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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: rocklobster who wrote (6372)	1/10/1998 2:46:00 PM
From: Douglas Webb	Read Replies (2) \| Respond to of 14162

I am going to start an account with 10k and try trading a stock using this method. I am also concerned about when this method may be inappropriate. Let's follow this one and test it with actual trading. Cool...but don't hold me responsible for your 10k! I'm hoping to be able to use this chart to earn back the 10k I've lost over the past seven months. The method works best in a trending environment. In a sideways-trading environment, you could get lots of alternating black and white bars, and if you trade based on those you're going to lose money. But, you can adjust the chart so that these alternating bars get absorbed into one bar, so you won't get any signals unitl a trend forms. There are two variables which are used to fine-tune the TLB chart: frequency, and sensitivity. The chart is based on closing prices, but it can be weekly, daily, hourly, half-hourly, etc. closing prices. This is the frequency. Unfortunately, the site I'm getting historical prices from only has daily prices. I could probably get weekly and monthly closes from that, but I think those are probably too long-term for the sort of trading we do. The second variable is the sensitivity, which can be two-line break, three-line break, four-line break, etc. As I said before, up to a ten-line break is used for very long-term trends. I think we'll mostly use the two- and three-line breaks, which are my high and medium sensitivity settings. Re: TXN: That was a stock split in November? Interesting, because the price was $30 off it's high and falling at that point, and continued falling afterward. I didn't think splitting stocks behaved that way. In any case, the TLB chart identified the downtrend that started before the split, and tracked the continuation of it after the split. Doug.