Nowhere can a picture be more valuable than in price forecasting. Elaborate theories and complex formulas may ultimately be successful, but the loss of perspective is rarely corrected without a simple chart. We should remember the investor who, anxious after a long technical presentation by a research analyst, could only blurt out, “But is it going up or down?” Even the most sophisticated market strategies must capture the obvious trends or countertrends. Before any trading method is used. the past buy and sell signals should be plotted on a chart. Those signals should appear at logical points; otherwise, the basis of the strategy or the testing method should he questioned.
Through the mid-1980s technical analysis was considered chart interpretation. In the equities industry that perception is still strong. Most traders begin as chartists. and many return to it or use it along with their other methods. William L jiler. a great trader and founder of Commodity Research Bureau, wrote:
One of the most significant and intriguing concepts derived from intensive chart studies by this writer is that of characterization, or habit. Generally speaking. charts of the same commodity tend to have similar pattern sequences which may be different from those of another commodity. In other words. charts of one particular commodity may appear to have an identity or a character peculiar to that commodity. For example, cotton charts display many round tops and bottoms, and even a series of these constructions, which are seldom observed in soybeans and wheat. The examination of soybean charts over the years reveals that triangles are especially favored. Head and shoulders formations abound throughout the wheat charts. All commodities seem to favor certain behavior patterns.’
In addition to jiler’s observation, the cattle market is recognized as also having the unusual occurrence of “V” bottoms. Both the silver and pork belly markets have tendencies to look very similar, with long periods of sideways movement and short-lived, violent price shocks, where prices leap rather than trend to a new level, The financial markets have equally unique personalities. The S&P traditionally makes new highs, then immediately falls back; it has fast, short-lived drops and slower, steady gains. Currencies show intermediate trends bounded by noticeable major stopping levels. while long-term interest rates have long-term direction.
Charting remains a most popular and practical form for evaluating commodity price movement, and numerous works have been written on methods of interpretation.

Once you have mastered the basics of trading commodity futures, you may wish to begin trading stock index futures. Your Stock-Trak account allows you to trade futures on a number of different stock market indexes. To trade stock index futures, you first choose the stock index you want to use and find the ticker symbol for that index. You must also know the ticker extension for the maturity month of the futures contract.
The most popular stock market indexes are the Dow Jones Industrial Average (DJIA) and the Standard and Poor’s 500 (S&P 500). Futures contracts for the DJIA trade under the futures ticker symbol DJ. Futures contracts for the S&P 500 trade under the futures ticker symbol SP. At the time this was written, the contract value for a single DJ futures contract was 10 times the underlying index level, and the contract value for the SP futures contract was 250 times the underlying index level. However, these contract values may change and you should consult the Stock- Trak website for the latest contract specifications. If you wish to know more detail about contract specifications, you should consult the Chicago Board of Trade website (www.cbot.com).
For example, suppose you go short a single DJ futures contract when the futures price is 10,150, and then at contract maturity the underlying index has a value of 10,025. Your dollar gain is then 10 × (10,150 – 10,025) = $1,250. Alternatively, suppose you go long a single SP futures contract when the futures price is 1310, and then at contract maturity the S&P 500 index is at 1302. Your dollar loss is then 250 × (1310 – 1302) = $2,000.
Futures tickers for stock indexes have a two-character extension denoting the contract expiration date. Just like commodity futures, the first character is a letter representing the expiration month, and the second character is an integer representing the expiration year.