionals?
stood the test of time. It seeks to interpret from the tape and/ for practically fifty years, my dear
Three Skills of Top Trading”? HP: My advice to the next generation of Technicians and
or from charts the intentions of the smart money, who were wife, Sarah Pruden.
characterized by Wyckoff as the “Composite Man” or the HP: The key premise is that to compete successfully in financial professionals: get educated and get credentialed.
“Composite Operator.” the securities markets, the investor-trader must become a
Complete Trader. A Complete Trader learns and practices the
The Composite Man is on the other side of the trade from the three mutually reinforcing elements of behavioral systems
crowd of less informed and less skilled investors. Wyckoff also building, pattern recognition, and mental/emotional discipline.
complements his grasp of the techniques of market behavior The Wyckoff Method plays a central role in this scheme. It is
To view the IFTA honorary video
of Dr. Henry Pruden’s lifetime
achievements, click on screen
image at right.

Hank, then IFTA Vice Chair,

Americas, in São Paulo For additional information about Henry (Hank) O. Pruden, Ph.D., go to
in April 2003, with Martin www.hankpruden.com
Pring (left) and then SAMT
President Bruno Estier. The
trio went to São Paulo to vet
the Brazil technical analyst
society for inclusion into IFTA.
To contact the author of this interview: Ron William, CMT, MSTA
[email protected]
www.ronwilliam.com

10 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 11
certain fundamental criteria or standards, is generated. Then (thus technical analysis) with a respect for the emotional and buttressed by concepts and practices that Higher education for TA has matured into such quality
a second step or filter would subject the charts of these same mental discipline. include the modeling of crowd behavior programs as the Graduate Certificate in Technical Market
groups and companies to technical analysis. As a result, some and the accessing by the trader of the Analysis at Golden Gate University, which is now available
Three basic laws, nine tests and four schematics are used by
stocks would be “technically” good or “okay to buy.” As the appropriate mental state for getting in, online around the globe. Professional certification like the CFTe
Wyckoff analysts to ascertain the current position and probable
Street has wisely said, “There is a good time to buy a mediocre staying with, and getting out of a trade. and MFTA have become necessary tickets for job placement,
future direction of a market. Most basic are the law of supply
company and a bad time to buy a good company.” advancement, and profitable performance. Also remember that
and demand, the law of effort vs. result, and the law of cause The mastery of all three aspects of the
“Right Brainers” may rule the future. Hence keep up the nitty
The best from both fundamentals and technicals can be and effect. The first two laws rely upon the bar chart, while Three Skills of Top Trading makes the
gritty practice in the market to get and hold an almost intuitive
obtained by maintaining the integrity of each discipline. That the law of cause and effect is dependent upon the figure chart. Complete Trader.
feel for its actions.
can probably be best accomplished by establishing a separate Then there are checklists of nine buying tests and nine selling
department devoted to technical market tests, plus a host of basic principles dealing with RW: How would you describe the
RW: On a personal note, tell us a little about a day in the life
analysis. “The Wyckoff Method is a support and resistance, trendlines, overbought evolution of technical analysis over the last few decades
of Henry Pruden. What are your passions and inspiration
and oversold conditions, absorption of floating in your career? Has the advancement from paper charts to
Moreover, a technical analysis astute person on straightforward bar chart in life?
computers improved the way we analyze the markets?
supply and an assortment of helpful analogies
a trading desk can become a portfolio manager’s and figure chart analysis HP: On a personal note, I appreciate the
to help the trader or investor cope with market HP: There has occurred a revolution within
most valuable ally. Such a partnership would of markets that understand “I appreciate the stimulation stimulation and learning that come with
action, money management and mental and for the field of technical analysis. One,
be another example of the two-step filtering that the most reliable thinking, teaching, and travelling. Thinking
discipline. it has gained acceptability amongst many and learning that come
system at work. pathway to profitable is expressed through postulating ideas about
academics, most notably Dr. Andrew Lo at with thinking, teaching, and
I was attracted to the Wyckoff Method after
decision making is through
RW: How much value does the Wyckoff a study of the action of the having read Edwin Lefevre’s delightful and the Massachusetts Institute of Technology. travelling. Thinking is expressed the market, verifying those ideas through
methodology provide in the discipline of Two, the computer has helped resuscitate through postulating ideas about market action and then writing about my
market itself.” insightful book, The Reminiscences of a Stock findings in practitioner publications like
technical analysis? How could this benefit charting and TA through widespread ease the market, verifying those
Operator. Wyckoff codified the best practices
many of our readers, members of Technical of usage and availability plus the capacity ideas through market action and the SAMT Journal. Teaching allows me to
of stock operators of the early 20th Century. preach what I practice while at the same
Analysis societies and colleagues within the financial to build and test systems. Three, behavioral
Most all of those same operators informed Lefevre. then writing about my findings time keeping me in contact with the younger
industry around the world? finance concepts and procedures have
Later, Thom Hartle, the editor of The Technical Analysis of helped legitimize TA by providing it with an
in practitioner publications like generation. Travelling out of town to such
HP: The Wyckoff Method is a straightforward bar chart and the SAMT Journal.” places as Paris, Geneva, Milan, London and
figure chart analysis of markets that understand that the most Stocks and Commodities magazine did a masterful job of underlying theoretical rationale. Computers
interviewing me for an article in which he clearly showed the have made market data easier to obtain Zürich brings one
reliable pathway to profitable decision making is through a into contact with the
study of the action of the market itself. The Wyckoff Method Wyckoff Method. More recently, Stocks and Commodities and easier to analyze, but computers can’t do it all. Human
captured the essence of the Wyckoff Method in another judgment is still the key component. people who are making things happen
is a guide to high-reward/low risk trading opportunities over in the world. On many of those trips
a cycle of accumulating markup, distribution and markdown. interview article, “Why Pattern Recognition is Important.”
RW: What words of advice would you give to the next and for my writing and teaching, I like
The method emphasizes price and volume behavior and it has to include my best friend and my love
RW: What is the key premise of your trading book “The generation of Technicians and financial professionals?
stood the test of time. It seeks to interpret from the tape and/ for practically fifty years, my dear
Three Skills of Top Trading”? HP: My advice to the next generation of Technicians and
or from charts the intentions of the smart money, who were wife, Sarah Pruden.
characterized by Wyckoff as the “Composite Man” or the HP: The key premise is that to compete successfully in financial professionals: get educated and get credentialed.
“Composite Operator.” the securities markets, the investor-trader must become a
Complete Trader. A Complete Trader learns and practices the
The Composite Man is on the other side of the trade from the three mutually reinforcing elements of behavioral systems
crowd of less informed and less skilled investors. Wyckoff also building, pattern recognition, and mental/emotional discipline.
complements his grasp of the techniques of market behavior The Wyckoff Method plays a central role in this scheme. It is
To view the IFTA honorary video
of Dr. Henry Pruden’s lifetime
achievements, click on screen
image at right.

Hank, then IFTA Vice Chair,

10 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 11
Title: Kirkpatrick’s Investment and Trading Strategies Secondly, this book is a worthwhile read because of the method To avoid this problem, the author exploits the Walk-Forward

Book Review
that Kirkpatrick uses in his approach. He uses classical Optimization. This backtesting technique uses the same
Subtitle: Tools and Techniques for Profitable Trend Following
technical indicators and studies that were created between the optimizations methods as the standard optimization, but
Author: Charles D. Kirkpatrick II, CMT 60s and 70s, such as the Relative Strength studies of Levy, it keeps some of the price data separate (i.e., unknown data
Publisher & Date: Pearson Education, Inc. – FT Press – July 2013, 150 pages some Welles Wilder’s indicators, and the Cycle studies of called out of sample data), to be used in later testing of the
Hurst. He reconsiders those indicators and studies, explains optimization results.
why sometimes they are utilized in a wrong manner and
The performance of the system can be considered realistic if
A book review & interview with suggests new possibilities on how to utilize them. All these
tools are then combined in algorithmic trading systems and
it has predictive value and performs well on unseen (out of
sample) market data, and if the resulting performance in the
Charles Kirkpatrick: when the tested with a relatively new backtesting method called Walk-
Forward Optimization. Finally, the methods are described as
“unknown data” does not provide robustness, the algorithm is
discarded.
classic meets the new well as tested to verify their robustness and thus the probability
The chapters about investment strategies explain Kirkpatrick’s
of good results in the future.
Mario Valentino Guffanti, CFTe systematic approach to trading winning stocks based on the
An examination of how the book is structured will help us to
concept of relative strength, mainly following and developing
better understand what I’ve mentioned.
Levy’s studies on that topic. The author ran his system live
The Book Review The book is composed of 150 pages organized in nine chapters. for more than 23 years and provided a superior performance
In our last interview with Dr. Tharp, a psychologist who has studied trader’s behavior for 30 While the content is written in a simple, straightforward relative to major indices, such as the S&P500, since its
years, we have seen how emotions can adversely influence a trader’s work. Van Tharp affirms language and without an excessive number of pages, the inception in the early 1990s. The new goal achieved and
that everything revolves around our beliefs, mental states and mental strategies. With that in content is very dense. There are numerous concepts described described in detail in the book is to improve the strategy by
mind, he claims everything about trading is 100% psychological. To have an edge in investing in each page, requiring a second reading to understand certain raising the profit and reducing the drawdown. To get such
or trading, we need to raise our self-awareness and eliminate negative emotions like fear, greed key passages. results, a new market timing system fully described in the
or desperation1. book is added to the original model, and testing with the Walk-
After the introduction chapter, the first part of the book is
Forward Optimization leads to new and interesting results for
I also believe that something that filters and reduces our emotional dedicated to investment strategies, that is long term strategies
the reader. During the process Kirkpatrick discovered that
bias during the decision making process for trading and investing, based on weekly data (chapters 2 to 5), and the second part
favorable results also can be achieved through a raw ratio
one possibility that modern times gave to us, is the use of a is dedicated to trading strategies, that is long and short trades
system, a new technique for individuals to use in selecting
computer. based on hourly data (chapters 6 to 9). Every chapter dedicated
stocks for their private portfolios, that can be calculated easier
to investment and trading strategies explains the concept of the
In 1965 Barron’s wrote that “the age of the computer unmistakably than the ranking system used in the original trading system.
study starting with backtesting and methods used.
is dawning on Wall Street” and that “the potential rewards of the
In chapter 6, Kirkpatrick introduces trading strategies, starting
computer, properly used, promise to be immeasurable”2. In the introduction, Kirkpatrick explains the basics of
from the basic modes of stock market behavior and describing
Algorithmic Trading, and the three basic elements of any
One of the first computers on Wall Street devoted to technical the trading methods. Chapter 7 is dedicated to the Welles
investment method: entry strategy, exit strategy and money
analysis was at Walston & Co., led by Anthony Tabell, where in Wilder Directional Movement Index (DMI) and the ADX.
management. The last is not treated in the book, but a good
the late 1960s Charles Kirkpatrick began the data accumulation that Here we can find a theoretical part accompanied by a very
bibliography to deepen the topic is included.
would be used for technical research later on. useful practice that comes from the long experience of the
There is also an interesting section dedicated to some concepts author on how to use the ADX, even with new techniques not
In this review & interview we’ll have the possibility to read about
like drawdown, volatility and diversification that clearly mentioned by Wilder.
the latest work of Charles Kirkpatrick, a pioneer in the use of the
explain how these definitions are often used in a misleading
computer applied to trading and investing, well known in Technical In the next chapter we have an introduction to Cycles Theory
way.
Analysis field for his books, like Technical Analysis: The Complete and how to take advantage of the cyclical nature of the price
Resource for Financial Market Technicians3, written together with J. Dahlquist and used as The introduction lasts with the explanation of the backtesting curves through the construction of an indicator called the
Chartered Market Technician Level 1 and 2 Exam Reading Assignment, and for his research systems used to check the robustness of the algorithm: the Forward Line.
that lead him to be the only person to win the annual Charles H. Dow Award twice4. Standard optimization and the Walk-Forward Optimization.
The last chapter, chapter 9, contains a trading system based
Optimization is the process by which an analyst hypothesizes
The use of the computer in the trading decision process is ruled based approach. It is known on hourly data, built with the technical methods described in
and tests a set of rules for investing or trading in the markets,
as Algorithmic Trading, quite different from Discretionary Trading where all decisions are the previous chapters and backtested with the Walk-Forward
and the Standard Optimization takes a range of parameters (the
made by the investor. With discretionary trading success is rare and depends on knowledge, Optimization.
actual values of the variables used in the rules) for the variables
expertise, quick decision making, and the ability to master emotions, biases, and mood5.
proposed in the system and tests to see which combination For the reader who is looking for a book on how to invest, I
Kirkpatrick recognizes that human nature is not compatible with trading markets and that provides the best results and eliminates irrelevant parameters. would say that the content of the book is clear and concise,
algorithmic trading also needs willpower, discipline, and patience not to waver from it. and as Kirkpatrick writes in his conclusion, “can be applied
We need then a method that optimizes the algorithm and avoids
The book demonstrates and explains algorithmic systems for both investment and trading. directly without expensive computer programming and with
the problem of excessive optimization of the trading system on
data and chart programs available for free on the web”6 .
But there are many original approaches to how the topic is written and explained. First of all, the historical data. The risk is that the optimized set of parameters
reason why the book has been written: Kirkpatrick tries to fight against the lack of investment that best fit the trading system in the past may not be able to For the technical reader who wants to deepen his knowledge,
common sense that continuously leads to money loss. He begins with an educational message exploit its predictive potential on the real market data in the the content of the book has characteristics based on classical
about the best investment methods he has found over a life time of professional study. future. techniques of high quality and a good reference bibliography.
These techniques are combined in robust trading systems

12 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 13
Title: Kirkpatrick’s Investment and Trading Strategies Secondly, this book is a worthwhile read because of the method To avoid this problem, the author exploits the Walk-Forward

12 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 13
backtested with the innovative Walk-Forward Optimization MVG: Your new book is based on the improvement and around for a number of years, and others have used it for stock Charles Kirkpatrick I first learned technical analysis, point-
and used in a practical way, without much loss of time. But increased usability of your preferred investment and trading market studies, so I certainly wasn’t inventing a new analysis and-figure to be specific, from my father who had me update
that still leaves open the opportunity for personal development, strategies that are a result of several years of research. method. I just came across it in some of the literature and his charts when I was around 14 years old. He ran mutual
especially for the techniques described in the second part of the Did you write the book with the idea that you wouldn’t hold decided that it was worth a try. It certainly has its faults, and no funds for Fidelity and others during his career and was always
book that deal with trading strategies. anything back? Is this book somehow a point of arrival in model of markets will ever predict the future, but at least it is a a technician as well as a talented investor. From there I went
your career as researcher?
method that given a chance can show results in many different to the NY Public Library and read Jiler, Elliott, Whelan, Dines,
The Interview Charles Kirkpatrick: I have never held anything back, market situations over time and thus give a realistic possible Dow, Helby, and many others, including, of course, Edwards
believing that the knowledge I have gained from experience outcome in the future. As such, of course, it doesn’t replace and Magee. I plotted my own charts for many years and still
Mario V. Guffanti (MVG) – Good morning Charlie, it’s a and study is not something unique. The markets are so vast stops to prevent loss in case it doesn’t work in the future. believe that by doing so, one can learn more about the price
great pleasure having you in an interview about your new and multilayered that any specific technique can be used As a pragmatist, I don’t believe that any method of analysis action of a security than through any other method. Today
book on investment and trading strategies. by traders and investors without the worry of the markets is 100% accurate, and this feeling is borne out by the known I encourage most students to keep a set of charts and to be
Charles Kirkpatrick: Well, thank you, Mario, for your kind anticipating their actions or others front-running their trades. fact that most investment systems fail at some time or another. religious about plotting them. I also encourage them to read
invitation. I hope I can satisfactorily answer your questions. While it is true that support and resistance levels, for example, Nevertheless, to me it is a useful method of investigating some all the old masters. The concept of technical analysis hasn’t
have little value today because insider traders take advantage of the “truths” of the market and is invaluable in eliminating changed much, and many of those old ideas are still valid
MVG: In your book on Technical Analysis, of the orders built up around them, this sort methods that have no chance of success. today. Only the mechanics have improved.
you quoted a study by F. R. Flanegin and of behavior is not as common as feared. On
D. P. Rudd, of Robert Morris University, But I also had taken one of the first computer programming
the other hand, it means that technical analysis MVG: Many concepts and methods mentioned in your book
produced in 2005. This interesting academic are known by the technical reader. But I think that a person courses at Harvard as an undergraduate and could easily see
is and will continue to become a little more
research derived from a survey which who is not familiar with technical analysis has some difficulty how eventually the computer would replace charts. I learned
complicated than the simple interpretations of
involved what investments professors teach reading a book so full of content: can you give advice to first FORTRAN then and still use it today. I also learned how a
the past, but the basis of the technical theories,
and what industry professionals utilize7. The time readers? computer program is strictly logical, unlike the markets, and
result was that before 2005, investment
namely that price reflects all knowledge and
Charles Kirkpatrick I write these books for people who that very specific instructions must be given. There’s no BS
professors believed that fundamental anticipation, will still hold true. Thus I believe
understand the basics of technical analysis and have the with a computer10. At Tabell’s office at Walston, we had a man
investment analysis was more important and that hiding a particular discovery and successful
capability of honestly thinking about markets. Even the text named Lester Sugarman who spent every evening on an old-
gave low importance and rarely mentioned experiments would benefit no one else. I am a
book that Julie and I wrote is not an easy read for someone style, hand-crank adding machine calculating moving averages
in their courses the topic of technical researcher and educator and would feel that I
unfamiliar with markets. In that context, to simplify the content while looking for the secret to the markets. I knew that the
investment analysis. On the other side of am betraying my subject if I kept information
would do three things that are harmful to the reader. The first is computer would eventually release Lester from his machine
the coin, many professionals indicated that secret.
they utilized the subjects related to technical that it would make it seem that technical analysis is easy. This because it was logical and quick, but it would take a while
investment analysis in most of their work. MVG: In your book you quote that you wrote is, of course, not true. Second, it would give the impression before it would be available for personal use. Levy used a
The conclusion of the paper was that current it to describe and test the concepts you use in your favorite that using technical analysis is an easy method of profiting in Control Data 6600, one of the fasted mainframe computers at
investments courses are giving students only a partial investment and trading strategies. Why are these strategies the markets. Again, this is not true. And finally, it would avoid the time (1970s), and even he had trouble getting time on the
foundation of investments knowledge on which to build their more favored over others? the implication that the book was the only answer to investing computer. In those days you used a deck of computer cards
careers. Even in your new book you quoted that during and ran the program overnight. If one comma was out of place,
Charles Kirkpatrick Because they work. There are and trading. I want to encourage more study in other books and
the time that you worked as an institutional salesman, you the entire program blew up that night, and you had to correct
met many institutional investment managers who did not
undoubtedly many other successful methods, but these work sources of information. Readers should be inspired to continue
for me, and I haven’t found any that work better. their own research, and because most are lazy and want a the card the next day and then submit the program again
trust technical analysis, and this distrust was based on the following night. It was a laborious and time-consuming
advice they had heard from contemporary managers and quick, get-rich solution without work, I want to discourage
MVG: When in the subtitle I quoted that “classic meets the them initially if they don’t have the intrinsic desire to learn process. Finally, with the advent of the PC, I and many others
courses they had taken at their business schools8. Now
new”, it was intended that in your new book you show how more. I also dislike flowery language and repetitiveness when were freed to not only do the work in our own domain but
you have taught technical analysis at Brandeis University
International Business School, and in the last decade to combine technical classical indicators and studies that the subject can be covered with few words and many statistics. also to live where we liked to live. The advanced personal
many studies about the efficiency of technical analysis have been created between 60s and 70s (the classics)
My publishers kept saying I should write more because there computers have certainly helped, especially in performing
have been produced, curiously by scholars who come from together with a relative new and innovative method of the massive optimization calculations necessary to test new
weren’t enough pages and that readers tend to believe that more
the academic world, such as Professor Andrew Lo. What backtesting that is Walk-Forward Optimization (the new). theories (and some old ones, too), but I must say I did enjoy
It’s the first time that I read in one of your books that you pages means more information. I had to disagree only because
should be still done in 2014 to promote a proper knowledge I hate wasting my own time while reading lengthy discussions the old days of plotting by hand.
and a good use of Technical Analysis? use this method. Could you explain in more detail what
is the potential that you found in the use of Walk-Forward that avoid the subject of interest. They finally, but reluctantly,
MVG: I like your preface to the book, where you compare
Charles Kirkpatrick Results usually speak for themselves. Optimization and if this use led you to discover new hints in agreed to the brevity of my writing. the market and the ocean as individual forces that have
Excellent results, statistical reasoning and testing, and your research? strength beyond our mortal powers, and they are not
distribution of these accomplishments should convince MVG: I read in a book written by Professor A. Lo, that one of
Charles Kirkpatrick To test the effectiveness of an personal like us11. They are both such a challenge to outwit,
students that technical analysis is a worthy study and useful the first rigorous studies of patterns was initiated by you, who
algorithmic system, just as in the scientific method, you but we tend to make many mistakes by being emotional in
discipline. I found in my classes that the enthusiasm for the convinced your then employer, Arthur D. Little Corporation,
must first make a set of rules and parameters, and then test an unsympathetic world. I’m in agreement to remove the
course was based on the knowledge that the methods actually to hire Robert Levy to conduct the study9. You knew Levy
this hypothesis in the future to see if it works. The traditional negative emotions that can influence our trading skills, but
and also other researchers who have developed their ideas
make money. Many students mentioned to me that it was the in your words I read also emotion, or better passion for the
method was to create a model and let it run for a few years to without the use of the current powerful computers. We can
only course in the business school that actually taught how to work you are doing. How you motivate your new students
see if it worked. I’m getting old now and don’t have the future therefore say that you have lived in two different worlds. to the technical analysis approach?
make money – the primary reason for their attendance at the
time left to test many theories I have about strategy and tactics What are the advantages that you feel to have inherited
school. If this can be more widely publicized and taught, the art from this past experience in the first part of your working
in the markets. Thus I have always been looking for a method
and science of technical analysis will succeed as an alternative life?
that would “create the future” right now such that I could test
and complementary method of investing and trading.
these theories realistically. Walk-Forward analysis has been

14 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 15
backtested with the innovative Walk-Forward Optimization MVG: Your new book is based on the improvement and around for a number of years, and others have used it for stock Charles Kirkpatrick I first learned technical analysis, point-
and used in a practical way, without much loss of time. But increased usability of your preferred investment and trading market studies, so I certainly wasn’t inventing a new analysis and-figure to be specific, from my father who had me update
that still leaves open the opportunity for personal development, strategies that are a result of several years of research. method. I just came across it in some of the literature and his charts when I was around 14 years old. He ran mutual
especially for the techniques described in the second part of the Did you write the book with the idea that you wouldn’t hold decided that it was worth a try. It certainly has its faults, and no funds for Fidelity and others during his career and was always
book that deal with trading strategies. anything back? Is this book somehow a point of arrival in model of markets will ever predict the future, but at least it is a a technician as well as a talented investor. From there I went
your career as researcher?
method that given a chance can show results in many different to the NY Public Library and read Jiler, Elliott, Whelan, Dines,
The Interview Charles Kirkpatrick: I have never held anything back, market situations over time and thus give a realistic possible Dow, Helby, and many others, including, of course, Edwards
believing that the knowledge I have gained from experience outcome in the future. As such, of course, it doesn’t replace and Magee. I plotted my own charts for many years and still
Mario V. Guffanti (MVG) – Good morning Charlie, it’s a and study is not something unique. The markets are so vast stops to prevent loss in case it doesn’t work in the future. believe that by doing so, one can learn more about the price
great pleasure having you in an interview about your new and multilayered that any specific technique can be used As a pragmatist, I don’t believe that any method of analysis action of a security than through any other method. Today
book on investment and trading strategies. by traders and investors without the worry of the markets is 100% accurate, and this feeling is borne out by the known I encourage most students to keep a set of charts and to be
Charles Kirkpatrick: Well, thank you, Mario, for your kind anticipating their actions or others front-running their trades. fact that most investment systems fail at some time or another. religious about plotting them. I also encourage them to read
invitation. I hope I can satisfactorily answer your questions. While it is true that support and resistance levels, for example, Nevertheless, to me it is a useful method of investigating some all the old masters. The concept of technical analysis hasn’t
have little value today because insider traders take advantage of the “truths” of the market and is invaluable in eliminating changed much, and many of those old ideas are still valid
MVG: In your book on Technical Analysis, of the orders built up around them, this sort methods that have no chance of success. today. Only the mechanics have improved.
you quoted a study by F. R. Flanegin and of behavior is not as common as feared. On
D. P. Rudd, of Robert Morris University, But I also had taken one of the first computer programming
the other hand, it means that technical analysis MVG: Many concepts and methods mentioned in your book
produced in 2005. This interesting academic are known by the technical reader. But I think that a person courses at Harvard as an undergraduate and could easily see
is and will continue to become a little more
research derived from a survey which who is not familiar with technical analysis has some difficulty how eventually the computer would replace charts. I learned
complicated than the simple interpretations of
involved what investments professors teach reading a book so full of content: can you give advice to first FORTRAN then and still use it today. I also learned how a
the past, but the basis of the technical theories,
and what industry professionals utilize7. The time readers? computer program is strictly logical, unlike the markets, and
result was that before 2005, investment
namely that price reflects all knowledge and
Charles Kirkpatrick I write these books for people who that very specific instructions must be given. There’s no BS
professors believed that fundamental anticipation, will still hold true. Thus I believe
understand the basics of technical analysis and have the with a computer10. At Tabell’s office at Walston, we had a man
investment analysis was more important and that hiding a particular discovery and successful
capability of honestly thinking about markets. Even the text named Lester Sugarman who spent every evening on an old-
gave low importance and rarely mentioned experiments would benefit no one else. I am a
book that Julie and I wrote is not an easy read for someone style, hand-crank adding machine calculating moving averages
in their courses the topic of technical researcher and educator and would feel that I
unfamiliar with markets. In that context, to simplify the content while looking for the secret to the markets. I knew that the
investment analysis. On the other side of am betraying my subject if I kept information
would do three things that are harmful to the reader. The first is computer would eventually release Lester from his machine
the coin, many professionals indicated that secret.
they utilized the subjects related to technical that it would make it seem that technical analysis is easy. This because it was logical and quick, but it would take a while
investment analysis in most of their work. MVG: In your book you quote that you wrote is, of course, not true. Second, it would give the impression before it would be available for personal use. Levy used a
The conclusion of the paper was that current it to describe and test the concepts you use in your favorite that using technical analysis is an easy method of profiting in Control Data 6600, one of the fasted mainframe computers at
investments courses are giving students only a partial investment and trading strategies. Why are these strategies the markets. Again, this is not true. And finally, it would avoid the time (1970s), and even he had trouble getting time on the
foundation of investments knowledge on which to build their more favored over others? the implication that the book was the only answer to investing computer. In those days you used a deck of computer cards
careers. Even in your new book you quoted that during and ran the program overnight. If one comma was out of place,
Charles Kirkpatrick Because they work. There are and trading. I want to encourage more study in other books and
the time that you worked as an institutional salesman, you the entire program blew up that night, and you had to correct
met many institutional investment managers who did not
undoubtedly many other successful methods, but these work sources of information. Readers should be inspired to continue
for me, and I haven’t found any that work better. their own research, and because most are lazy and want a the card the next day and then submit the program again
trust technical analysis, and this distrust was based on the following night. It was a laborious and time-consuming
advice they had heard from contemporary managers and quick, get-rich solution without work, I want to discourage
MVG: When in the subtitle I quoted that “classic meets the them initially if they don’t have the intrinsic desire to learn process. Finally, with the advent of the PC, I and many others
courses they had taken at their business schools8. Now
new”, it was intended that in your new book you show how more. I also dislike flowery language and repetitiveness when were freed to not only do the work in our own domain but
you have taught technical analysis at Brandeis University
International Business School, and in the last decade to combine technical classical indicators and studies that the subject can be covered with few words and many statistics. also to live where we liked to live. The advanced personal
many studies about the efficiency of technical analysis have been created between 60s and 70s (the classics)
My publishers kept saying I should write more because there computers have certainly helped, especially in performing
have been produced, curiously by scholars who come from together with a relative new and innovative method of the massive optimization calculations necessary to test new
weren’t enough pages and that readers tend to believe that more
the academic world, such as Professor Andrew Lo. What backtesting that is Walk-Forward Optimization (the new). theories (and some old ones, too), but I must say I did enjoy
It’s the first time that I read in one of your books that you pages means more information. I had to disagree only because
should be still done in 2014 to promote a proper knowledge I hate wasting my own time while reading lengthy discussions the old days of plotting by hand.
and a good use of Technical Analysis? use this method. Could you explain in more detail what
is the potential that you found in the use of Walk-Forward that avoid the subject of interest. They finally, but reluctantly,
MVG: I like your preface to the book, where you compare
Charles Kirkpatrick Results usually speak for themselves. Optimization and if this use led you to discover new hints in agreed to the brevity of my writing. the market and the ocean as individual forces that have
Excellent results, statistical reasoning and testing, and your research? strength beyond our mortal powers, and they are not
distribution of these accomplishments should convince MVG: I read in a book written by Professor A. Lo, that one of
Charles Kirkpatrick To test the effectiveness of an personal like us11. They are both such a challenge to outwit,
students that technical analysis is a worthy study and useful the first rigorous studies of patterns was initiated by you, who
algorithmic system, just as in the scientific method, you but we tend to make many mistakes by being emotional in
discipline. I found in my classes that the enthusiasm for the convinced your then employer, Arthur D. Little Corporation,
must first make a set of rules and parameters, and then test an unsympathetic world. I’m in agreement to remove the
course was based on the knowledge that the methods actually to hire Robert Levy to conduct the study9. You knew Levy
this hypothesis in the future to see if it works. The traditional negative emotions that can influence our trading skills, but
and also other researchers who have developed their ideas
make money. Many students mentioned to me that it was the in your words I read also emotion, or better passion for the
method was to create a model and let it run for a few years to without the use of the current powerful computers. We can
only course in the business school that actually taught how to work you are doing. How you motivate your new students
see if it worked. I’m getting old now and don’t have the future therefore say that you have lived in two different worlds. to the technical analysis approach?
make money – the primary reason for their attendance at the
time left to test many theories I have about strategy and tactics What are the advantages that you feel to have inherited
school. If this can be more widely publicized and taught, the art from this past experience in the first part of your working
in the markets. Thus I have always been looking for a method
and science of technical analysis will succeed as an alternative life?
that would “create the future” right now such that I could test
and complementary method of investing and trading.
these theories realistically. Walk-Forward analysis has been

14 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 15
Charles Kirkpatrick The passion is for the subject not its Endnotes
use. But again, results speak for themselves. Most investment
courses the students are required to take emphasize financial
1. M.V. Guffanti – A book review & interview: the unconventional
Van Tharp thinking – SAMT Journal – Winter 2013 – pp. 9 Elliott Wave, Chaos Theory
theory including such things as the CAPM and MPT, Sharpe
ratios, diversification, and risk as defined by volatility. They
-12;
and Fractals
2. A. Lo and J. Hasanhodzic – The Evolution of Technical
never teach the students how the markets work or how to Julien Camberlin, CFTe, MFTA, CEWA Lev I
Analysis – Bloomberg Press – 2012 – Chapter 6 – The use of
make money. The courses seem to imply that you can’t computers;
make money in the markets. Even the courses in securities
analysis are biased. The analysis is focused on buying a 3. C. Kirkpatrick & J. R. Dahlquist – Technical Analysis – 2 ed. Introduction systems do not behave as expected: they follow a
security. There is no realistic discussion of risk measurement - Pearson Education – 2011; special order that seems unpredictable. They are neither
People have always been fascinated by financial markets and
or money management. Because the EMH is so prevalent in 4. 1994 - Charles Dow Looks at the Long Wave, 2001 - Stock the possibility to predict future movements. the first scientific deterministic nor random. He called them chaotic.
academic thinking, the concept of a price trend is dismissed Selection: A Test of Relative Stock Values Reported over 17 ½ studies are from the beginning of the 20th century. n The second is fractals invented by Benoit Mandelbrot.
as impossible. But students generally see through this. They Years; Mandelbrot gave the name of fractal to the mathematical
know people make money in the markets, and they want to In 1900, Louis Bachelier, defended his thesis “Theory of
5. C. Kirkpatrick – Kirkpatrick Investment and Trading Strategies sets that have self-similar patterns. Mandelbrot explains
know how. That’s why they are so excited about studying Speculation”, stipulating that markets are random.
– Pearson Education – 2013 - pag. 1; how financial markets organize in fractals. Though he didn’t
technical analysis. Their enthusiasm comes naturally. At the same time, Charles Dow develops his now called “Dow use the system of waves developed by Elliott nor he even
6. C. Kirkpatrick – Kirkpatrick Investment… - pag. 143; Theory”. One of the most important points of his theory is quote Elliott’s work, Mandelbrot developed a fractal model
MVG: And nothing is so contagious as enthusiasm12,
7. Frank R. Flanegin, Denis P. Rudd - Should investments that financial markets are made of tendencies and evolve in that approaches the behavior of financial markets.
especially among the young students attending your
professors join the “crowd” - Managerial Finance, Vol. 31 Iss: 5 successive waves. In 1978, Frost & Prechter published Elliott Wave Principle.
courses that will broaden the group of those who use
technical analysis in their investment decisions. – 2005 pp. 28 – 37; Today this book is still the reference for Elliott wave study.
n If we follow the ideas of Louis Bachelier, markets are
8. C. Kirkpatrick – Kirkpatrick Investment… - pag. 5; random and cannot be forecast. They presented a very smart system of multiple wave
Thank you Charlie. confirmations called multiple wave relationships3. This system
n If we follow the ideas of Charles Dow, markets follow
9. A.Lo and J Hasanhodzic – The Evolution of Technical proposes that as all levels of waves are developing at the same
Analysis – Bloomberg Press – 2012 – Chapter 8 – Empirical trends (meaning they are not random) and it is possible to
forecast future movements by looking at past movements. time, end of waves of different levels could then be forecast
Evaluation; with concentrations of Fibonacci ratios. Multiple wave
In 1934, Ralph Nelson Elliott discovered that financial markets
10. BS is the common American acronym for “bull shit”; relationships are a very interesting tool, but they recognize that
organize in waves respecting certain rules and guidelines.
“If a complete method of ratio analysis could be successfully
11. C. Kirkpatrick – Kirkpatrick Investment… - Preface; These waves are self-similar patterns (Figure 1) and it was
For additional information about Charles Kirkpatrick and the resolved into basic tenets, forecasting with the Elliott wave
12. Quote from the poet Samuel Taylor Coleridge. the first idea of fractals in the financial markets. He called this
other books he has written, visit www.charleskirkpatrick.com principle would become more scientific”4.
principle Elliott waves and in 19381 his first book is published
to present this theory. In 1946, he published a second book2, In the ’80s and ’90s, Edgard E. Peters published different
where, for the first time, he discussed Fibonacci relations in books on chaos theory in financial markets, confirming that
financial markets. Elliott noted that the Fibonacci ratios appear markets are chaotic systems.
quite often in the relation between waves of the same degree.
The Technical Analyst was proud to present its 2014 awards to celebrate the best in technical analysis and trading software. Though, he never settled upon clear rules to use the Fibonacci
Winners and runners-up were announced at the awards ceremony at the Le Meridien Piccadilly Hotel in London on 24 April relations.
2014.
In the 60s, two new concepts were developed, that will help our
Book of the Year Finalists:
understanding of financial markets:
Shaun Downey – “Trading Time: Mapping Your Voyage of Discovery”; Stephen Eckett – “The UK Stock Market Almanac 2014”;
Charles Kirkpatrick – “Investment and Trading Strategies”; Tony Plummer – “The Law of Vibration: The Revelation of Wiliam D. n The first is chaos theory. Edward Lorenz was working
Gann” and Eoin Treacy – “Crowd Money” on climate forecasts. He discovered that certain complex
Runner-up:
“Investment and Trading Strategies”, Charles Kirkpatrick
Winner:
“Trading Time: Mapping Your Voyage of Discovery”, Shaun Downey

Mario Valentino Guffanti, CFTe is a Financial Advisor, Certified Financial Technician and Researcher. He is a
Vice President of the Swiss Italian Chapter of the Swiss Association of Market Technicians (SAMT) and also a
Lecturer in Technical Analysis at the Centro di Studi Bancari in Vezia (CH).
Figure 1: Elliott wave: self-similarity of a fractal Figure 2: Random System

16 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 17
Charles Kirkpatrick The passion is for the subject not its Endnotes
use. But again, results speak for themselves. Most investment
courses the students are required to take emphasize financial
1. M.V. Guffanti – A book review & interview: the unconventional
Van Tharp thinking – SAMT Journal – Winter 2013 – pp. 9 Elliott Wave, Chaos Theory
theory including such things as the CAPM and MPT, Sharpe
ratios, diversification, and risk as defined by volatility. They
-12;
and Fractals
2. A. Lo and J. Hasanhodzic – The Evolution of Technical
never teach the students how the markets work or how to Julien Camberlin, CFTe, MFTA, CEWA Lev I
Analysis – Bloomberg Press – 2012 – Chapter 6 – The use of
make money. The courses seem to imply that you can’t computers;
make money in the markets. Even the courses in securities
analysis are biased. The analysis is focused on buying a 3. C. Kirkpatrick & J. R. Dahlquist – Technical Analysis – 2 ed. Introduction systems do not behave as expected: they follow a
security. There is no realistic discussion of risk measurement - Pearson Education – 2011; special order that seems unpredictable. They are neither
People have always been fascinated by financial markets and
or money management. Because the EMH is so prevalent in 4. 1994 - Charles Dow Looks at the Long Wave, 2001 - Stock the possibility to predict future movements. the first scientific deterministic nor random. He called them chaotic.
academic thinking, the concept of a price trend is dismissed Selection: A Test of Relative Stock Values Reported over 17 ½ studies are from the beginning of the 20th century. n The second is fractals invented by Benoit Mandelbrot.
as impossible. But students generally see through this. They Years; Mandelbrot gave the name of fractal to the mathematical
know people make money in the markets, and they want to In 1900, Louis Bachelier, defended his thesis “Theory of
5. C. Kirkpatrick – Kirkpatrick Investment and Trading Strategies sets that have self-similar patterns. Mandelbrot explains
know how. That’s why they are so excited about studying Speculation”, stipulating that markets are random.
– Pearson Education – 2013 - pag. 1; how financial markets organize in fractals. Though he didn’t
technical analysis. Their enthusiasm comes naturally. At the same time, Charles Dow develops his now called “Dow use the system of waves developed by Elliott nor he even
6. C. Kirkpatrick – Kirkpatrick Investment… - pag. 143; Theory”. One of the most important points of his theory is quote Elliott’s work, Mandelbrot developed a fractal model
MVG: And nothing is so contagious as enthusiasm12,
7. Frank R. Flanegin, Denis P. Rudd - Should investments that financial markets are made of tendencies and evolve in that approaches the behavior of financial markets.
especially among the young students attending your
professors join the “crowd” - Managerial Finance, Vol. 31 Iss: 5 successive waves. In 1978, Frost & Prechter published Elliott Wave Principle.
courses that will broaden the group of those who use
technical analysis in their investment decisions. – 2005 pp. 28 – 37; Today this book is still the reference for Elliott wave study.
n If we follow the ideas of Louis Bachelier, markets are
8. C. Kirkpatrick – Kirkpatrick Investment… - pag. 5; random and cannot be forecast. They presented a very smart system of multiple wave
Thank you Charlie. confirmations called multiple wave relationships3. This system
n If we follow the ideas of Charles Dow, markets follow
9. A.Lo and J Hasanhodzic – The Evolution of Technical proposes that as all levels of waves are developing at the same
Analysis – Bloomberg Press – 2012 – Chapter 8 – Empirical trends (meaning they are not random) and it is possible to
forecast future movements by looking at past movements. time, end of waves of different levels could then be forecast
Evaluation; with concentrations of Fibonacci ratios. Multiple wave
In 1934, Ralph Nelson Elliott discovered that financial markets
10. BS is the common American acronym for “bull shit”; relationships are a very interesting tool, but they recognize that
organize in waves respecting certain rules and guidelines.
“If a complete method of ratio analysis could be successfully
11. C. Kirkpatrick – Kirkpatrick Investment… - Preface; These waves are self-similar patterns (Figure 1) and it was
For additional information about Charles Kirkpatrick and the resolved into basic tenets, forecasting with the Elliott wave
12. Quote from the poet Samuel Taylor Coleridge. the first idea of fractals in the financial markets. He called this
other books he has written, visit www.charleskirkpatrick.com principle would become more scientific”4.
principle Elliott waves and in 19381 his first book is published
to present this theory. In 1946, he published a second book2, In the ’80s and ’90s, Edgard E. Peters published different
where, for the first time, he discussed Fibonacci relations in books on chaos theory in financial markets, confirming that
financial markets. Elliott noted that the Fibonacci ratios appear markets are chaotic systems.
quite often in the relation between waves of the same degree.
The Technical Analyst was proud to present its 2014 awards to celebrate the best in technical analysis and trading software. Though, he never settled upon clear rules to use the Fibonacci
Winners and runners-up were announced at the awards ceremony at the Le Meridien Piccadilly Hotel in London on 24 April relations.
2014.
In the 60s, two new concepts were developed, that will help our
Book of the Year Finalists:
understanding of financial markets:
Shaun Downey – “Trading Time: Mapping Your Voyage of Discovery”; Stephen Eckett – “The UK Stock Market Almanac 2014”;
Charles Kirkpatrick – “Investment and Trading Strategies”; Tony Plummer – “The Law of Vibration: The Revelation of Wiliam D. n The first is chaos theory. Edward Lorenz was working
Gann” and Eoin Treacy – “Crowd Money” on climate forecasts. He discovered that certain complex
Runner-up:
“Investment and Trading Strategies”, Charles Kirkpatrick
Winner:
“Trading Time: Mapping Your Voyage of Discovery”, Shaun Downey

16 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 17
Figure 4: Construction of a fractal
Figure 5: Cumulative curve of ratios between waves following
Figure 3: example of deterministic system: sinusoidal Elliott wave guidelines Figure 6: Fibonacci ratio – Golden section

Random System VS Deterministic System structure.5” Strange attractors are considered as the limit lightning approaches its final destination, the more precisely proportion. The golden section is when C is to A what A is to B
A random system is a mathematic model composed of a point of the system. we can forecast the target. It is the same with waves: the more (Figure 6) and the ratio is 61.8% or its inverse 161.8%.
succession of random walks. This means that future events n Fractals: As explained earlier, Benoit Mandelbrot gave waves are developing, the more we can fine-tune the target.
A lot of information about Fibonacci and the golden section
only depend on the present event by his position. There is no the name of fractal to the mathematical sets that have self- can be found, but what is the most important here is that the
memory effect and no forecast can be done. An example is a similar patterns: they look the same from near as from far Fibonacci Strange Attractor Model
golden section is the ratio that is at the cross-roads between
Brownian movement, which is the movement of pollen on the (Figure 1). As seen before, fractals are self-similar patterns. These patterns
addition and multiplication because 1 + PHI =1/ PHI. This is
surface of water, produced by the shocks of the molecule of can have different forms. Elliott waves are the patterns in force
Construction of fractal the growth ratio.
water (Figure 2). Another example is the toss of a coin; you in financial markets. Impulse waves (waves developing in the
To draw a fractal (for example a financial chart as Mandelbrot direction of the main trend) are always subdivided in 5 waves: The model will be constructed from the Fibonacci ratios suite
cannot forecast the next toss from the past toss.
explains it6), a starting point and an end point are needed (Figure 3 impulse waves developing also in direction of the main trend that is … .382, .618, 1.00, 1.618, 2.618 …
A deterministic system is a system that always gives the same 4). In fact, if end point (A’,t’) is not known, it is not possible to and 2 corrective waves, developing against the main trend
result from an input. The memory effect is 100%. An example draw the fractal. This means that in financial markets, the end (Figure 1). Construction of the model
is a sinusoidal (Figure 3). point must also exist. This point is the strange attractor. This is The following arithmetic operations from the Fibonacci
true for the general vector in green on the figure, but also for In Elliott Wave Principle, Prechter and Frost give different
ratios suite are calculated: addition, subtraction, division,
Chaotic System the smaller ones in other colors. guidelines to validate Elliott wave counts. A part of these
multiplication, exponent, square root, inverse and opposite.
There is no unanimous definition for chaos systems, but among guidelines are dedicated to ratio analysis between waves. To
This calculation has not been done to infinity to be represented
the different points defining it, there are: Where is the strange attractor? clearly understand the organization of the ratios, a brand new
on a chart, but maximum three combinations of them have
In a chaotic system, the strange attractor is the set where the idea will be proposed here: the construction of the Fibonacci
n Sensibility to initial conditions: This is the butterfly been set.
system is in equilibrium. A financial market is in equilibrium Strange Attractor Model. This model will be compared to the
effect, meaning that a small change in initial conditions can statistics of ratios between Elliott waves following Elliott wave It is worth noting on Figure 7 that instead of a random repartition
completely change the results after some time. The model when buyers and sellers are in equilibrium. This is at the end
of a wave (top or bottom), when price changes direction, this guidelines proposed by Frost and Prechter. appears a fractal repartition of the ratios. One could say here
will progressively deviate. that the process of construction of the model is too vague, but
is where we can find the strange attractor.
n Memory effect: Random systems have 0% on memory Data as stated before, the golden section is the ratio which is the
effect, while deterministic systems have 100%. Chaotic Each wave at every degree has its own strange attractor. The Six markets have been chosen: two currencies, two indices, link between addition and multiplication, and in the long run,
systems have a memory effect, but less than 100%, this strange attractor is active even if the price is slightly disturbed. and two commodities. Only liquid markets have been used. the results of the calculations will always end up with the same
means that there is a part of unpredictability. If it is highly disturbed, the price will change its strange Elliott wave counts have been done on daily and weekly repartition, whatever Fibonacci ratios are taken or the type of
n Strange attractors: To give a concrete example of an attractor and will be attracted by another one. Price formation is charts, following Elliott wave rules and guidelines described in calculation that will be done. This is the magic of Fibonacci!
attractor, let’s imagine a pendulum circling around its a compromise between determinism and randomness (memory Elliott Wave Principle (channeling, alternation …). From these
effect is between 0% and 100%). Figure 8 is the combination of the Fibonacci Strange Attractor
point of stability (the center of the ‘circle’). This point is counts, all the ratios that appear between the waves described in
Model and the cumulative curve of ratios between waves
the attractor. If there is external element, like a cat kicking Every degree of an Elliott wave developing at same time the ratio analysis section are taken and added on a cumulative
following Elliott wave guidelines. We clearly see the similarity
the pendulum, it disturbs the model, but once the kicking (Minuette, Minute, Minor…), waves develop moving to chart (Figure 5).
of the statistics and the model.
stops, the system again starts to be attracted by the attractor. their final strange attractor. When attractor is hit, the wave
In most of chaotic systems, more complex attractors called Fibonacci The model has two kinds of ratios: ratios that are the Fibonacci
is completely developed, the equilibrium between buyers
strange attractors are found. Strange attractors are attractors and sellers is done and the price can change direction. This We can see on figure 5 that we have spikes at certain levels. suite in blue (…, .382, 0.618, 1, 1.618, 2.618,…), that we call
with more complicated structures. They are not single means that the price is not stopped by Fibonacci ratios, but As we can see, these spikes are, for most of them, situated at Fibonacci ratios, and clusters of ratios in red that are between
points, but organized most of the time in fractal sets, that’s rather vibrates in the direction of it. We could compare price Fibonacci ratios: 38.2%, 50%, 61.8% … the Fibonacci suite, that are formed by echoes of the Fibonacci
why they are sometimes called fractal attractors. “The formation to lightning: when lightning starts from a cloud, it ratio (.447, .472, .486, .5, .514, .528, .553, .724, .764, .786 …)
Before looking at the construction of the model, it is important
solution set of a dynamical system is generally called an is attracted to the earth. Then, the lightning approaches and and that will be called derived Fibonacci ratios.
to review exactly what a Fibonacci ratio is:
attractor, and the attractor of a chaotic system is specifically is attracted to a certain village or forest, then to a group of The Fibonacci ratios have much importance than the derived
called a strange attractor. Strange Attractors have a fractal A Fibonacci ratio is also called the golden section or divine
houses or trees, then to a specific house or tree. The more the Fibonacci ratios. Ratio .50 is not a precise Fibonacci ratio, but

18 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 19
Figure 4: Construction of a fractal
Figure 5: Cumulative curve of ratios between waves following
Figure 3: example of deterministic system: sinusoidal Elliott wave guidelines Figure 6: Fibonacci ratio – Golden section

18 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 19
See the Whole Market in One
Picture in One Graph with
Relative Rotation Graphs TM

Trevor Neil, MSTA MCSI

Relative Rotation GraphsTM (RRG) …. a visualization tool This makes the RS line perfectly suitable for applying
to display the relative position of securities in a universe, any regular technical analysis technique or tool like trend
Figure 7: Fibonacci Strange Attractor Model Figure 8: combination of the Fibonacci Strange Attractor Model against a benchmark and against each other. lines but also indicators like the RSI, MACD etc. can all
and the cumulative curve of ratios between waves following
be applied to a Relative Strength line.
Elliott wave guidelines The primary goal of RRGs is to help its users, portfolio
managers, traders, sales-people, investment advisers etc. The interpretation of the RS-line is fairly straightforward.
a cluster from .447 to .553. The inverse of 2.00 being .50, it is This work has covered relations in price between Elliott waves. get an overview of the relative movements on financial If the line goes up the sector is outperforming the broader
also a cluster around 2.00 and not a precise Fibonacci ratio. It could be very useful to study the ratios between Elliott waves markets. This can be equity sectors against a broader market index (benchmark). If the line goes down the
Concerning ratio of .764, it is also a cluster of different ratios in time, since price and time in markets are related. benchmark, asset classes, commodities, currencies really sector is underperforming the broader market. Analyzing
between .724 and .809 and the inverse is between 1.236 and any instrument that one would like to see the relative trends in relative strength lines therefore enables us to
1.382. This means for practical use that we will allow more interaction on. On the back of that, as RRGs give a great make calls like: “This sector is expected to outperform
uncertainty for 50% or 76.4% retracement than for 61.8% or Endnotes overview, they can very well be used to generate “trade- the benchmark index in coming weeks”.
38.2% retracement. 1. Elliott, R.N., The Wave Principle, 1938 ideas”.
What Are Your Best Five Sectors / Stocks?
This model is the representation of the strange attractor that Relative Strength Analysis
2. Elliott R.N., Nature’s Law - The Secret of the Universe, 1946 This is probably the most asked question by portfolio
is in force in financial markets. It can be used to improve
3. Prechter, R., Frost, A.J., Elliott Wave Principle, Tenth Edition, Technical analysts have a many tools (indicators) in managers. Portfolio Managers are always very busy and
guidelines for validation of Elliott waves.
New Classics Library, 2005, p. 145 their toolbox, but only one of these tools helps you to they want the analysts on the sell-side to be short and to
Conclusion put things into perspective for (comparative) relative the point. So instead of talking through a whole universe
4. Prechter, R., Frost, A.J., Elliott Wave Principle, Tenth Edition, strength analysis. The RRG technique analyses and of sectors the quickest way to pick someone’s brain is
Financial markets are chaotic systems that organize in fractal New Classics Library, 2005, p. 146 clearly visualizes the relationship between price series, to ask this question and see if one or more of the names
sets. Markets do not evolve randomly, but are attracted by
5. Brown, C.T., Liebovitch, L.S., Fractal Analysis (Quantitative for example a sector-index and a broader market index. that come out match with their own ideas to see if there
strange attractors that are in force on different wave degrees
Applications in the Social Sciences), SAGE Publications, First is ground for a further discussion. So, what we need it a
(time scales). The “raw” relative strength line is simply the price of the
edition (April 14, 2010), p. 63 way to “rank” a universe and answer that question.
sector-index divided by the price of the broader market
With the new concept of a Fibonacci Strange Attractor Model,
6. Mandelbrot B., Hudson R.L., The (Mis)behaviour of Markets: index. However, working with relative strength analysis and the
it has been possible to show how Fibonacci ratios organize in
A Fractal View of Risk, Ruin and Reward, Profile Books, 2010, price of sector index values of RS-lines creates a problem in that respect as the
a fractal way, that are the spectrum of the strange attractors p 210-211 “raw” relative strength = numerical values of a raw RS line cannot be compared
in force in financial markets, confirming two kinds of ratios: price of market index
to the numerical value of another RS-line in the same
precise ratios (Fibonacci suite) and clusters of derived
(You can apply this also to individual equities against sector universe. Looking at the STOXX sector universe for
Fibonacci ratios (echoes). This model gave an explanation for
indices or regional (equity) indices against a world index example, the RS value of the Automobile sector cannot
.500, 2.000, .724, .764 and .786 ratios.
etc. You can also use RRG to look for outperformance and be compared to the RS value of the Insurance sector. In
underperformance in other asset classes such as Foreign other words, the universe cannot be “ranked” by this RS
Exchange.) value.

The result of this equation is a line that moves up and JdK RS-Ratio / RS-Momentum
down over time and actually looks and behaves itself as The basic approach for analyzing these RS lines is a
a price series. Graph 1 shows the weekly price chart of trend-following approach to gauge whether the relative
the STOXX Utilities sector in the upper pane and the raw strength of a sector is moving up or down to make a
relative strength line against the STOXX 600 index in the call for overweight or underweight positions. However,
As an Elliott Wave specialist, Julien Camberlin has developed new ideas about how markets behave lower pane. without any modification the problem of “not comparable
according to Elliott Waves, Chaos Theory and Fractals. His studies explain that prices are not stopped by
As you can see the RS line pretty much moves like a figures” remains. The solution to this problem was found
Fibonacci ratios but are rather attracted by them and vibrate in their direction, according to fractal models.
normal price-line. If we would not tell you that it is a in the “JdK RS-Ratio”, this is a proprietary indicator that
This allows a better understanding of Elliott Wave formations, to enhance its use for better performance. uses a normalization algorithm which takes into account
Julien Camberlin is now looking for new professional challenges. He can be reached at julien.camberlin@
relative line you would not be able to tell it apart from a
normal price graph. not only the comparison against the benchmark but also
gmail.com
the comparison to all other elements in the universe. The
result is a line that oscillates around the 100-level, where

20 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 21
See the Whole Market in One
Picture in One Graph with
Relative Rotation Graphs TM

Trevor Neil, MSTA MCSI

20 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 21
values above 100 indicate a positive trend in the RS-line later, the JdK RS-Ratio line is at the same 104 level but be compared across a universe on a numerical basis. sector will rotate back into the top right-hand quadrant
and vice versa. This indicator enables “ranking” of a now the line is moving down. This indicates that the However it still means that we have to “flip” through the completing a full rotation.
universe and basically answers the question: “What are sector is still in an up-trend but the trend is getting weaker. charts of all elements in the universe to get the picture. If When we apply that to the universe that holds the 19
your best five stocks/sectors/….etc.” A similar thing happens on the downside where the JdK we stick to the 19 STOXX sectors for this example it does STOXX sectors we get the RRG that is plotted below.
Graph 2 shows the chart of the STOXX Oil & Gas sector RS-Ratio line pushes below the 96 level (at red arrow) not only mean looking at 19 charts, one for each sector
indicating a declining relative strength that is still getting against the benchmark index, but also at all possible The “trails” that are visible on each sector are the historical
with the JdK RS-Ratio line as the solid red line in the
weaker. A few weeks later the line is again at the same 96 combinations of sectors against each other. In a 19 sector positions of that sector in this example on a weekly basis
middle pane. The raw RS-line is in the lower pane. One
level but now the line is moving upward, indicating a still universe this means analyzing (19 * 19 = 361 – 19 = 342 and indicate where the sector is coming from and show
can easily see the trend-following nature of the JdK RS-
weak relative strength but losing (downside) power. / 2) = 171 charts. And this in only a 19 sector universe! the path of the rotation. Although the charts and the RRG
Ratio line in relation with the RS-line in the lower pane.
Imagine what happens when you track the Euro STOXX in this article are based on weekly data everything can be
Monitoring the red JdK RS-Ratio line also reveals a So what we also want to know is the direction and the pace
50 index or even the S&P 500 … The number of possible done on any time-frame even intra-day
new “problem”. Although the numerical values are now of the JdK RS-Ratio line, again in a (numerical) format
combinations balloons exponentially. How could I put all This RRG gives insight into the relative positions and
comparable throughout the universe and “high values are that can be compared across the universe. This is done by
this information in front of portfolio managers in ONE movements of the 19 STOXX sectors against the STOXX
god and low values are bad” not all “high” values or “low” the (proprietary) “JdK RS-Momentum” indicator which
single graph? That became a Relative Rotation GraphTM. 600 benchmark but also against each other. It provides
values are the same. In the graph above 104 is considered is a normalized momentum or rate of change indicator
which measures the direction and the speed of the JdK A “styled” plot is shown on Graph 3. the BIG picture in ONE picture. This chart replaces 171
a “high” value and 96 is a “low” value (theses values are
RS-Ratio line. What you see is a diagram with the JdK RS-Ratio line on individual relative strength charts and can serve as a
arbitrary and the levels change depending on th universe).
the horizontal axis and the JdK RS-Momentum line on the perfect starting point for any analyst, portfolio manager,
When the JdK RS-Ratio line is at 104 the first time (green Putting It All Together vertical axis. This means that in the top-right, LEADING, strategist etc. to focus their attention on the sectors that
arrow) the line is still moving up indicating a relative up-
The good thing is that we now have two measures quadrant you will see the sectors which are in a relative really do matter and deserve further analysis. Or it can
trend that is still getting stronger. However a few weeks
of relative strength and relative momentum that can up-trend which is still being pushed higher by positive serve as a trade idea generator for sales-traders, hedge-
momentum (104 the first time in graph 2). When relative fund managers or individual traders looking for long-
Graph 1 short trade ideas.
momentum starts to weaken and eventually drops below
the 100-level, the sector moves into the lower right- Relative Rotation Graphstm should be treated like any
hand, WEAKENING, quadrant (104 the second time in other chart-form and therefore there are no fixed “trading-
graph 2). When the weakening of the relative momentum rules” it all depends on the aggressiveness or conservatism
continues the sector will eventually cross into the lower of the user. Picking up a sector that moves from the
left-hand, LAGGING, quadrant (96 the first time in graph LAGGING quadrant into the IMPROVING quadrant is
2). Finally relative momentum will start to pick up and considered pretty aggressive while waiting until the sector
push the sector into the top left-hand, IMPROVING, moves from IMPROVING into LEADING is considered
quadrant indicating that the sector is still in a relative to be conservative. Like with any other chart format, the
down-trend (RS-Ratio < 100) but the JdK RS-Ratio line truth is probably somewhere in the middle. Obviously the
is already moving upward (96 the second time in graph same goes in reverse for the bottom part of the plot.
2). Eventually, when this improvement continues, the

Graph 3

Graph 2

22 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 23
values above 100 indicate a positive trend in the RS-line later, the JdK RS-Ratio line is at the same 104 level but be compared across a universe on a numerical basis. sector will rotate back into the top right-hand quadrant
and vice versa. This indicator enables “ranking” of a now the line is moving down. This indicates that the However it still means that we have to “flip” through the completing a full rotation.
universe and basically answers the question: “What are sector is still in an up-trend but the trend is getting weaker. charts of all elements in the universe to get the picture. If When we apply that to the universe that holds the 19
your best five stocks/sectors/….etc.” A similar thing happens on the downside where the JdK we stick to the 19 STOXX sectors for this example it does STOXX sectors we get the RRG that is plotted below.
Graph 2 shows the chart of the STOXX Oil & Gas sector RS-Ratio line pushes below the 96 level (at red arrow) not only mean looking at 19 charts, one for each sector
indicating a declining relative strength that is still getting against the benchmark index, but also at all possible The “trails” that are visible on each sector are the historical
with the JdK RS-Ratio line as the solid red line in the
weaker. A few weeks later the line is again at the same 96 combinations of sectors against each other. In a 19 sector positions of that sector in this example on a weekly basis
middle pane. The raw RS-line is in the lower pane. One
level but now the line is moving upward, indicating a still universe this means analyzing (19 * 19 = 361 – 19 = 342 and indicate where the sector is coming from and show
can easily see the trend-following nature of the JdK RS-
weak relative strength but losing (downside) power. / 2) = 171 charts. And this in only a 19 sector universe! the path of the rotation. Although the charts and the RRG
Ratio line in relation with the RS-line in the lower pane.
Imagine what happens when you track the Euro STOXX in this article are based on weekly data everything can be
Monitoring the red JdK RS-Ratio line also reveals a So what we also want to know is the direction and the pace
50 index or even the S&P 500 … The number of possible done on any time-frame even intra-day
new “problem”. Although the numerical values are now of the JdK RS-Ratio line, again in a (numerical) format
combinations balloons exponentially. How could I put all This RRG gives insight into the relative positions and
comparable throughout the universe and “high values are that can be compared across the universe. This is done by
this information in front of portfolio managers in ONE movements of the 19 STOXX sectors against the STOXX
god and low values are bad” not all “high” values or “low” the (proprietary) “JdK RS-Momentum” indicator which
single graph? That became a Relative Rotation GraphTM. 600 benchmark but also against each other. It provides
values are the same. In the graph above 104 is considered is a normalized momentum or rate of change indicator
which measures the direction and the speed of the JdK A “styled” plot is shown on Graph 3. the BIG picture in ONE picture. This chart replaces 171
a “high” value and 96 is a “low” value (theses values are
RS-Ratio line. What you see is a diagram with the JdK RS-Ratio line on individual relative strength charts and can serve as a
arbitrary and the levels change depending on th universe).
the horizontal axis and the JdK RS-Momentum line on the perfect starting point for any analyst, portfolio manager,
When the JdK RS-Ratio line is at 104 the first time (green Putting It All Together vertical axis. This means that in the top-right, LEADING, strategist etc. to focus their attention on the sectors that
arrow) the line is still moving up indicating a relative up-
The good thing is that we now have two measures quadrant you will see the sectors which are in a relative really do matter and deserve further analysis. Or it can
trend that is still getting stronger. However a few weeks
of relative strength and relative momentum that can up-trend which is still being pushed higher by positive serve as a trade idea generator for sales-traders, hedge-
momentum (104 the first time in graph 2). When relative fund managers or individual traders looking for long-
Graph 1 short trade ideas.
momentum starts to weaken and eventually drops below
the 100-level, the sector moves into the lower right- Relative Rotation Graphstm should be treated like any
hand, WEAKENING, quadrant (104 the second time in other chart-form and therefore there are no fixed “trading-
graph 2). When the weakening of the relative momentum rules” it all depends on the aggressiveness or conservatism
continues the sector will eventually cross into the lower of the user. Picking up a sector that moves from the
left-hand, LAGGING, quadrant (96 the first time in graph LAGGING quadrant into the IMPROVING quadrant is
2). Finally relative momentum will start to pick up and considered pretty aggressive while waiting until the sector
push the sector into the top left-hand, IMPROVING, moves from IMPROVING into LEADING is considered
quadrant indicating that the sector is still in a relative to be conservative. Like with any other chart format, the
down-trend (RS-Ratio < 100) but the JdK RS-Ratio line truth is probably somewhere in the middle. Obviously the
is already moving upward (96 the second time in graph same goes in reverse for the bottom part of the plot.
2). Eventually, when this improvement continues, the

Graph 3

Graph 2

22 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 23
Graph 4

Protect against losses

by hedging through a
simple, trend-following strategy
Alberto Vivanti

We all know well how uncomfortable a buy & hold position in By assuming that we have employed 100% of our position in
the stock market can be, and we had some evidence through the an ETF on the Eurostoxx50, 100 euros invested in 1993 (the
last decade, one of the most troubled in the history of the equity euro started in 1999 but older data are simulated by Stoxx),
markets. We also know, as technicians, the priceless value of a had turned into 313 by March 2014. It corresponds to a
sound trend following technique: even a simple strategy could yearly compounded return of just 5.6%, but through dramatic
avoid most of the sharp drawdowns that affected the indices vicissitudes: 2001 (-20%), 2002 (-38%), 2008 (-46%), 2011
in 2002 and 2008. Of course, such bear markets do not occur (-17%), with a maximum price drawdown (from highest to
Relative Rotation Graphstm are definitely NOT a trading Last year RRG charts became available to Thomson often, two of them in just one decade would be enough for lowest weekly close) of 67%.
system per se but much more a visualization tool to get Reuters customers too. Versions of RRG are being a long while, but further sharp moves on the downside could
But what happened if we just had followed the simple trend
a better insight in what is happening in the markets that released for the Foreign Exchange markets. RRG Ltd., always be around the corner. In 2010 and 2011, for example,
following method described above? Much less volatility and
you are tracking. Having said that the two indicators that the company that holds the intellectual property and the the S&P 500 experienced two corrections between 17 and
lower drawdowns of course (-22% instead of 67), and a better
make up the RRG plot can very well be used in trading TradeMark for Relative Rotation GraphsTM, provides 20%.
return (a yearly 8.6% rather than 5.6%). We all know the
systems as a filter for example to make sure that the weekly updates of RRGs on a number of set universes on In portfolio management, it is the strategic rather than the benefits of a long term trend following technique, and we also
system only takes long trades when the stock or the sector its website (www.relativerotationgraphs.com). Register tactical decision that makes the difference in results and when know that such strategies usually underperform in bull markets.
is outperforming its benchmark. now for free samples and access to further research. we have to face adverse trends, then the most effective tool we Instead, what I want to show are the ways we can weather the
Clients use RRG Pro to help them manage their portfolios can rely upon is a trend following strategy. It is understood that storms. The simplest, of course, is to buy and sell according
RRG charts were “born” around 2004 and Julius
DeKempenaer is their ‘mother’. It wasn’t until 2011, and RRG Ltd provide tailored research for fund managers you cannot get out of a trend at the best point, and then often to the signals. But we can also stay constantly invested and
and traders designed to optimize their portfolios. you lose a portion of the last gains, but, overall, the quality of protected, when necessary, through the purchase of an inverse
when they became first widely available appearing on the
Bloomberg professional terminal. Since 2013 Market Please ask for details at trevor@relativerotationgraphs. returns will improve dramatically in the long run. ETF.
Analyst software has made RRGs available on their com I do not want to compare the effectiveness of the different trend In this case we need to calculate the additional amount needed
platform through a RRG-toolbox (www.mav7.com/rrg). following techniques, but just examine different tactics that we for the protection. In fact, an inverse ETF corresponds to a
can implement by adopting one of them as a protection. So I long position into something that increases in value when the
took a simple case as example, assuming that we are long in the benchmark decreases. If we want, for example, to neutralize a
European market by indexing the Eurostoxx50. Then, we have 100% long position on the Eurostoxx50 through a short ETF,
chosen a simple 20-week rate of change of the weekly closes then we should double the amount invested (100% on the long
for getting in and out of the market. ETF plus 100% on the short one, in order to neutralize the

Figure 1

Trevor Neil, MSTA, MCSI has been a trader and technical analyst for 40 years. He is a
professional portfolio manager as well as a director for Relative Rotation Graphs Limited. See
www.Relativerotationgraphs.com or [email protected]
Trevor is also the head trainer at BETA Group which offers institutional financial training including
technical analysis. He is also a director and trainer for BETA Educators Limited which run
popular e-Learning courses to prepare candidates for the IFTA CFTe exam.
He can be reached at [email protected].

24 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 25
Graph 4

Protect against losses

by hedging through a
simple, trend-following strategy
Alberto Vivanti

Figure 1

24 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 25
investment). But we can also employ a leveraged product: Figure 1 shows the yearly returns of a trend following system Figure 3
Consider a leveraged inverse ETF that has two times (2x) applied to a short ETF, leverage 2, on the Eurostoxx50,
exposure to the underlying. If the index goes up by 1% in one compared with the effective returns of the long benchmark.
day, then the ETF moves down by 2%. But if the index goes The size of the investment in the short product is 50%. The
down 1% then the ETF value increases 2%. In this case the full rule: buy the inverse ETF when the 20-week rate of change
hedge will be obtained by a 100% in the long ETF and 50% on is below zero; sell it when it turns positive. We suppose a
the 2x short one. constant rebalance.

Table 1

By applying a trend following strategy to a short ETF, we The simulated results of both strategies, that consider a constant
are exposed to wrong signals in bull years. But in such cases, rebalance, are those indicated in Table 1 and Figure 2.
the negative returns are largely offset by the good ones of the
Table 1: simulated yearly returns of two trend-following
benchmark. On the other side, the same strategy produces
strategies in Eurostoxx50 since 1993:
positive returns in the bad years, that generally counterbalance
the loss in the long side. 1. 100% Buy & Hold, +50% in a 2x short ETF, only during
bearish signals by a trend following indicator.
Figure 1: the blue histograms are the yearly returns of a buy
& hold strategy on the Eurostoxx50. The red histograms are 2. 50% Buy & Hold, +25% in a 2x long ETF, only during
the yearly returns of a trend following strategy applied to an bullish signals by a trend following indicator, +25% in a 2x
inverse ETF on the same index, leverage 2x, invested at 50% short ETF, only during bearish signals by a trend following
on the negative signals of the strategy. The sharply negative indicator.
returns of 2001, 2002, 2008, 2011, are fully counterbalanced by Figure 2: 100 euros invested in 1993. Constant rebalance. The
gains in the trend-following strategy applied to the short ETF. strategies are those of Table 1.

I have simulated two distinct tactics: Conclusion

1. Strategy 1: a 100% buy & hold investment in the Euro- This simple method reveals the typical weakness of a trend
stoxx50 in which we suppose to buy an additional 50% of following strategy: slow indicators lag the market and provide
the employed capital in a double leveraged short ETF on late signals. In sideways trends, the results are often frustrating.
the same index, when we get a bearish signal from the trend Here is why, in this case, positive years like 2006, 2007 and
Figure 2 following technique. 2012 were unprofitable for our method.
2. Strategy 2: a 50% constant investment in the Eurostoxx50 On the other side we could avoid the sharp declines of 2001,
(buy & hold). The remaining 50% to be employed as 2002, 2008 and 2011.
follows:
Overall, the global final results are far better than the passive
- 25% on a leveraged long ETF (2x) only invested when the investment for both return and risk.
trend following indicator is positive
- 25% on a leveraged short ETF (2x) only invested when the Figure 3: entry (blue arrows) and exit (red arrows) signals of a
trend following indicator is negative 20-week rate of change indicator on the Eurostoxx50.

Alberto Vivanti, Independent analyst, founder of Vivanti Analysis in 2003. Alberto is a technical and quantitative analyst
since the early 1980’s, with a sound experience as an asset manager with Swiss Institutions. Author of a technical
newsletter, lecturer for institutions and instructor in Technical Analysis courses in Switzerland for the IFTA Certification,
author of articles and books, has been co-author of a book with Perry Kaufman. Alberto chaired the IFTA conference
held in Lugano in 2006. He has been official speaker at the IFTA Conferences 1998 in Rome and 2006 in Lugano.
Alberto is Vice President of the Swiss Association of Market Technicians, representing the Swiss Italian Chapter.

26 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 27
investment). But we can also employ a leveraged product: Figure 1 shows the yearly returns of a trend following system Figure 3
Consider a leveraged inverse ETF that has two times (2x) applied to a short ETF, leverage 2, on the Eurostoxx50,
exposure to the underlying. If the index goes up by 1% in one compared with the effective returns of the long benchmark.
day, then the ETF moves down by 2%. But if the index goes The size of the investment in the short product is 50%. The
down 1% then the ETF value increases 2%. In this case the full rule: buy the inverse ETF when the 20-week rate of change
hedge will be obtained by a 100% in the long ETF and 50% on is below zero; sell it when it turns positive. We suppose a
the 2x short one. constant rebalance.

Table 1

I have simulated two distinct tactics: Conclusion

26 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 27
SAMT Members on Taking Technical Analysis
to a Higher Level ...
introducing an immersion course in preparation for the IFTA
Certified Financial Technicians (CFTe) Level II examination

On Saturday and Sunday, 13-14 September 2014, the Geneva chapter of the Swiss
Association of Market Technicians (SAMT) will present a two-day immersion course on
advanced technical analysis and preparation for IFTA Certified Financial Technicians
(CFTe) Level II examination. This course is designed for professionals with market
Every other Tuesday, Bruno is interviewed for Each Monday, Jean-Francois is interviewed for Tuesday, 18 March 2014
Preparation Course for experience who are familiar with the essentials of technical analysis and also for those
his technical perspective. his market perspective. http://www.dukascopy.com/tv/en/#123426 the October CFTe Exam who would like to use more advanced technical analysis on a regular basis.
Tuesday, 15 April 2014 Monday, 14 April 2014 His archived interviews can be found at n This immersion course is also designed to prepare candidates for the upcoming
When:
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Talk/#125245 Saturday, 13 September & professional qualification in technical analysis. The exam tests technical skills
His archived interviews can be found at Sunday, 14 September 2014 knowledge and understanding of ethics and the markets.
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Where:
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Geneva n The CFTe Level II exam incorporates a number of questions requiring essay-based
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experience in applying various methods of technical analysis.
SAMT Guests on 9:00 until 18:00 each day
n The exam also contains a number of different charts covering one specific market
16 hours of Immersion Training (often an equity) to be analysed, as though for a fund manager or trader.
Class Size:
5 minimum; 10 maximum Who Will Teach the Course?
Wednesday, 4 December 2014 Wednesday, 19 March 2014 n The course will be taught by Bruno Estier, CFTe, MFTA; and Ron William, CMT,
Cost:
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Early Bird Cost:

SAMT Members - CHF 1150 How Will it Work?
n The two-day course will begin promptly at 09:00 on Saturday, 13 September. The
Non Members - CHF 1350
instructors will begin with an overview of basic technical analysis per the CFTe
Registration Deadline: Level I exam.
n A sample of a CFTe Level II exam will be introduced to familiarize each candidate
London, 9-11 October 2014 Friday, 5 September 2014
with each of the three sections and how best to answer the questions in the three
Early Bird Deadline: hours allotted for the exam.
Friday, 29 August 2014 n Lunch will be served (12:00-13:30).
n The afternoon will focus on all aspects of technical analysis – with particular
attention to subjects which will be needed to complete and hopefully pass the
IFTA Exam: CFTe Level II exam.
Wednesday, 8 August 2014 n At the end of the day – about 18:00 – an overnight assignment will be given –
similar to the chart analysis section of the CFTe Level II exam. The class will end
Exam Registration Deadline:
at 18:00.
Friday, 22 August 2014 n On Sunday morning, the class will review the overnight assignment before
Complete information: continuing with the materials needed to familiarize the participants with the
information needed for the CFTe Level II exam.
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i/305430
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Contact:
charts which will be analysed.
[email protected] n There will be a review of all subjects in the late afternoon before the course ends
at 18:00.
The course will be presented n In preparation for the exam, candidates should review the IFTA Syllabus and Study
conference.ifta.org/2014/The Society of Technical Analysts (STA) is delighted to be hosting the 2014
International Federation of Technical Analysts’ Conference in London.
in English. Guide (CFTe Level II). Click on link to download.

Early Bird Cost:

The conference will take place on 9-11th October at the Waldorf Hilton Hotel in
28 • Springcentral
2014 London.
• The Swiss Technical
The theme of theAnalysis Journal
conference “Unravelling the DNA of the The Swiss Technical Analysis Journal • Spring 2014 • 29
market” will allow us to explore some of the underlying causes of market
behaviour.
We would especially like to see
contributions that draw from areas not
SAMT Board THE Swiss previously examined, and/or topics
tangential to technical analysis.
of technical The list is just a guide and should in
no way be considered restrictive. We
Directors analysis wish to make the Journal open to new
Daniel Stillhart
President and innovative ideas from all areas of
& Officers [email protected] journal technical analysis and those that connect
with it.

Submitting Contributions
The Swiss Technical Analysis Journal
is a quarterly publication established Submission of contributions to
by The Swiss Association of Market [email protected]
Material deadline for the
Technicians (SAMT). It is compiled by
a committee of SAMT colleagues. The
Language Summer 2014 issue
Swiss Technical Analysis Journal is Contributions must be submitted in
English with British grammar required. 30 June 2014
essential reading for academics, students
Patrick Pfister, CFTe Ron William, CMT, MSTA and practition
Vice President and Vice President and Writing Style Advertising
Head of Zürich Chapter Head of Geneva Chapter ical analysis in all arenas. It is an excellent
The Swiss Association [email protected] [email protected] Papers should be written in a thesis The Swiss Technical Analysis Journal
The Swiss Association reference source for anyone interested in
of Market Technicians style. is published three times a year and is
of Market Technicians technical analysis, containing a wealth
(SAMT) is a non- of resource material. published in A4 size, in pdf format only.
Founded 1987 References
profit organisation SAMT will accept advertisements in
(Civil Code Art Credibility And Recognition All texts referred to in the paper must this publication if the advertising does
60ff) of market analysis professionals in Switzerland, be appropriately referenced with a not interfere with its objectives.
The Swiss Technical Analysis Journal
founded in 1987. SAMT is a member of the International bibliography and endnotes (footnotes
has original contributions from its The appearance of advertising in SAMT
Federation of Technical Analysts (IFTA). will not be accepted.)
members covering developments in publications is neither a guarantee nor
Technical analysis is the study of prices and markets. It technical analysis in global markets. Responsibility for the accuracy of an endorsement by SAMT.
examines price behavior on an emprirical and statistical The Journal’s aim is to reach leading references and quotations is the
Alberto Vivanti Mario Valentino Guffanti, CFTe
basis. It extends to the study of all published information Vice President and Vice President practitioners and students of technical author’s. We expect the authors to check Advertising Policy
on price trends, volatility, momentum, cycles and the Head of Lugano Chapter of Lugano Chapter analysis throughout the world. thoroughly before submission. Advertising is subject to approval by
[email protected] [email protected]
interrelationship of prices, volume, breadth, sentiment The Swiss Technical Analysis Journal All references are to be included as SAMT. All advertisements must be
and liquidity. A comprehensive understanding of is a professional resource. Its online endnotes. No separate list of references non-discriminatory and comply with all
technical analysis requires a knowledge of statistics and publication on the SAMT website will or bibliography should be provided. applicable laws and regulations. SAMT
pattern recognition, a familiarity with financial history make its work available as a future reserves the right to decline, withdraw
and cycles. Figures, Charts and Tables and/or copy edit at their discretion.
resource to the community of technical
SAMT encourages the development of technical analysis analysts. Illustrations and charts must be referred Every care is taken to avoid mistakes,
and the education of the financial community in the uses to by Figure Number and source (when but responsibility cannot be accepted for
and applications of technical research and its value in the
Topics applicable). Tables must be referred to clerical error.
formulation of investment and trading decisions. SAMT SAMT is seeking papers that cover by Table Number and source.
Advertising Rates
has a wide range of activities including: Louis Grosjean Tim Straiton, FGA developments impacting, either directly
Length of Contribution Rate Size
Head of Treasury Head of Website Development or indirectly, on the field of technical
n Organising meetings on a broad range of technical [email protected] [email protected] Papers should be approximately 1,200
analysis; they may be drawn from such Inside covers 750 CHF 21.0 x 29.7 cm
subjects encouraging the exchange of information and to 3,000 words, with supporting graphs
areas as:
knowledge of technical analysis for the purpose of and charts.
Full page 500 CHF 19.3 x 26.9 cm
adding to the knowledge of its members. • Basic market analysis techniques 1/2 page 350 CHF 19.3 x 13.4 cm
n Preparing its members to sit for the Certified Financial • Indicators—sentiment, volume Format
Technician (CFTe) exams and the Masters level degree analysis, momentum, etc. Payment
We ask for submission in MS Word or
Master of Financial Technical Analysis (MFTA) in • Global and intra-global technical Pre-payment by wire transfer is required
analysis other text format. PDF format will not be
Switzerland. These exams are controlled by IFTA. accepted. Charts and graphs may be in for all ads. Bank details will be provided
• Styles of technical analysis upon request.
n Developing CFTe preparatory courses. gif or jpeg, but we ask that authors also
• Data
Marco Zahner keep a tif format in case it is required.
Auditor • The changing role of technical
[email protected] analysis in the investment
community.

30 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 31
We would especially like to see
contributions that draw from areas not
SAMT Board THE Swiss previously examined, and/or topics
tangential to technical analysis.
of technical The list is just a guide and should in
no way be considered restrictive. We
Directors analysis wish to make the Journal open to new
Daniel Stillhart
President and innovative ideas from all areas of
& Officers [email protected] journal technical analysis and those that connect
with it.

30 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 31
Technical Securities IFTA Certified Financial
Analysts Association Technician (CFTe)
- San Francisco (TSAA- Program
Samt encourages the development of The Cost of Membership SF) Webinars The IFTA Certificate (Certified Financial
technical analysis and the education of Each month the TSAA-SF presents webinars Technician) consists of CFTe I and CFTe
SAMT the financial community in the uses and
n Initial one time registration fee of SAMT that are often free or require a prepayment II, which together constitute a complete
CHF 50. of a small fee. The webinars are offered as professional program.
applications of the technical research
Membership and its value in the formulation of
n Annual membership fee of CHF
Education various times during the day - some early in
the morning (Pacific Time), some at noon or in
The two examinations culminate in the award
150. (The total cost for the first year of this internationally recognised professional
investment and trading decisions. the evening. Because of the time difference qualifi cation in Technical Analysis.
is CHF 200.) between San Francisco and Switzerland (9
SAMT offers the following benefits: n Only fully paid-up members have hours), SAMT members could view some of Examinations
access to the member area. the webinars during CEST evening hours. The exams test not only technical skills, but
n The organisation of meetings on a also international market knowledge.
n The subscription cost for each The next webinar is on Saturday, 13 April on
broad range of technical subjects Integrating Signals from the Credit Market CFTe I
encouraging the exchange of subsequent year is CHF 150. This multiple-choice exam covers a
into Equity Trading Strategies by Dave Klein,
information and knowledge of n Subscription expiry results in partner and co-founder of Capital Context wide range of technical knowledge and
technical analysis for the purpose blocked access to the member area. LLC. This webinar will be from 10:00-11:30 understanding of the principals of Technical
of adding to the knowledge of the A standing annual payment order is AM PDT (19:00-20:30 CEST). The fee for Analysis, usually not involving actual
this webinar is $US 10 (the member fee). experience.
members. therefore recommended.
Click to see the schedule of webinars The CFTe I exam is offered in English, French,
n The organisation of presentations
Subscription Payments available. Italian, German, Spanish, and Arabic, and
from guest speakers from around the TSAA-SF is the oldest society in the U.S. is available, year-round, at testing centers
world. Please use the Register Here link devoted to the study and development of throughout the world, from IFTA’s computer-
below for executing your payment and based testing provider, Pearson VUE.
n The possibility to sit for the Certified technical analysis of stocks and commodities.
Financial Technician(CFTe) exams don’t forget to make sure your name is TSAA-SF is an IFTA Member Society. CFTe II
at a discounted rate. These exams mentioned in the payment (especially This exam incorporates a number of
questions requiring an essay based analysis
are controlled by IFTA. for members whose subscription is paid and answers. For this, the candidate should
n The “IFTA Update” - a quarterly by/through their employers). demonstrate a depth of knowledge and
newsletter from the International experience in applying various methods
Also please note that by registering as a of technical analysis. The exam provides
Federation of Technical Analysts. member of SAMT you declare that you a number of current charts covering one
n Access to the SAMT database have read, fully understand and agree specific market (often an equity), to be
covering trading strategies, chart to the content of the SAMTDisclaimer analysed, as though for a Fund Manager.
pattern recognition, technical The CFTe is offered in English, French,
statement which appears below.
indicators and a glossary of terms. Italian, German, Spanish and Arabic bi-
Payments are made to: annually, typically in April and October.
n A generous discount on the annual
IFTA Conference admission fee. Curriculum
Swiss Association of Market
Technicians S.A.M.T. Important Changes to The program is designed for self-study. Local
societies may offer preparatory courses to
assist potential candidates. Syllabus and
Swiss Postal account Nr. 80-52569-5
IBAN: CH77 0900 0000 8005 2569 5
the CFTe Program Study Guides are available on the IFTA
website.

Register Here Syllabus and Study Guides To Register

Please visit the website for registration
CFTe Level I (offered all year long) and CFTe Level II (offered biannually in April details.
and October) candidates should study the current Syllabus and Study Guide for CFTe http://www.ifta.org/certifications/financial/
Level I and CFTe Level II for any exam taken through 30 September 2014, and the Cost
new Syllabus and Study Guide for any exam taken on or after 1 October 2014. IFTA Member Colleagues
CFTe I $500 US
SAMT Disclaimer
The Swiss Association of Market Technicians (SAMT) is a not-for-profit organization that does not hold a Swiss Financial Services License. It is the aim of the SAMT to promote the theory and practice of technical analysis, and to assist members in
Languages CFTe II $800* US
becoming more knowledgeable and competent technical analysts, through meetings and encouraging the interchange of materials, ideas and information. In furthering its aims the SAMT offers general material and information through its website
Effective on 1 October 2014, the CFTe I will only be available in English, German Non-Members
and publications therein.
CFTe I $700 US
The information provided on the SAMT website has been compiled for your convenience and made available for general personal use only.
SAMT makes no warranties implied or expressly, as to the accuracy or completeness of any information contained on the SAMT web site. The SAMT directors, affiliates, officers, employees, agents, contractors, successors and assigns, and Arabic. The CFTe II will be offered in English, German, Arabic, Italian, French,
CFTe II $1,000* US
will not accept any liability for any loss, damage or other injury resulting from its use.
SAMT does not accept any liability for any investment decisions made on the basis of this information, nor any errors or omissions on the SAMT website. This web site does not constitute financial advice and should not be taken as and Spanish through 8 October 2014. After this date, the exam will only be available
*Additional Fees (CFTe II only):
such. SAMT urges you to obtain professional advice before proceeding with any investment.
The material may include views and statements of third parties, which do not necessarily reflect the views of the SAMT. Information on this website is maintained by the people and organization to which it relates. The SAMT believes in English, German, and Arabic.
that the material contained on this website is based on the information from sources that are considered reliable. Although all care has been taken to ensure the material contained on this website is based on sources considered reliable $250 US translation fee applies to non-
we take no responsibility for the relevance and accuracy of this information.
English exams
Why Certify?
Before relying or acting on the material, users should independently verify its accuracy, currency, completeness and relevance for their purposes. Before making any financial decision it is recommended that you seek appropriate
professional advice. The SAMT website may contain links to other websites, these are inserted merely as a convenience and the presence of these links does not constitute an endorsement of the material at those sites, or any
associated organizations, products or services.
$100 US applies for non-IFTA proctored
exam locations
Obtaining the CFTe or MFTA designation(s) demonstrates that you have achieved
the highest level of expertise in the field of technical analysis. Join an elite group
Journal eNewsletter: http://www.technicalanalyst.co.uk/eNewsletter/index.htm who have already recognized the importance of these certification(s) in elevating
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Technical Analysts.

32 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 33
Technical Securities IFTA Certified Financial
Analysts Association Technician (CFTe)
- San Francisco (TSAA- Program
Samt encourages the development of The Cost of Membership SF) Webinars The IFTA Certificate (Certified Financial
technical analysis and the education of Each month the TSAA-SF presents webinars Technician) consists of CFTe I and CFTe
SAMT the financial community in the uses and
n Initial one time registration fee of SAMT that are often free or require a prepayment II, which together constitute a complete
CHF 50. of a small fee. The webinars are offered as professional program.
applications of the technical research
Membership and its value in the formulation of
n Annual membership fee of CHF
Education various times during the day - some early in
the morning (Pacific Time), some at noon or in
The two examinations culminate in the award
150. (The total cost for the first year of this internationally recognised professional
investment and trading decisions. the evening. Because of the time difference qualifi cation in Technical Analysis.
is CHF 200.) between San Francisco and Switzerland (9
SAMT offers the following benefits: n Only fully paid-up members have hours), SAMT members could view some of Examinations
access to the member area. the webinars during CEST evening hours. The exams test not only technical skills, but
n The organisation of meetings on a also international market knowledge.
n The subscription cost for each The next webinar is on Saturday, 13 April on
broad range of technical subjects Integrating Signals from the Credit Market CFTe I
encouraging the exchange of subsequent year is CHF 150. This multiple-choice exam covers a
into Equity Trading Strategies by Dave Klein,
information and knowledge of n Subscription expiry results in partner and co-founder of Capital Context wide range of technical knowledge and
technical analysis for the purpose blocked access to the member area. LLC. This webinar will be from 10:00-11:30 understanding of the principals of Technical
of adding to the knowledge of the A standing annual payment order is AM PDT (19:00-20:30 CEST). The fee for Analysis, usually not involving actual
this webinar is $US 10 (the member fee). experience.
members. therefore recommended.
Click to see the schedule of webinars The CFTe I exam is offered in English, French,
n The organisation of presentations
Subscription Payments available. Italian, German, Spanish, and Arabic, and
from guest speakers from around the TSAA-SF is the oldest society in the U.S. is available, year-round, at testing centers
world. Please use the Register Here link devoted to the study and development of throughout the world, from IFTA’s computer-
below for executing your payment and based testing provider, Pearson VUE.
n The possibility to sit for the Certified technical analysis of stocks and commodities.
Financial Technician(CFTe) exams don’t forget to make sure your name is TSAA-SF is an IFTA Member Society. CFTe II
at a discounted rate. These exams mentioned in the payment (especially This exam incorporates a number of
questions requiring an essay based analysis
are controlled by IFTA. for members whose subscription is paid and answers. For this, the candidate should
n The “IFTA Update” - a quarterly by/through their employers). demonstrate a depth of knowledge and
newsletter from the International experience in applying various methods
Also please note that by registering as a of technical analysis. The exam provides
Federation of Technical Analysts. member of SAMT you declare that you a number of current charts covering one
n Access to the SAMT database have read, fully understand and agree specific market (often an equity), to be
covering trading strategies, chart to the content of the SAMTDisclaimer analysed, as though for a Fund Manager.
pattern recognition, technical The CFTe is offered in English, French,
statement which appears below.
indicators and a glossary of terms. Italian, German, Spanish and Arabic bi-
Payments are made to: annually, typically in April and October.
n A generous discount on the annual
IFTA Conference admission fee. Curriculum
Swiss Association of Market
Technicians S.A.M.T. Important Changes to The program is designed for self-study. Local
societies may offer preparatory courses to
assist potential candidates. Syllabus and
Swiss Postal account Nr. 80-52569-5
IBAN: CH77 0900 0000 8005 2569 5
the CFTe Program Study Guides are available on the IFTA
website.

Register Here Syllabus and Study Guides To Register

32 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 33
l Zürich

SAMT Centro di Studi Bancari

Swiss Futures and Options
Partner Founded by the Ticino’s Banking Association
Association in 1990, Centro di Studi
Bancari (CSB) is an institution that The Swiss Futures and Options
Societies promotes and provides education, Association (SFOA), previously the
training and continuous update for Swiss Commodities, Futures and Options
Association, was founded in 1979 as a
banking, fiduciary, insurance and legal-
non-profit professional association for
ZÜrich
financial professionals in the financial
the purpose of promoting derivative
markets. CSB provides courses, training
financial instruments, particularly Chapter
courses for various certifications
and hosts conferences. The training standard futures and options contracts on
programs are recognized at local, financial instruments and commodities, events
national and international levels, as well to the widest possible audience, and to
International Federation of
as by many private associations, such as serve the interests of its members. SFOA
Technical Analysts (IFTA)
SwissBanking. CSB can also organise serves users of commodity and financial
IFTA is a non-profit federation of 26
individual country societies who individually tailor-made training, leveraging on its derivatives, as well as professionals,
and jointly dedicate themselves to inter-disciplinary competences in the their institutions and the exchanges.
n Research, education, camaraderie and field of banking, finance, compliance, www.sfoa.org
dissemination of technical analysis management and taxation. Ian McAvity spoke in to the
of world markets. The IFTA societies www.csbancari.ch Groupement
Zürich Chapter on 4 February.
support sharing technical analytical Suisse des
methodology that at its highest level is Conseils His slides can be found at
a valid, and often-indispensable element en Gestion http://samtjournal.uberflip.
in the formulation of a reasonable com/i/258886
basis for investment decisions. Indepenats
n Promotion of the highest standards
(GSCI)
of professional conduct, international CSCGI is a group of economic interests
cooperation and scholarship between all Swiss CFA Society formed by specialized independent
its Member and Developing Societies
The Swiss CFA Society boasts over financial intermediaries who are
within all arenas of technical analysis.
n Providing 2,400 members in Switzerland, against confirmed professionals in the financial
centralized international
exchange for information and data of barely 100 in 1996 at inception. It is services industry. The group is open
various financial centers while respecting the largest CFA Institute society in to contacts with any person interested
individual country and Society business continental Europe. With more than in the business of wealth management
practices, legal structures and customs. seeking to promote dialogue with the
2,000 candidates taking the rigorous
n Encouraging the standardization of
Chartered Financial Analyst® (CFA®) banking partners and authorities at all
education and testing of its constituent levels. Their goals are to:
members in technical analysis, making exam in Switzerland each year, the
sure that each individual country’s society’s impact on the Swiss investment • Promote contacts between
security analyst licensing, legal and community is self-evident. professionals motivated by the same Apres the presentation
language /communication priorities desire for independence, wishing to Martin Pring gave to the
continue to be individually accepted. It was the first society of CFA
maintain and develop relationships SAMT Zürich Chapter
n Fostering the establishment of individual
charterholders in the EMEA region with counterparts.
to be directly affiliated with the on 19 March. Martin is at
societies of technical analysts without • Find common ground for
bias in regard to race, creed or religion. prestigious CFA Institute, which center left.
exchanging experiences and ideas, a
It supports the need for maintaining a includes more than 110,000 members His slides can found at
field where diversity and novelty are
free and open worldwide markets under in 139 countries. http://samtjournal.uberflip.
normal, and in particular crisis periods. prevailing.
The vision of the Swiss CFA Society is • The enrichment of the links that com/i/292269
As a growing bridge of communication
worldwide, IFTA remains open to methods to be a leader in fostering the highest can be forged on a friendly and
of technical analysis, while encouraging the level of knowledge, professionalism, professional level within a well
consideration and support of membership for and integrity in the investment defined and recognized framework
both developing and established societies. business. to favour professional consultation
and close dialogues.
www.ifta.org www.cfasociety.org/switzerland
www.gscgi.ch

34 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 35
l Zürich

SAMT Centro di Studi Bancari

34 • Spring 2014 • The Swiss Technical Analysis Journal The Swiss Technical Analysis Journal • Spring 2014 • 35
The Swiss Association of Market Technicians

GenÈvE • Lugano • ZÜrich

36 • Spring 2014 • The Swiss Technical Analysis Journal

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4 Spring 2014 SAMT Journal PDF

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4 Spring 2014 SAMT Journal PDF

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The swiss

The Swiss Association of Market Technicians

GenÈvE • Lugano • ZÜrich

Ian McAvity spoke in

ian Mcavity spoke in

crafted for: Journal Pearls of Wisdom from a Master

Market Analyst exists to give you the edge

of Market Technicians with any investment.

crafted for: Journal Pearls of Wisdom from a Master

Market Analyst exists to give you the edge

of Market Technicians with any investment.

3. I can pick the parameters that will work in the

3. I can pick the parameters that will work in the

Hank, then IFTA Vice Chair,

Hank, then IFTA Vice Chair,

Trevor Neil, MSTA MCSI

Trevor Neil, MSTA MCSI

Protect against losses

Protect against losses

I have simulated two distinct tactics: Conclusion

I have simulated two distinct tactics: Conclusion

Early Bird Cost:

Early Bird Cost:

Register Here Syllabus and Study Guides To Register

Register Here Syllabus and Study Guides To Register

SAMT Centro di Studi Bancari

SAMT Centro di Studi Bancari

GenÈvE • Lugano • ZÜrich

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