Something to read

The Wave Principle
by Ralph Nelson Elliott


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The Elliott Wave Principle is a form of technical analysis that some traders use to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology, highs and lows in prices, and other collective factors. Ralph Nelson Elliott, a professional accountant, discovered the underlying social principles and developed the analytical tools. He proposed that market prices unfold in specific patterns, which practitioners today call Elliott waves, or simply waves. Elliott published his theory of market behavior in this book "The Wave Principle". Elliott stated that "because man is subject to rhythmical procedure, calculations having to do with his activities can be projected far into the future with a justification and certainty heretofore unattainable."

Software will replace more people says Gates


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Software King of the World Sir William Gates III said that software will start replacing more people and US secondary schools may not be able stay ahead of software automation.

Mincing his words, Gates dubbed the process "software substitution" or systems capable of doing jobs now done by people.

Gates, in an interview with the American Enterprise Institute reckons that 20 years from now labour demand for a lot of skill sets will be substantially lower, and he does not think people have that in their mental model.

The impact of automation on the labour market, whether it's for drivers, waiters or nurses, is progressing and low income jobs are being eliminated by globalisation.

Now the quality of automation, software artificial intelligence, is improving fast enough that you can start to worry about middle class jobs. The US has lost manufacturing and union wage scales. Those were middle class jobs. "Automation is doing that, the wage differential is tilted, the more education you get, and the higher you are going to be paid and the tilt of that is much higher. It's really that low end that's been impacted the most," said Gates.

The only way for a person to survive is through improving US education. The US has to do a better job educating its workforce.

Quantitative Trading: How to Build Your Own Algorithmic Trading Business (Wiley Trading)


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While institutional traders continue to implement quantitative (or algorithmic) trading, many independent traders have wondered if they can still challenge powerful industry professionals at their own game? The answer is "yes," and in Quantitative Trading, Dr. Ernest Chan, a respected independent trader and consultant, will show you how. Whether you're an independent "retail" trader looking to start your own quantitative trading business or an individual who aspires to work as a quantitative trader at a major financial institution, this practical guide contains the information you need to succeed.

Chan: Algorithmic Trading: Winning Strategies and Their Rationale (Wiley Trading)

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Engaging and informative, Algorithmic Trading skillfully covers a wide array of strategies. Broadly divided into the mean-reverting and momentum camps, it lays out standard techniques for trading each category of strategies and, equally important, the fundamental reasons why a strategy should work. The emphasis throughout is on simple and linear strategies, as an antidote to the over-fitting and data-snooping biases that often plague complex strategies. Along the way, it provides comprehensive coverage of:

• Choosing the right automated execution platform as well as a backtesting platform that will allow you to reduce or eliminate common pitfalls associated with algorithmic trading strategies
• Multiple statistical techniques for detecting "time series" mean reversion or stationarity, and for detecting cointegration of a portfolio of instruments
• Simple techniques for trading mean-reverting portfolios—linear, Bollinger band, and Kalman filter—and whether using raw prices, log prices, or ratios make the most sense as inputs to these tests and strategies
• Mean-reverting strategies for stocks, ETFs, currencies, and futures calendar and intermarket spreads
• The four main drivers of momentum in stocks and futures, and strategies that can extract time series and cross sectional momentum
• Newer momentum strategies based on news events and sentiment, leveraged ETFs, order flow, and high-frequency trading
• Issues involving risk and money management based on the Kelly formula, but tempered with the author's practical experience in risk management involving black swans, Constant Proportion Portfolio Insurance, and stop losses
• Mathematics and software are the twin languages of algorithmic trading. This book stays true to that view by using a level of mathematics that allows for a more precise discussion of the concepts involved in financial markets. And it includes illustrative examples that are built around MATLAB© codes, which are available for download.

While Algorithmic Trading contains an abundance of strategies that will be attractive to both independent and institutional traders, it is not a step-by-step guide to implementing them. It offers a realistic assessment of common algorithmic trading techniques and can help serious traders further refine their skills in this field.

Former Madoff Associates Found Guilty Of Fraud ~ Reuters

(Reuters) - Five former aides to investment manager Bernard Madoff were convicted on Monday of charges that they helped their boss conceal his multibillion-dollar Ponzi scheme for years.

A federal jury in New York found back-office director Daniel Bonventre, portfolio managers Annette Bongiorno and Joann Crupi,

and computer programmers Jerome O'Hara and George Perez guilty on all counts, including securities fraud and conspiracy to defraud clients.

The five-month trial was one of the longest white-collar criminal trials in Manhattan federal court history, featuring dozens of witnesses and thousands of documents. It is the first criminal trial stemming from Madoff's fraud.

The five defendants will be sentenced in late July.

"The scheme these defendants helped perpetrate cost innumerable investors their life savings," U.S. Attorney Preet Bharara said in a statement. "Now it likely will cost the defendants their freedom."

Madoff, 75, is serving a 150-year-prison sentence after pleading guilty in March 2009 to running the Ponzi scheme, estimated to have cost investors more than $17 billion of principal. He was arrested in December 2008.

Nine other people have pleaded guilty in connection with Madoff's fraud, some of whom testified at the trial as cooperating government witnesses.

As the jury foreman said "guilty" 59 times in a row, there was no visible reaction from the defendants, who each faced anywhere from eight to 20 charges.

"The list of Bernard Madoff's victims now includes these five former employees," Andrew Frisch, a lawyer for Bonventre, said after the verdict, adding that he plans to appeal.

There was little dispute that various defendants engaged in activities such as backdating fake trades and creating false documents. Instead, the case turned on whether they knew at the time that they were aiding Madoff's fraud.

The defendants claimed Madoff duped them into becoming unwitting accomplices, using a potent combination of charm and deception.

"Why wouldn't she believe him?" Roland Riopelle, the lawyer for Bongiorno, said during his closing argument. "He was the head of the firm and the chairman of NASDAQ. She was by design, by Mr. Madoff's design, living in her own little bubble."

But prosecutors pointed to internal documents seized from Madoff's investment firm, including handwritten notes from the defendants, as clear evidence they knew what was happening.

"The notion that these defendants didn't know the trading was fake is an absurdity," Assistant U.S. Attorney Randall Jackson said at the end of the trial.

The key government witness was Madoff's right-hand man, Frank DiPascali, who testified as part of a plea deal and implicated each of the five defendants in the fraud.

Defense lawyers urged the jury to disregard his claims, calling him an inveterate liar desperate to avoid a lifelong prison term. But several jurors interviewed after the verdict said they found DiPascali's testimony credible.

"It was pretty captivating," said Sheila Amato, an art teacher.

By contrast, jurors scoffed at the testimony of Bongiorno and Bonventre, who surprised trial observers by taking the stand in their own defense to deny knowing about any fraud.

Nancy Goldberg, an instructional assistant for at-risk public school students, said the testimony was "embarrassing."

Riopelle said he did not regret putting Bongiorno on the stand, as it was the only way to show the jurors she "never understood the consequences of her actions."

The government said Bonventre helped conceal the fraud by manipulating the firm's general ledger. He also deceived regulators, auditors and bankers, filed false tax returns and helped Madoff evade taxes as well, prosecutors said.

Prosecutors accused Crupi and Bongiorno of backdating fake trades in customer accounts months, and sometimes years, after they purportedly occurred.

And O'Hara and Perez were accused of writing computer programs that generated fake trade records to fool auditors, prosecutors said.

The trial provided an intimate look at Madoff's fraud and the intricate structure of lies that kept it afloat, with Madoff fooling even his most trusted aides into believing he had assets stashed somewhere.

No one at the firm knew the entire truth; even DiPascali, who was deeply involved in the fraud, said he didn't realize it was a Ponzi scheme until Madoff confessed to him just days before his arrest that he had run out of money.

Asked whether the defense could have anything differently, Eric Breslin, a lawyer for Crupi, said, "Madoff was a tall mountain to climb."

The case is U.S. v. O'Hara et al, U.S. District Court, Southern District of New York, No. 10-cr-00228.

Kenmore Design Announces Participation in the 2014 Turkey Forex Conference in Istanbul

Kenmore Design will join Boston Technologies and other Forex professionals at the 2014 Turkey FX Conference, hosted by Forex Magnates and Conversion Pros. The conference will take place on April 4-5, and will feature educational presentations and panels for Forex brokers and traders in the luxurious setting of Istanbul's Ciragan Palace Hotel.

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Leading Forex web developer Kenmore Design announces their participation in the 2014 Turkey Forex Conference in Istanbul, Turkey, which will take place April 4-5.
The conference will provide an exceptional opportunity for Forex professionals to meet and network in Istanbul, an emerging regional center for financial markets. As a leading provider of Forex web services, Kenmore Design looks forward to expanding their global perspective at the conference.

Known for their Trader’s Room portal for Forex brokers, Kenmore Design also provides a variety of services including Forex web design, website/MT4 integration, MT4 Webtrader/VPS, multi-level IB logic for MT4, and more.
Kenmore Design Director of Business Development Alex Sherbakov says, “Working with brokers, traders, and technology providers in the Forex industry is essential for inventing new products and improving existing ones. We are anticipating an exciting 2014 and expect this conference to be a catalyst for the conception and development of innovative new Forex web solutions.”

Kenmore Design will be sharing a booth at the conference with leading financial technology provider Boston Technologies, which will be presenting an educational seminar entitled “Learn how to save 50% or more on your MT4 running costs”. Kenmore Design and Boston Technologies have recently teamed up to offer several discounted comprehensive service packages for Boston Technologies clients.

The conference, which will provide two days of educational seminars and networking opportunities in the luxurious setting of Istanbal’s Ciragan Palace Hotel, will be attended by Forex professionals from all over the world.

About Kenmore Design

Kenmore Design is a recognized name and a comprehensive leader in Forex software and web development. The Boston-based developer is primarily known for its Trader's Room, a web-based portal that combines a litany of account options and live forex support. The company’s new MT4 Cloud Trader represents a stateless VPS, allowing users more streamlined access with the application. Furthermore, the MT4 trader is equipped with an interface into the Trader’s Room solution, fostering a connection with existing trading experiences. Learn more about Kenmore Design at http://www.kenmoredesign.com.

The Complete Guide To Point & Figure Charting : The New Science of an Old Art

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The aim of this book is to explain point-and-figure charting to European investors and traders, and to show why it is the most reliable technical tool for timing entry and exit points in stocks, indices and other securities. The book is written for all levels of trader, from the novice to the experienced. It starts by explaining the basics of point-and-figure, and by showing its advantages over other types of chart. Readers are then given step-by-step instructions on how to start a point-and-figure chart from simple price data, and how to add to it day-by-day using simple rules based on end of day highs and lows. The emphasis is on simplicity and clarity. The section on chart interpretation introduces the basic buy and sell signals, and goes on to explain the more complex signals, in each case illustrating the pattern, and the precise entry and exit points, with colour charts from FTSE stocks and indices. It also shows how trend lines are incorporated into a chart. The latest point-and-figure trading techniques are covered in depth. The authors show how to: use horizontal and vertical counts to estimate the size of price moves, use stop-orders to protect positions, use pyramiding to maximise profitable trends, and use swing trading in combination with p&f. They also show how to adapt your trading style to the amount of capital you have available and to your risk tolerance. In the later sections of the book, the authors concentrate on optimisation of p&f trading and the avoidance of the most common trap - 'over-fitting' - and on analysis of the profitability of p&f trading. They demonstrate conclusively that point and figure, correctly applied, produces consistent and reliable profits across a variety of markets. In summary, Heinrich Weber & Kermit Zieg's book is the definitive guide to the theory and application of point-and-figure charting. It is especially welcome for UK and European traders, since it uses recent charts of FTSE and European securities as examples, and includes hitherto unpublished research on p&f's applicability to European securities.

Encyclopedia of Chart Patterns
by Thomas N. Bulkowski

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In this revised and expanded second edition of the bestselling Encyclopedia of Chart Patterns, Thomas Bulkowski updates the classic with new performance statistics for both bull and bear markets and 23 new patterns, including a second section devoted to ten event patterns. Bulkowski tells you how to trade the significant events -- such as quarterly earnings announcements, retail sales, stock upgrades and downgrades -- that shape today?s trading and uses statistics to back up his approach. This comprehensive new edition is a must-have reference if you're a technical investor or trader. Place your order today.

"The most complete reference to chart patterns available. It goes where no one has gone before. Bulkowski gives hard data on how good and bad the patterns are. A must-read for anyone that's ever looked at a chart and wondered what was happening."
-- Larry Williams, trader and author of Long-Term Secrets to Short-Term Trading

Trading Classic Chart Patterns
by Thomas Bulkowski

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Use popular chart patterns profitably

In his follow-up to the well-received Encyclopedia of Chart Patterns, Thomas Bulkowski gives traders a practical game plan to capitalize on established chart patterns. Written for the novice investor but with techniques for the professional, Trading Classic Chart Patterns includes easy-to-use performance tables, vivid case studies, and a scoring system that makes trading chart patterns simple. This comprehensive guide skillfully gives investors straightforward solutions to profitably trading chart patterns. Trading Classic Chart Patterns also serves as a handy reference guide for favorite chart patterns, including broadening tops, head-and-shoulders, rectangles, triangles, and double and triple bottoms. Filled with numerous techniques, strategies, and insights, Trading Classic Chart Patterns fits perfectly into any pattern trader's arsenal.

Thomas N. Bulkowski (Keller, TX), an active investor since 1981, is the author of the highly acclaimed Encyclopedia of Chart Patterns as well as numerous articles for Technical Analysis of Stocks & Commodities. Trained as a computer engineer, Bulkowski worked for over a decade at Tandy Corporation. Prior to that, he worked on the Patriot air defense system for Raytheon.

New technology and the advent of around the clock trading have opened the floodgates to both foreign and domestic markets. Traders need the wisdom of industry veterans and the vision of innovators in today's volatile financial marketplace. The Wiley Trading series features books by traders who have survived the market's ever changing temperament and have prospered-some by reinventing systems, others by getting back to basics. Whether a novice trader, professional or somewhere in-between, these books will provide the advice and strategies needed to prosper today and well into the future.

Does "Sell in May and Go Away" Work in Forex Trading?

If you’ve been watching the financial markets for quite some time now, you’ve probably heard of the adage “Sell in May and go away.” Simply put, this refers to an equities trading strategy based on the observation that stocks typically undergo a long selloff period from May right until October.

Still having doubts? Take a look at the screenshots of the S&P 500 index from 2010 to 2012 on this ForexLive article. Coincidence? Now take a look at the S&P 500′s performance in May to October last year:

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Apart from that sharp mid-month selloff, that decline wasn’t so bad! In fact, the index was off to a good start during the first couple of weeks in May 2013 then managed to trend higher until October.

Although the validity of this “Sell in May and go away” theory and the rationale behind the repeating market behavior is still debatable, several traders attest to this self-fulfilling phenomenon. After all, this seasonal trend has taken place for years and traders can be a little bit superstitious sometimes. Just ask Dr. Pipslow who insists on wearing his ratty old “lucky socks” while day trading!

Intermarket analysis tells us that price action in the equity markets has an impact on forex price movements. A sharp selloff in the stocks, which usually takes place when traders rush to close their long positions, could lead to risk-off market moves in the forex arena. This suggests that safe-haven currencies such as the U.S. dollar or lower-yielding ones like the Japanese yen could gain support while higher-yielding and riskier currencies like the comdolls could lose ground.