Notes
1. Joachim Goldberg and Rüdiger von Nitzsch, Behavioral Finance (Chichester, UK: John Wiley & Sons, 2001), p. 157.
2. Daniel Kahneman was awarded the Nobel Prize in economics in 2002 for his work on behavioral finance.
3. Mandelbrot first suggested that capital markets displayed a stable Paretian distribution in 1964.
4. See “Types of Technical Indicators: Trend-Following and Mean Reversion” in this chapter for a detailed explanations of Wilder's RSI and moving averages.
5. Ari Kiev, Trading in the Zone (New York: John Wiley & Sons, 2001), p. 162.
6. Goldberg and von Nitzsch, Behavioral Finance, chapter 4.
7. This section is adapted from Richard Weissman, “The Math behind the System,” Working Money™, December 2003, ©2003 Technical Analysis, Inc. Used with permission.
8. For detailed explanations of each of these classical technical indicators, see John J. Murphy, Technical Analysis of the Financial Markets (Paramus, NJ: New York Institute of Finance, 1999).
9. Fundamentals are defined as supply and demand statistics and/or news events.
10. Peak-to-valley drawdowns are a more accurate measure of risk than closed-out position losses. Instead of merely quantifying declines in account equity based on closed-out profits and losses, peak-to-valley drawdowns measure deterioration from an old equity peak (or high water mark) to the ultimate trough on the basis of daily mark-to-market calculations.
11. Perhaps the most common indicator-driven trigger is the breaking of ...
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