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March, 2006 | Issue #30

Screening with the Keltner Channel
Introduction

The Keltner Channel is a band or envelope indicator which is made up of two bands plotted around an Exponential Moving Average (EMA), usually the 20-day EMA. The Keltner Channel is based on the Average True Range and can be used in place of standard deviation (Bollinger) bands or percentage envelopes (moving average envelopes). The main signals given by the Keltner Channel are similar to other band indicators (price crosses center, price crosses outerband) and it is considered a trend following system.

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Article

A technical charting interpretation of the Donchian's Four Week Rule/Price Channel - Alex Martin

The Four-week Rule is a basic method that may not seem glamorous in the company of Fibonacci Numbers and Japanese Candlesticks - but it is a profitable method that is still used today.

Despite its obvious shortcomings, as a trend-following system, - it works well in up or down trends, but not sideways trends. The Four-week Rule is a tool that should be in every technical analyst's repertoire. It was developed by Richard Donchian in the early 1970s for commodities and futures and has been successfully applied to stock analysis.

The question is: How can you make it work for you?

Read Full Article

Glossary Definition

Trading Channel

The trading channel refers to the area between a support and resistance lines. This is also known as a price channel.

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Stock Market Humor

STOCK: A magical piece of paper that is worth $33.75 until the moment you buy it. It will then be worth $8.50.
BOND: What you had with your spouse until you pawned his/her golf clubs to invest in Amazon.com.
BROKER: The person you trust to help you make major financial decisions. Please note the first five letters of this word spell Broke.
BEAR: What your trade account and wallet will be when you take a flyer on that hot stock tip your secretary gave you.
BULL: What your broker uses to explain why your mutual funds tanked during the last quarter.
MARGIN: Where you scribble the latest quotes when you're supposed to be listening to your manager's presentation.
SHORT POSITION: A type of trade where, in theory, a person sells stocks he doesn't actually own. Since this also only ever works in theory, a short position is what a person usually ends up being in (i.e. "The rent, sir? Hahaha, well, I'm a little short this month.").
COMMISSION: The only reliable way to make money on the stock market, which is why your broker charges you one.
YAK: What you do into a pail when you discover your stocks have plunged and your broker is making a margin call.

 

Fundamentals and Technical Handbook

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A  Guide to Trend

A great place to start! An introduction to technical analysis with a focus on understanding trend, trend indicators and setting up a trading system, 50-page PDF (Adobe Acrobat) e-book for just $19.95. See sample

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