Volatility-Based Technical Analysis, Companion Web site

KIRK NORTHINGTON is the President of Northington Trading, LLC, a developer of technical analysis systems based on adaptive volatility for swing trading. The company's flagship software product, MetaSwing, is an add-on toolkit for users of MetaStock technical analysis software. In addition to system design, Northington Trading trades stocks on the NYSE and NASDAQ exchanges. Kirk has previously held positions in several Fortune 500 companies, with experience in engineering, digital control system design, and project management.

• Preface xiiiIntended Audience xivWhat’s Inside? xivAcknowledgments xviiPART ONE Are You Prepared? 1CHAPTER 1 The Challenges 3The Brain Power 4The Horse Power 6Options and VaR Ascendancy 7Rain Clouds or Urine? 10News Folly 12Eyes on the Goal 13CHAPTER 2 The Opportunities 15Choose Your Battles 16Take the Offensive 17Prepare and Perform 26Quiet the Noise 29Opportunities Outnumber Challenges 30CHAPTER 3 The Foundation: Preparations for Exploring Volatility-Based Technical Analysis 31The Preparations Needed 32Trading the Invisible Indicators: Original Development 33Tenets of Volatility-Based Technical Analysis 34Component Testing 40MetaSwing QuickStart 40Discover by Doing 51PART TWO Seeing the Invisible 53CHAPTER 4 New Volatility Indicator Design 55Volatility Unmasked 56Standard Deviation 57Example: Volatility-Based Support and Resistance 61Average True Range 66Molding a Volatility-Based Indicator 69The Whole Picture 83Building Blocks 86CHAPTER 5 Integrated Volatility Indicator Design 87Volatility Pointed Forward 87Projected Implied Volatility 90More from the Math Toolbox 101Using Tools to Leverage TTI ATR Extreme 107Development Efficiency 114Inventing Wheels: You’re Not Alone 115Onward 126CHAPTER 6 The Framework: A Structural Approach for Cross-Verification 127Adopting a Structure 128Think and See Volatility 129The Framework Components 141Constructing a Compound Derivative 146The Framework 156Going Forward 161CHAPTER 7 Traditional Technical Analysis: What Works, What Doesn’t, and Why 162Line Studies 163Chart Patterns 173Oscillators 185Choose the Best 198PART THREE Trading the Invisible 199CHAPTER 8 Bull Bear Phase Prediction: The Intermediate and Short-Term Market Swing 201Why Swing with the Market? 202Intermediate-Term Market Direction 204Short-Term Market Swing 211Seek the Advantage 223CHAPTER 9 Trading the Short-Term Reversal with Volatility-Based Technical Analysis—The Adeo 224The Adeo Point 225The Adeo Trend Rally 232The Meandering Adeo 236The Adeo Short 240Adeo and FOREX 245The Fractal Adeo 246Open Your Can of Spinach 249CHAPTER 10 Trading the Trend with the 1-2-3 250Rectangles Everywhere 251The Traditional Approach 253The 1-2-3 Construct 254The Daily 1-2-3 259The Weekly 1-2-3 263The 1-2-3: Inside and Outside 269As Simple as 1-2-3 279CHAPTER 11 Hidden Momentum with Adeo High Slope 280We Are Experiencing Technical Difficulties; Please Stand By 281Momentum Hide and Go Seek 283Momentum Found 289The Quick and the Broke 303CHAPTER 12 Designing the Exit 305The Objective: Optimize the Profit Target 306Using Time Slicing to Understand Your Time Frame 310Fifth-Grade Arithmetic 312Exit Tactics 315Achieving the Objective 331CHAPTER 13 Correction and Surge: An Early Warning System 333Market Breadth 334The Correction Event 338The Surge Event 348The Best Free Advice 355CHAPTER 14 Trading System Design: Detecting the Invisible 356Seeing through the Fog of War 357Nail It Down: Recognize the Specifics 358The Importance of Believing 359System Design Structure 360System Design Tactics 365Ask the Questions and Use the Advantages 382APPENDIX A TradeStation Examples and Easy Language Code 384Average True Range 384The TTI ATR Extreme 386The TTI Stochastic Extreme 393The TTI Fabric LR 399The TTI Trend Strength 403The TTI RSIV 405The TTI Composite 409The Relative Exit 412Correction and Surge 420MetaSwing for TradeStation 423APPENDIX B The PIV Options Advantage: Using Projected Implied Volatility to Trade the Butterfly,Condor, Strangle, and Straddle 427PIV for the Butterfly and Condor 427PIV for the Strangle and Straddle 436PIV for Option Spreads 440APPENDIX C About the Companion Web Site 441Notes 443About the Author 447A Special Offer from MetaStock 449Index 451

"While the book is written in an easy to understand style, Northington realizes that not every trader is a programmer. For that reason, he includes the MetaStock® and TradeStation® code for the original, volatility-based indicators that he presents in the book. With these examples in hand, any trader can apply the concepts which are explained in rich detail. Northington’s goal seems to be to teach the reader how to build indicators based upon unique market insights; test the indicators on a stand-alone basis; and incorporate meaningful indicators into trading methods that suit a trader’s personality. In doing so, he also provides a ready-to-go trading system that can be applied with days of beginning the book." (Market Technicians Association Technically Speaking, September 2009) "Northington presents a credible framework for trading volatile markets. His creativity and advocacy merit attention. New and advanced traders alike will benefit from grasping these concepts."—SFO Magazine