Study of Signals (SoS)

[j.c.]

Equities Magazine's Discovery Day XII Conference
will be held on Friday , September 16 , 2005 at The Yale Club, 50 Vanderbilt Avenue. NY, NY 10017. Top executives from ten emerging growth companies and three countries will make 30-minute presentations between 8 a.m. and 3:30 p.m. Each executive will advance their strategies, growth plans and why they believe their stock may be a bargain.

FURA DDSI MKTE PIVX BIPH RPTN AVSO SNYL MIDS AVMD

FURA


DDSI


MKTE


PIVX


BIPH


RPTN


AVSO


SNYL
http://finance.yahoo.com/q?s=SNYL.PK

MIDS
http://finance.yahoo.com/q?s=MIDS.PK

AVMD
http://finance.yahoo.com/q?s=AVMD.PK

[jmichael7]

UVCL / ESAN ..hmmm which is the better chart play at this point...


ESAN - only 16,805,076 OS

[j.c.]

Strong Volume Gainers
ACKO APAC ATEG ATSX CYGN DIAAF PTGC QTEK SENR TCHL TRINC UVCL VICI VRSO

ACKO .335


APAC .83


ATEG .029


ATSX .195


CYGN .13


DIAAF .013


PTGC .815


QTEK .087


SENR .18


TCHL .026


TRINC .27


UVCL .015


VICI .014


VRSO .49

[j.c.]

Moved Below Lower Bollinger Band
ALRX CTCH LMMG MMAM MRMR MRPI MWIS VRDE

ALRX .08


CTCH .53


LMMG .048


MMAM .03


MRMR .075


MRPI .023


MWIS .13


VRDE .042

[j.c.]

FURA .22 Dragonfly Doji



Dragon fly doji form when the open, high and close are equal and the low creates a long lower shadow. The resulting candlestick looks like a "T" with a long lower shadow and no upper shadow. Dragon fly doji indicate that sellers dominated trading and drove prices lower during the session. By the end of the session, buyers resurfaced and pushed prices back to the opening level and the session high.

The reversal implications of a dragon fly doji depend on previous price action and future confirmation. The long lower shadow provides evidence of buying pressure, but the low indicates that plenty of sellers still loom. After a long downtrend, long black candlestick or at support, a dragon fly doji could signal a potential bullish reversal or bottom. After a long uptrend, long white candlestick or at resistance, the long lower shadow could foreshadow a potential bearish reversal or top. Bearish or bullish confirmation is required for both situations.
http://stockcharts.com/education/ChartAnalysis/candlesticks2.html

watching... a couple upward gaps also.

[j.c.]

watching...
ACUP AMW DJRT EYII IEVM MSEV WHAIE ZENX

ACUP .085


AMW .39


DJRT .23


EYII .137


IEVM .27


MSEV .018


WHAIE .38


ZENX .34

[j.c.]

Moved Below Lower Bollinger Band
ADGD AMRE BWEB CIRT DRGO EPYH LMMG MEDC MMXT ONEV QOIL TIDE USTI VSUS VTSI WTER

ADGD .085


AMRE .025


BWEB .49


CIRT .027


DRGO .105


EPYH .013


LMMG .062


MEDC .47


MMXT .027


ONEV .037


QOIL .381


TIDE .835


USTI .066


VSUS .29


VTSI .14


WTER .195

[j.c.]

Oversold with an Improving RSI
OCCM .29

[j.c.]

Moved Below Lower Bollinger Band
CDIK DRGG EFCR GPSN JAVO NIHK PAPO PFCE PMED PRVB USXP VITS VTLV

CDIK .025


DRGG .22


EFCR .089


GPSN .083


JAVO .30


NIHK .071


PAPO .009


PFCE .12


PMED .012


PRVB .22


USXP .001


VITS .055


VTLV .044

[j.c.]

Moved Below Lower Bollinger Band
ABTG AMRE CBAI CIRT CPICF DIGL EMRG FMLY IFMX INCA INSN POPT SMTR STIV SWME UALAQ USTT

ABTG .191


AMRE .028


CBAI .325


CIRT .029


CPICF .035


DIGL .22


EMRG .49


FMLY .032


IFMX .15


INCA .008


INSN .001


POPT .011


SMTR .09


STIV .134


SWME .218


UALAQ .645


USTT .141

[j.c.]

Stocks in a New Uptrend (ADX)
ITEX MBEU VNBL

ITEX .60


MBEU .74


VNBL .098

[j.c.]

HQSM .395


STTC .248


TCHL .018


VTSI .176


WPRO .122


WVWC .36


YGDC .745

[j.c.]

Strong Volume Gainers
BPWRF CLSI CRDS CTVH DBMI ETLT GIMUF HQSM STTC TCHL VTSI WPRO WVWC YGDC

BPWRF .48


CLSI .017


CRDS .89


CTVH .17


DBMI .45


ETLT .498


GIMUF .33

[j.c.]

Oversold with an Improving RSI
FMXI .25

[j.c.]

MBEU .77


MCHM .22


RMSG .112


SATC 1.50


SENR .125


TDIH .06


TEKC .84


UTYW .205


VNBL .11


WEBB .36

[j.c.]

Strong Volume Gainers
ASTT CDCOR CHMS ECVG ESNR GLNC GNBT HQSM INSQ MBEU MCHM RMSG SENR TDIH TEKC UTYW VNBL WEBB

ASTT .60


CDCOR .37


CHMS .69


ECVG .002


ESNR .61


GLNC 1.16


GNBT .61


HQSM .287


INSQ .005

[j.c.]

Oversold with an Improving RSI
HTVL TGEN

HTVL .295


TGEN .65

[j.c.]

Richard Beales: Bad omens

By Richard Beales in New York 1 hour, 32 minutes ago

The first chairman of the US
Federal Reserve, Charles S. Hamlin, took office in August 1914, less than a week after Britain declared war on Germany. His successor two years later, W.P.G. Harding, had been in charge only eight months when the US entered the first world war.

Indeed, every Fed chairman has had a crisis to deal with in his first year - or so Jack Malvey, chief fixed income strategist at Lehman Brothers (NYSE:LEH - news), only half-jokingly observes.
Alan Greenspan, the incumbent, had his own baptism of fire when stock markets crashed in October 1987, two months after he took office.

Mr Greenspan's tenure is set to end next January. Those in the running to succeed him might wonder what surprises the financial markets have in store for them. No one can foresee the exact shape or timing of the next crisis. But, despite historically low volatility and other benign conditions in financial markets, many worry that we are closer to the next market shock than to the last.

That occurred in 1998, when problems in Asia and Russia precipitated the near collapse of the Long Term Capital Management hedge fund. That, at least, was the most recent genuine systemic threat to the financial system, according to a report published last week under the leadership of Gerald Corrigan, Goldman Sachs (NYSE:GS - news) managing director and former chairman of the New York Federal Reserve.

The previous such shock, by the same definition, was the 1987 crash that greeted Mr Greenspan. The only other example in the past 25 years was the emerging market debt crisis that began in August 1982 when Mexico announced that it could no longer afford to pay interest on its debts.

Mr Corrigan believes the financial system is more robust than it was in 1998, thanks in part to the "therapeutic" effects of LTCM and subsequent lesser crises. But he warns against the delusion that the risks have disappeared. "There will be another financial shock," he says.

Aside from the first-year curse for Fed chairmen, some doomsayers use another rule of thumb: US presidents stoke economic growth as they approach the end of their first term, with the result that conditions can only deteriorate soon after they are re-elected.
President Bush's huge first term tax cuts fit the story; the hangover headache, however, is yet to start throbbing.

Where might the Cassandras look for trouble? While a war like the one that ambushed the early Fed chairmen might seem unlikely, another act of terrorism on the scale of 9/11 is not unfeasible. But because neither the probability nor the impact of such an event can be quantified, the markets tend to ignore the possibility.

The potential for macroeconomic shocks is also hard to assess. What would be the effect of a plunge in the dollar, for example, perhaps triggered by concerns over America's fiscal deficit? Or of the feared sell-off by Asian central banks of their huge holdings of US government and agency bonds? Or an abrupt economic slowdown in China?

Other events should be easier to foresee. Investors in corporate and emerging market debt could, for example, look ahead to the almost inevitable turn in the credit cycle and demand higher premiums to compensate for the risk that today's historically low default rates will eventually creep upwards. Instead, lenders seem to be getting less demanding, not more.

That has certainly been the case for many lenders involved in the roaring US property market. Yet the consequences of even a localised downturn could be severe - credit problems in the mortgage market or, perhaps more likely, a collapse in consumer spending, the keystone of the US economy.

None of these things have happened yet. And if some in the financial community appear complacent, it could simply reflect John Maynard Keynes' observation that "a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation".

By the same token, the investment environment can turn sharply negative "if the animal spirits are dimmed and the spontaneous optimism falters", as the great economist put it.

That suggests even the weather might affect the markets - as Keynes pointed out. And The simple fact of Mr Greenspan's absence after more than 18 years could be unnerving for some.

Whoever takes over at the Fed will be hoping that the unfamiliarity of a new chairman will not, by itself, be enough to dim the animal spirits of the financial markets.

http://news.yahoo.com/news?tmpl=story&u=/ft/20050805/bs_ft/fto080520051142525487

[j.c.]

Mon 1:54pm USGL.OB U S GOLD CORP Files SEC form 8-K, Regulation FD Disclosure, Financial Statements and Exhibits - EDGAR Online

Mon 1:00pm BCON Beacon Power Announces Acceptance of Flywheel Demonstration System by California Energy Commission - Business Wire

Mon 12:46pm USGL.OB U.S. Gold Reports NovaGold Purchases Stock from Existing Shareholders - Business Wire

Mon 12:34pm MDII Hummingbird Selects MDI to Provide Command and Control Platform for Integration of Video Surveillance and Airport Checkpoint Technologies - Business Wire

Mon 6:00am CGHI.OB Centurion Gold Accepts Offer for Buyout at $.60 a Share - Business Wire

[j.c.]

Strong Volume Gainers
BCON CGHI MDII USGL

BCON 1.66


CGHI .40


MDII 1.81


USGL .81

[j.c.]

Study Shines Light on Earnings Statements

By ELLEN SIMON, AP Business Writer Sat Jul 30,10:50 AM ET

NEW YORK - Gaming a financial statement to meet earnings expectations has its own colorful nomenclature: cookie-jar accounting, channel stuffing and "the big bath." If a company's earnings meet analyst estimates, the stock gets boosted. If it doesn't, it's busted. But wise investors remember there are many ways a company can prettify its earnings.

A study by independent research firm RateFinancials, based in New York, concluded that nearly 33 percent of Standard & Poor's 500 companies file financial statements that don't accurately reflect their financial condition. Victor Germack, RateFinancials president, wrote about the study under the headline, "How Good are Those Earnings ... Really?"

A series of $1 billion-plus restatements, including HealthSouth Corp., Computer Associates International Inc. and the nation's largest insurer, American International Group Inc., have driven that question home.

More restatements are coming. Fannie Mae is expected to file a multibillion-dollar restatement once it untangles it books. Even number-crunching tax preparer H&R Block Inc. is working on a restatement.

Adjusting a company's finances to meet expectations is called "earnings management" or "earnings smoothing." In most cases, it's legal, if misleading.

The techniques involved "are endless," wrote John A. Tracy, author of 10 books on accounting and finance, including the classic "How to Read a Financial Report."

"A business can engage in deferred maintenance and not do normal things to keep its property and equipment in tiptop shape," wrote Tracy, an emeritus professor at University of Colorado. A company "could delay these costs until next year, thereby not recording expenses this year, which boosts its bottom-line profit for the year" he wrote. Or, it could put off employee training programs or advertising outlays until the next year.

Other methods of tweaking the books are more questionable.

For instance, there's channel stuffing, when a company makes sales look better than they are by shipping products to customers with the understanding those products can later be returned, or bought at a deep discount, said Itzhak Sharav, an accounting professor at Columbia University.

One of the most notorious channel stuffers was former Sunbeam Corp. CEO Albert Dunlap. Sunbeam shipped $1.5 million in barbecue grills to a distributor in March 1997. Although all the grills were returned at the end of the summer, Sunbeam had already booked the revenue. This was but one bit of Dunlap's accounting artifice. Under an agreement with the
Securities and Exchange Commission, he later paid a $500,000 fine and said he will never again hold a leadership role in a public company.

Another way to doll up the books is the cookie jar reserve. Companies can put aside a reserve of cash when times are good, then use it later.

Or they can take a bigger than needed hit when times are bad. Telecom equipment maker Nortel Networks Corp. did this when it took $18.4 billion charges for restructuring costs, bad customer debts and obsolete inventory over three years at the end of the telecom boom.

When it became clear that the reserves were greater than they needed to be, the company strayed from accounting rules and began dipping into them. Finance employees used the overstated reserves, starting in 2002, to "close the gap" between actual earnings and earnings targets, said a report by an outside law firm and consulting company that Nortel released in January.

A corollary lesson to the Nortel story is that companies can use accounting tactics to make one quarter, or one year, look worse than it really was, often by putting aside reserves. This is the practice called "the big bath." It's also very common for companies to announce big fourth-quarter writedowns, taking charges for restructurings planned the following year, to get the bad news out of the way.

Analysts question companies whose earnings seem as reliable as a collie.

"Be a little bit careful about giving too much credit to companies that are too reliable in meeting the numbers," said David W. Tice, president of Behind the Numbers LLC, an institutional research service. "Sometimes companies get a premium for that because investors feel like they're not going to be disappointed."

Rewards in the market come from risk taking. A wise investor knows there's always a chance of disappointment.

http://news.yahoo.com/news?tmpl=story&u=/ap/20050730/ap_on_bi_ge/wall___main

[j.c.]

I will be posting these studies less often for a while. Frequent HubHangs have encouraged me to spend more time on other projects.

Delayed results from StockCharts are really no better than a dart board, anyway.
Will start looking at MSN predefined next. They are still delayed, but not a whole day.
http://moneycentral.msn.com/investor/finder/predefstocks.aspx

[j.c.]

Tue 9:00am BBSE.OB Barnabus Gains Worldwide Rights to Proprietary Solar Technology - Market Wire

Mon 6:00am MBEU.OB Morgan Beaumont Expands Technology Department; Accelerates Build-Out of SIRE Network(TM) - PR Newswire

Fri Jul 22 MBEU.OB MORGAN BEAUMONT INC Files SEC form 8-K, Regulation FD Disclosure, Other Events - EDGAR Online

Thu Jul 21 GBTVK.OB Granite Broadcasting Corp Earnings Call scheduled for Wed, Aug 3 - CCBN

Mon Jul 18 MBEU.OB Morgan Beaumont Raises $5 Million Through Private Placement - PR Newswire

Thu Jul 14 SNNW.OB Aventura Buys Stake in VoIP Blue Chip Exchange - PrimeZone Media Network

[j.c.]

Stocks in a New Uptrend (ADX)
BBSE GBTVK MBEU SAMC SITG SNNW

BBSE .667


GBTVK .35


MBEU .69


SAMC .90


SITG .25


SNNW .002

[j.c.]

Oversold with an Improving RSI
NIHK .105


Nighthawk Systems Announces Hiring of Russell Medina
Business Wire (Wed, Jul 13)

[j.c.]

Wed 3:01pm TRDY.OB TRUDY CORP Files SEC form 10QSB/A, Quarterly Report - EDGAR Online

Wed 9:00am TRDY.OB TRUDY CORP Financials - EDGAR Online Financials

Tue 5:00am TGLO.OB The .travel Registry and WTO Agree on Priority Right to States to Ensure Each Country's Place Name Rights are Preserved - PR Newswire

Sat Jul 16 STKR Investor Update: The Rosen Law Firm Reminds StockerYale Investors of the July 24, 2005 Deadline to Participate in the Class Action - STKR - PrimeZone Media Network

Fri Jul 15 TRDY.OB TRUDY CORP Files SEC form 10KSB, Annual Report - EDGAR Online

Thu Jul 14 STKR STOCKERYALE INC Files SEC form 8-K, Termination of Material Agreement - EDGAR Online

Wed Jul 13 NBDR.OB No Borders Founder Interviewed by Businessweek Magazine in Article Entitled ``Embracing Illegals -- Companies Are Getting Hooked on the Buying Power of 11 Million Undocumented Immigrants'' - Business Wire

Tue Jul 12 MRKL.OB HomelandDefenseStocks.com Reports: As Terrorist Attacks Continue, Need for Explosives Detection System Technology Surges - Market Wire

[j.c.]

Stocks in a New Uptrend (ADX)
MRKL NBDR SHQCW STKR TGLO TRDY

MRKL .107


NBDR .23


SHQCW .91


STKR .87


TGLO .15


TRDY .01

[j.c.]

Oversold with an Improving RSI
AGIS .077

[j.c.]

Tue 4:58pm HDVY.OB HEALTH DISCOVERY CORP Files SEC form 8-K, Sale of Equity - EDGAR Online

Mon 11:37am MBTT.OB MB Tech Updates Product Status and Projects - PrimeZone Media Network

Mon 6:05am HDVY.OB HEALTH DISCOVERY CORP Files SEC form 8-K, Change in Accountant, Non Reliance on Prev Financials, Audits or Interim Re - EDGAR Online

Fri Jul 15 HDVY.OB Company Profile for Health Discovery Corporation - Business Wire

Thu Jul 14 HDVY.OB Health Discovery Corporation Announces Approval and Issuance of Multiple Patent Applications Covering SVM Methods - Business Wire

Mon Jul 11 WAVX Wave Systems' Partner Reports It Has Shipped More Than One Million Devices With Wave's Secure Software Technology - Business Wire

[j.c.]

Stocks in a New Uptrend (ADX)
HDVY MBTT PRCS WAVX

HDVY .235


MBTT .072


PRCS .64


WAVX .88 (also listed under CCI buy signals)

[j.c.]

Fri Jul 15 VNWI VIA NET WORKS INC Files SEC form 8-K, Entry into Material Agreement, Financial Obligation Matter, Financial Statement - EDGAR Online

Fri Jul 15 URIX.OB URANIUM RESOURCES INC /DE/ Files SEC form 8-K, Entry into Material Agreement - EDGAR Online

Tue Jul 12 VNWI VIA NET.WORKS Announces Sale of Amen Group and Its VIA Operations in USA, Portugal and Netherlands to Claranet - PR Newswire

Tue Jul 12 ITUI.OB I2 TELECOM INTERNATIONAL INC Files SEC form 8-K, Entry into Material Agreement, Sale of Equity, Financial Statements - EDGAR Online

Mon Jul 11 CIRT.OB CirTran Projects Record Sales and First-Ever Profitable Quarter - Business Wire

Thu Jul 7 CIRT.OB CirTran Hits $80 Million Mark in First-Half New Business Booked with $15.75 Million Contract to Build Sold-on-TV Blow Dryers - Business Wire

Thu Jul 7 ITUI.OB i2Telecom International Introduces $24.99 Unlimited Global Calling Plan - Business Wire

[j.c.]

Stocks in a New Uptrend (ADX)
CIRT ITUI URIX VNWI VOXW

CIRT .038


ITUI .37


URIX .495


VNWI .09


VOXW .042

[j.c.]

Management Vocabulary for the Trader

In many letters to editors of various magazines, as well as letters to our company, the question always arises about the proper terminology that an author has used. Also, many people aren’t sure about what the various "management" terms mean. In answer to several people’s request, we are going to give the descriptions of various terms, as well as the basics of how others use them. The confusion stems from the three terms: Portfolio Management, Money Management, and Trade Management.

Portfolio Management

Portfolio Management is the technique of assigning money to different investment products or different securities within the same product. Asset Allocation falls under this category. Benjamin Graham in "The Intelligent Investor" uses techniques such as this and describes moving assets between Stocks, Bonds, and Gold. Mutual Fund managers use various techniques for determining how much money should be devoted to any particular stock and what percentage of the entire portfolio is to be retained as cash reserves.

When looking at Portfolio Management strategies (and there are literally thousands of them) take into account that they can have very different goals in mind as well as many different philosophies behind those goals. More often than not you will see different strategies claiming to be designed for the same group of people. Here is an example of a Portfolio Management philosophy for one individual’s life:

30 Years Old:
70% Mutual Funds
20% Cash
10% Stocks

50 Years Old:
20% Mutual Funds
10% Cash
70% Stocks

70 Years Old:
20% cash
80% Stocks

The philosophy behind this is that at the beginning of an investment life (around 30 years old) that there is little funding for anyone to play with and so a conservative approach is taken to allow assets to build up over the years. This also leaves enough cash available for unseen emergencies. By the time they become 50 years old they have sufficient assets to start playing the market hard as the money in Mutual Funds and cash should be sufficient enough to defend against any real potential hardship. By the time they become 70 any potential long-term gains are viewed to be unrealistic for the life expectancy. Active stock ownership is encouraged since the cash and shares are usually easily distributed to beneficiaries when the time becomes necessary.

Philosophy #2.

30 Years Old:
30% Mutual Funds
10% Cash
60% Stocks

50 Years Old:
50% Mutual Funds
10% Cash
40% Stocks

70 Years Old:
80% Mutual Funds
10% cash
10% Stocks

The general philosophy behind this strategy is that while people are young (and most recoverable from financial stresses) that they should take their most active approach to acquiring immediate high gain returns. This acquisition phase of their life flows into the 50-year-old range with the assumption that since they have a significant portfolio by this time that they are now looking to protect some of it while still playing the market significantly. By the time they become 70 they are into an almost straight protection phase, assuring that their beneficiaries are well protected.

Both of these strategies have merit. Both are designed with sound principles. Both are designed with the same groups of people in mind. But they have very different approaches and very different outcomes. It would be more accurate to say that instead of one being better than the other, that one is better for a certain type of investor than another. Different people have different comfort levels, and the comfort level of one strategy may not be (usually isn’t) for all investors.

Portfolio Management is also the assigning and movement of assets between securities in a related field. So it you have 60% of your account in stocks, the way you manage your portfolio determines what particular stocks you’re in at any given time. The rules for this type of management are even more subjective than that of overall Portfolio Management, but is usually not as much of a problem as many (experienced) investors and traders have their own rules for determining what securities they are in (either by a trading system, fundamental information, or other method).

Money Management

Money Management is the technique of applying certain assets to individual securities at different times. Money Management techniques are broken down into two basic methods: Devotion Per Trade, and Devotion Per Condition.

Devotion Per Trade determines how much to devote to a position "at the beginning of the position". Different circumstances (usually available capital) determine how much should be risked on the position for that trade. Amounts are adjusted depending upon circumstances at the beginning of the position. An example of this in stocks would be to take a position of 1000 shares, then exit, then enter a position of 800 shares, then exit, then 1300 shares, etc. As the account size changes (due to the success or failure of the previous trade) then the amount risked on the next trade will change. This kind of method is frequently seen in "Fixed Fractional", "Fixed Percentage", and Ryan Jones "Fixed Ratio" money management methods.

It should be noted here that Money Management techniques in general can be difficult for stocks, due to the lack of significant hedging ability, and because the value increase of the underlying security directly affects how much is purchasable. I.e., 1000 shares of a stock may increase 20%, but it still only has the purchasing power of 1000 shares. To change the number of shares being added, enough has to remain in the account to suffer the difference. This is an area where commodities/futures trading is ideal, since as an account (or position) increases/decreases in value, the margin requirements for each contract remain relatively the same. This allows additional contracts to be purchased where additional stock shares typically could not.

Devotion Per Condition determines how much to "add on to an existing position". This is commonly known as "pyramiding" a position. This is also broken down into two types of techniques: Fixed Movement Addition, and Signal Addition.

Fixed Movement Addition involves increasing a position at fixed increments or percentage movements. I.e., an initial trade is entered with 1000 shares/1 contract for a specified price. For every $5.00 (or 5%, or whatever fixed parameter) move in the positions favor, an additional 1000 shares/1 contract is added on. As soon as there is a $5.00 (5%, etc.) movement in the opposite direction, then all positions are exited. All profits from all positions are in the account’s favor, except the last position that was entered. Basically, all of the gains of the successful entries should more than offset any losses that the last added position should incur.

Signal Addition involves increasing a position every time an entry signal is triggered before an exit signal is triggered. This type of system can be seen in traditional indicators like the Stochastic Oscillator, where two, three, or more buy signals can occur before an exit signal occurs. At every entry signal, 1000 shares/1 contract is added onto the existing position, and all shares/contracts are closed out at the first exit signal. This type of money management works well for mechanical trading systems that actually generate multiple entry/exit signals. (Note that if analyzing this type of approach using MetaStock, the System Tester cannot show multiple entry/exit positions. However, the Expert Advisor is capable of displaying the buy/sell/exit symbols for multiple entries/ exits.)

Something to be aware of here. Many people have been brought up with the false notion that Money Management will turn a bad or mediocre system into a profitable one or that Money Management in and of itself is a trading system. This is false and will cost you dearly to find out. Money Management will make a failing system fail much faster, and a mediocre system almost random in the profits and losses, effectively turning it into a failing system. However, proper Money Management can typically turn a somewhat profitable trading system into an extremely profitable system, typically magnifying the returns multifold.

Trade Management

Trade Management is the art of risk protection of a trade. This is done by several techniques in a predetermined order. First, the trading system (entry rule, fundamental criteria, etc.) is analyzed to determine the basic risk of taking the trade. This analysis typically consists of:

Risk of Ruin
Ratio of winning vs. losing trades
Ratio of winning trade profits to losing trade profits
Largest expected drawdown
Etc.

Once the initial risk of the trade is evaluated, then the conditions to enter the trade are determined. These could be market orders, stop orders, limit orders, etc. This assures that the trade is entered at only the anticipated price or set of conditions. Along with an entry order, an exit (stop) order is simultaneously entered on the condition of fulfillment of the entry order. This is your initial stop-loss to prevent unforeseen adverse market activity. If the position moves favorably, then each day the stop-loss order is reevaluated and typically moved up to lock in profits (a trailing stop). All of these individual actions combined make for good trade management.

Which ones matter?

The simple answer is that all of them are important. If none of the management processes are being applied then an individual is closer to gambling than to investing or trading. Portfolio Management and Trade Management are used to protect capital, and Money Management is used to increase capital. Often, these techniques can be the difference between being a common trader and being a successful one.
http://server.tsagroup.com/archives/vocab.php

[j.c.]

Eight Basic Rules of Trading

#1 Don't Trade Stupid.

While it sounds like a logical statement, this is THE primary reason that traders/speculators/investors fail. How many times have you watched someone place a trade with no plan whatsoever, and then they are legitimately shocked when it doesn't profit for them? Here's a perfect example:

An acquaintance had bought 800 shares in a local company at $13/share. The reason for buying? They were a local company and the company is in the computer industry. Because they were local (a little hometown pride) he thought that they would move to $15/share within a couple of months. I talked to him six months later. "So, how'd your company do?" "They went down to $8 (per share)." "So you sold at $12, right?" "Well, no. I still have them all. I'm waiting for it go back up to $10 and then I'll sell." "If you're going to sell them at $10 anyway, why don't you write a covered call (option) for $10 and get some additional money while you wait?" "I'll think about it." Guess what. He never wrote the covered call. He didn't sell when it hit $10 (per share). In fact, he didn't sell the shares until they had hit $10 three times over the next three years. After holding on to his position for over 3 years, he finally was able to sell them at the $15 per share he originally wanted. He really couldn't understand why they didn't hit $15 right after he bought them. The reality? He had no signal to buy them. The only reason he had for buying the shares was that he knew who they were (the company). No financials were involved. No technicals. Nothing. Since there was no real reason to get in, there was also no reason to get out. Let's face it. There are thousands of ways to make money in the markets, and he chose none of them. (Every once in a while I bring it up with him in hopes that he won't do something like that again. Guess what. He did do it again. Some people never learn.)

If you don't have a set plan, a strategy, then you WILL lose money. A good strategy includes three basic principles:

1. Where do I get in?
2. Where do I get out when I'm winning?
3. Where go I get out when I'm losing?

Answer these questions and your trading plan will be better than 95% of the people in the market.

#2 The first thing you learn isn't always the correct thing.

As children, we would often argue with others over who was right and who was wrong. We would learn a 'fact' from our father and we would defend that fact as hard as we could. It didn't matter if it was really true or false, daddy said that it's true. His reputation was at stake, and if he said that it's true then it is. End of story.

We still believe many of those so-called 'truths' that daddy told us. We still argue with people over some little piece of information that daddy told us when we were five (not realizing that when we were five, daddy was much younger than we are now). To us it is a truth that stays with us, no matter how wrong it is or how much it hurts us.

This happens to almost everyone in trading. The first thing we learn (technique, tool, indicator, system, etc.) we accept as gospel. Whoever taught it to us obviously knew more than we did (at the time), so it must be the best way to trade.

This happened to another associate of mine. He had learned a particular gap trading technique from the first book he read on trading. Since then, he had read 40 - 50 different books on trading. I personally had spent almost 20 hours teaching him minute details about futures trading, trend identification, indicator usage, etc. When it came down to making the first trade, his plan was to go with the trend, follow an entry signal, and do everything right. The market gapped open. In a split-second he changed everything and placed a trade with the original gap strategy. The trend was very strong against him. He had entry signals in the opposite direction of the gap. Everything pointed to him taking a long position. He shorted it. He lost almost $1,000 within the first two hours, and then finally exited. Had he stayed, he would have lost much more. After reprimanding him for the change in action, he said that he would never do it again. His next three trades were the same gap system. Those three trades lost money each time. He came to the conclusion that the markets were not for him and he hasn't traded since.

Am I saying that gap-trading strategies are wrong? Not at all. But some are definitely wrong (as with all types of strategies). He had learned a bad one as the first thing he ever learned about trading. Rather than accept the fact that it was an incorrect strategy, he was determined to make it work (just like he was defending a little piece of information that his father told him when he was five). Even after getting pounded every time and having been taught much better information by more experienced people. He refused to let it go.

You may want to look at the strategy that you're using (or planning to use). Was it one of the first ones you learned, or was it developed over time to fit your style and personality? Is it profitable because the author/creator says it is, or because you consistently make money yourself? Some things are worth re-evaluating.

#3 Learn from your mistakes.

The above story may sound like an isolated incident, but it happens every day. Do you learn from your mistakes? Self-evaluation and examination are very difficult, but required. EVERYONE MAKES MISTAKES IN TRADING. There is no way around it. We try something new. We try something old. This is part of the learning process and is required. What isn't required is doing the same mistake over and over again because "this time it will work out for me, really."

The best way to correct this type of behavior is to record it and review it. Make a notebook that you record every trading mistake you make. Review it each week and see how many mistakes you have duplicated (each week). The more duplications, the greater the problem and the more you should focus on it. However, be careful about what is a mistake, and what is not a mistake.

While it is easy to do everything right and still lose on a trade, it is just as easy to do everything wrong and still make a profit. Just because you got lucky doesn't mean that it isn't a mistake. Ignoring a mistake because you made a profit once is the best way to develop bad trading habits that will lose you money in the long run. Remember, even if you win some by playing a slot machine, the odds are against you, and the longer you play the more you will lose.

#4 What works for one person will not work for everyone.

This is the main reason why people who follow market gurus lose money. Many (in fact most) known market experts have very valid trading systems. Ken Roberts (for futures) is a great example. Here is a trading philosophy that has its roots in the heart of technical analysis. Some people make money with it, but many people do not. The philosophies within it are very valid and profitable. So why do so many people lose money using it? Because while it's a good strategy, it's not a good strategy for them. They don't visualize the markets the same way; they have different experiences, have learned different things (like what daddy told them), different tolerance and comfort levels, etc. (I personally cannot trade the Ken Roberts philosophies, but I have enough of a background to know that they can work, just that my psychology won't let me trade it profitably.)

If you try using a strategy that isn't working, accept that the strategy may be valid, but is not for you. You may need to research a large number of strategies to find one that works for you. Paper trading, while not real, is a good way to see if a strategy will work for you. You will notice that some strategies will feel more comfortable to you, even on paper. If you're not comfortable with it, you won't trade it right. Don't give up trading, just accept that a particular strategy won't work for you and move on.

#5 Keep an open mind about your trading strategies.

On the opposite side of the coin, there is more than one type of strategy that will work for each person. The age-old rule of "work with what you have" applies here. Few things are more stressful and frustrating than finding that the strategy you've chosen will be problematic based upon lack of resources. You ALWAYS have options, and most people haven't realized that they can use them. A great example is the person who has a strategy that requires that he have a stock's raw non-split adjusted data. His particular data provider doesn't have non-split adjusted data. He has three options:

1. Get mad. Swear and complain to the data provider that they are hampering his trading style. Tell them that he is losing money because they don't have what he wants. Talk to higher-ups in the company and get even angrier when they tell him that there is nothing that they can do about it (because there probably isn't). Ultimately defame the company and maybe even threaten a lawsuit or two (if he's really upset).

2. Look for a data provider that provides the non-split adjusted data, possibly for an exorbitant price.

3. Change to one of the thousands of profitable strategies that doesn't rely on non-split adjusted data.

Most traders opt for the first choice. The last choice never even occurs to them, but is often the most realistic. Many traders have learned to trade end-of-day successfully because they couldn't afford a real-time or delayed quote set-up. Many delayed quote traders have learned to successfully trade with intraday strategies because they weren't in a position to see the 'real' entry of a real-time set-up. Many investors have moved to technical analysis because they couldn't get fundamental information in a timely fashion. There are always options, and profitable ones at that. Flexibility can be one of your greatest assets as a trader.

#6 Trade with enough money to handle the losses AND commissions. Losses WILL happen and commissions are real.

Another failing trait is not having an account that can handle the losses that occur. Many people say that if you have a winning strategy, you can do nothing but make money. You can have an excellent strategy and still lose money if the account can't handle it.

Here's an example. I had a stock trading strategy that worked out to be consistently profitable in design (and technically in practice). It required that I buy stocks that were around $30 - $40 per share. With a stock in that price range, out of 10 trades four of them would give me a $1 per share gain, and six of them would give me a $.50 loss. Out of ten trades I would consistently have a $1 per share profit. Well, it didn't work out that way. I only had an account of $2,000 at the time. Trading on margin, I could only afford 100 shares of a stock between $30 - $40 in price. Commission to enter was $23, and commission to exit was also $23. This ended up costing $.46 per share for a round trip in and out. That changed the numbers considerably. My $1 success was now only a $.54 success after commissions. My $.50 losses were now $.96 losses. Out of 10 trades my gains amounted to $2.16 and my losses amounted to $5.76, totaling a loss of $3.16 after every 10 trades. AND THIS WAS TECHNICALLY A WINNING SYSTEM. Had the account been ten times that amount, the commissions would have been brought down to approximately $.05 per share round trip, and the system would have been profitable. The account size killed it. (So we moved on to another system that works with the account size that we do have.)

The same rule holds for losses. A $2,000 account can handle fewer losses than a $10,000 account can. With only $2,000, a few losses in a row can wipe you out. If you start out with $10,000, then $2,000 in losses only reduces your account by 20%, not 100%. $8,000 may leave a lot of room for trading, while zero left over from a $2,000 account will leave you out in the cold. If your account can't handle the losses, then start out with a larger account, or change your trading strategy.

#7 Don't commit to a new system until after you've tested it.

This scenario happens all too often. Someone has been trading a system successfully and they're making a decent living. Suddenly, they get a new idea or hear about a new system. It sounds great and they paper trade it to see how well it will do. It does well on paper and then they drop their old successful system for the new system, committing all of their capital to the new system just to watch it all go away.

This problem occurs with too many traders, and could always be avoided with one simple concept: TEST IT ON YOURSELF FIRST. Just because it looks great on paper, doesn't mean that you will be able to trade it properly (as in rule #4), even if you designed it yourself. There are always hidden variables that tend to get overlooked - the new system didn't account for slippage, it has more drawdown than you expected, etc.

Rather than committing to it wholeheartedly, try working with only 10 to 20 percent of your account (preferably 10%). As it proves to be successful, slowly make a transition in 10 to 20 percent increments. This way you can adapt to the new system instead of just throwing a new set of variables into your life without getting used to a new style.

#8 There's ALWAYS another trade around the corner.

While this usually happens with beginning traders, experienced traders still fall prey to the up-and-coming opportunity. People see an opportunity and tell themselves that if they don't get on the bandwagon now then they will miss 'The Big One' that they can retire on. They see that gas prices are extremely low, and if they don't buy gas futures now then they will lose out on all that money that they could make. They see the new Millenium opportunities and think that they have to sell the farm to get all of the profits just lying there. Many traders believe (and act upon the belief) that if they don't trade an opportunity at full force, then there will never be anything like this ever again (after all, they won't live to see another Millenium).

All of these are legitimate opportunities, but there are ALWAYS opportunities. Just because you see a great opportunity to take advantage of doesn't mean that you should 'risk the whole wad' or trade sloppy. These opportunities can help you decide what to be trading in, but you still need to follow sound trading practices. The rules don't change just because something looks like a great deal.

Conclusion

While no actual trading strategies are discussed within these eight rules, the rules themselves will often determine a successful trader or a failing trader. They can also make the difference between trading stressed-out or trading stress free. Use them for your own success, or ignore them at your own expense. It's always up to you.
http://www.tsagroup.com/archives/8rules.php

[j.c.]

Oversold with an Improving RSI
CSII NMXS NXXI

CSII .16


NMXS .11


NXXI .65


Thu Jul 7 NXXI Nutrition 21 Sues GNC for Patent Infringement - Business Wire

[j.c.]

Stocks in a New Uptrend (ADX)
SEHO VGTI VRSO

SEHO .175


VGTI .39


VRSO .36


Tue Jul 12 VRSO Market Pulse: CORRECT: Verso reports preliminary revenue range - MarketWatch

Mon Jul 11 VRSO Verso Technologies Inc Earnings Call scheduled for Mon, July 25 - CCBN

Mon Jul 11 VRSO Market Pulse: Verso Technologies reports preliminary revenue range - MarketWatch

Mon Jul 11 VRSO Verso to Announce Second Quarter 2005 Results on July 25 - Business Wire

Fri Jul 8 VRSO VERSO TECHNOLOGIES INC Files SEC form 8-K, Entry into Material Agreement, Financial Statements and Exhibits - EDGAR Online

Fri Jul 8 VRSO Verso to sublease Atlanta office space - bizjournals.com

Fri Jul 8 VRSO Verso Announces Sublease of Excess Atlanta Facilities - Business Wire

[j.c.]

Fri 10:31am BUDH.OB BUDGETHOTELS NETWORK INC Files SEC form 8-K/A, Change in Control - EDGAR Online

Fri 9:00am ATVE.OB ACTIVECORE TECHNOLOGIES INC Financials - EDGAR Online Financials

Thu 5:07pm BUDH.OB BUDGETHOTELS NETWORK INC Files SEC form 8-K, Material Modifications, Change in Control, Change in FYE or Articles - EDGAR Online

Thu 8:40am HYRF.OB HydroFlo to Promote Deanna Britt to Chief Operating Officer of Ultra Choice Water - Market Wire

Thu 7:30am EMED.OB MedCom USA, Inc., Reviews Investment Opinion From Source Capital Group, Inc. - PR Newswire

Wed Jul 13 TTLA.OB Sun Microsystems Completes Tarantella Acquisition - PR Newswire

Wed Jul 13 JLHY.OB Email Technology Provider Lyris Reports Spam Filtering Growing More Accurate, Sophisticated - Business Wire

Tue Jul 12 HYRF.OB HydroFlo Announces E-Mail Campaign to Update Public - Market Wire

Tue Jul 12 MLHP.OB MILLENIA HOPE INC Files SEC form 8-K, Entry into Material Agreement, Sale of Equity, Change in Directors or Principal - EDGAR Online

Mon Jul 11 SDNA.OB SEDONA CORP Files SEC form 8-K, Financial Obligation Matter, Sale of Equity, Financial Statements and Exhibits - EDGAR Online

Mon Jul 11 CGCP.OB CARDIOGENESIS CORP /CA Files SEC form 8-K, Change in Accountant, Financial Statements and Exhibits - EDGAR Online

Mon Jul 11 ATVE.OB ActiveCore Compliant on Filing Requirements - PrimeZone Media Network

[j.c.]

MLHP .16


MZEI .011


PVCT .72


SDGL .125


SDNA .21


SDRG .145


TTLA .899


USCS .15


VTYC .09


WLIV .12

[j.c.]

CCI Buy Signals
ANDR ATVE BUDH BWEB CGCP EMED EWKE HYRF JLHY MLHP MZEI PVCT SDGL SDNA SDRG TTLA USCS VTYC WLIV

ANDR .055


ATVE .098


BUDH .05


BWEB .52


CGCP .55


EMED .88


EWKE .14


HYRF .22


JLHY .56

[j.c.]

That's a lot of "ifs" and all the best scammers have great stories I wish you luck... trade it and don't fall in love with it. Always money to be made on the right side of the trade.

[garrett800ca]

Even if the o/s ends up hitting all of the authorized (500,000,000), the m/c on this today is only $1MM, and they are acquiring a Saudi company producing $29MM in annual revs.

I'm either the stupidest person in the world for buying at these levels, or the smartest. If their merger goes through, there is nowhere for this to go but up, even with maximum dilution.

Let's just hope they don't do ANOTHER r/s!

Big risk, but bigger reward possible.

[j.c.]

Agreed. Actually, holding a stock like this, and there are so many of them, can cost one more than their original investment (tongue in cheek) after commission and other fees are added.
Amazing how they can just keep on doing it over and over again. Legalized thievery.

[garrett800ca]

Actually, if you account for the r/s, the price drop is 400 times more dramatic than it looks on your chart. Rock bottom here.

[j.c.]

Thu 3:00pm VYST.OB View Systems Scores Big at All Star Game - PrimeZone Media Network

Wed 12:25pm TBIO Market Pulse: Transgenomic sees neutral to positive op cash flow - MarketWatch

Wed 11:32am TBIO Transgenomic Projects Neutral to Positive Operating Cash Flow by Year-End - PR Newswire

Tue Jul 12 TGEN UPDATE - Biogen to sell portion of Targeted Genetics stake - at Reuters

Thu Jul 7 VYST.OB View Announces Additional Video First Responder Sales - PrimeZone Media Network

Wed Jul 6 TBIO TRANSGENOMIC INC Financials - EDGAR Online Financials

Fri Jul 1 VYST.OB VIEW SYSTEMS INC Files SEC form 8-K, Sale of Equity, Material Modifications, Change in Control - EDGAR Online

[j.c.]

Stocks in a New Uptrend (ADX)
AVVW EFTI GSML GSPG NIMU TBIO TGEN VYST

AVVW .157


EFTI .151


GSML .028


GSPG .095


NIMU .11


TBIO .956


TGEN .799


VYST .078

[j.c.]

Thu 2:15pm RMKR RAINMAKER SYSTEMS INC Files SEC form 8-K, Financial Obligation Matter, Financial Statements and Exhibits - EDGAR Online

Thu 1:18pm DUVT.OB Estracure Signs Licensing Agreement for Use of MediVas Exclusive Drug Delivery Technology for Development of Next Generation of Drug Eluting Stents - Business Wire

Thu 7:00am CDSS Citadel Security Software Receives $875,000 Order for Service Enhancements to Major US Government Contract - Market Wire

Thu 6:06am SYBD.OB SYNTHETIC BLOOD INTERNATIONAL INC Files SEC form 8-K, Sale of Equity, Financial Statements and Exhibits - EDGAR Online

Thu 6:00am IBTGF.OB International Barrier's Commercial Modular Business Escalates as Sales Growth Continues - Business Wire

Thu 6:00am CGHI.OB Negotiations Proceed for Buy-out of Centurion Gold with Higher Competing Bids - Business Wire

Wed 6:13pm SYBD.OB Synthetic Blood International Completes $1.85 Million Financing - Business Wire

Wed 2:55pm CDSS DHS Reorganization Enhances Cyber Security - PR Newswire

Wed 8:00am CDSS Citadel Security Software Awarded $900,000 in Contracts by Leading Financial Services Institutions to Provide Enterprise Vulnerability Management Solutions - Market Wire

Wed 1:57am RMKR Rainmaker Systems, Inc. Earnings Call scheduled for Thu, Aug 4 - CCBN

Tue Jul 12 RMKR Rainmaker Announces Release Date of Second Quarter 2005 Financial Results - Business Wire

Tue Jul 12 CDSS CSIA Joins the Anti-Spyware Coalition to Support Efforts to Give Consumers and Businesses More Power Over Spyware - PR Newswire

Tue Jul 12 CGHI.OB Centurion Gold's SEC Filing Extended Due to Consolidation of Assets - Business Wire

Mon Jul 11 INFL.OB InfiniCall to Increase Services and Calling Plans - Market Wire

Mon Jul 11 SYBD.OB SYNTHETIC BLOOD INTERNATIONAL INC Files SEC form 8-K, Sale of Equity, Other Events - EDGAR Online

[j.c.]

MBAY .59


NAWL .01


PRTL .68


RMKR .59


SHQCW .84


SQUM .09


SYBD .23


UCPJ .007


ZIMCF .18

[j.c.]

CCI Buy Signals
AMHI CDSS CGHI CLSC DUVT IBTGF IGII INFL KAIH MBAY NAWL PRTL RMKR SHQCW SQUM SYBD UCPJ ZIMCF

AMHI .079


CDSS .88


CGHI .35


CLSC .64


DUVT .85


IBTGF .625


IGII .15


INFL .015


KAIH .038

[j.c.]

RWNW... a perfect example of deception.
One of the problems with some charts (in regard to pos stocks, anyway) is they don't account for RS or symbol changes in reality,

RWNW .004 (+133.33% vol:99,836,408)


It was never more than a penny stock (high .79 in April '03 irl) which is not reflected in the chart since it's adjusted for reverse split prices... prices never seen by average joe sales.

Wouldn't touch it with a ten foot pole... but will watch with interest...

[pennyjunkie]

What about this baby?
This came from a simple volume scan