http://www.bwts.com.au/Answers to recent questions asked to Colin Nicholson, financial writer and educator, author of Building Wealth Through Shares web site.en-auTue, 07 Feb 2012 17:40:18 -1000Thu, 19 Jan 2012 23:49:00 -1000rss.bwts.com.auhttp://blogs.law.harvard.edu/tech/rsscolin@bwts.com.aucolin@bwts.com.au http://www.bwts.com.au/index.cfm/resources/ask-colin/1177-what-do-i-need-in-insight-trader-to-use-your-methods/ I assume that you have already read the over 50 questions and answers on Insight Trader on my website Ask Colin page, so I will be brief here. I have used Insight Trader for over 20 years and it meets all my charting needs.Assuming that you want to use my methods, you will need to start:The basic software.The Systems module for doing scans of the market.The Database Manager service from Insight Trader to keep your data files up to date with splits etc.Thu, 19 Jan 2012 23:49:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/152-are-you-able-to-point-me-in-the-right-direction-on-which-chartin/ I have been using Insight Trader for many years and continue to believe that it is excellent value for money and does everything I need to trade shares. I recommend it on the basis of my own personal experience. I look at other software from time to time. This falls into three categories:1. General Charting software. I have not found any as good for my purpose as Insight Trader.Thu, 19 Jan 2012 23:24:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/174-do-you-know-a-subscription-website-listing-australian-shares-poi/ The quick answer is no. The longer answer is that I doubt you will find one. The chart library services that used to operate in Australia have died. They have been killed by charting software which can provide the same product instantly up-to-date and cheaper to buy even though you have to first invest in the charting software.So, I think your solution is to buy some CHARTING software. Not TRADING software. You will then need a data vendor from whom to download the data daily.Thu, 19 Jan 2012 23:21:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/175-should-i-consider-something-like-insight-trader-or-is-commsecand/ I think Comsec and similar broker-provided software is alright to start with. However, I think you will soon chafe at the limitations, if you are serious about technical analysis. Yes, you sound like an active investor, but that is still trading to me because capital gain seems to be you main objective rather than dividends.I suggest you look at playing with the demonstration version of Insight Trader charting software from www.insighttrading.com.au and see if you like it.Thu, 19 Jan 2012 23:19:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/2-do-you-thinkandnbspjoining-day-trader-hq-in-perth-wa-1760-using/ I am familiar with MetaStock charting software, but not with the Day Trader HQ course.MetaStock has been around a long time. I have heard comments from users that it has not been kept up to date as fast as it might have from time to time. For example, there were years of frustration when they limited the number of stocks you could have in a folder, while most other programs had an unlimited number. This has been fixed now I believe.Thu, 19 Jan 2012 23:09:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/20-is-there-an-australian-serviceandnbspfor-the-relative-strength-r/ I am not aware of a rating service as such. However, the charting software that I use enables you to do what I think you are looking for. You can set up relative strength charts for as many stocks as you want. You can rebase the relative strength charts so they all start at 100 at a chosen date. This enables you to see the best ones quite easily.The charting software is Insight Trader. See www.insighttrading.com.au or call Bernard Chapman in business hours on 02 4751 2932.Thu, 19 Jan 2012 23:07:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/1176-what-is-the-best-way-to-invest-cash-reserves-if-the-stock-market/ The cash issue was dealt with in Free Newsletter 77 – you can search that page in the usual way with Ctrl+F – “cash” found two articles. I have made the mistake in the past of tying up my cash reserves in ESANDA debentures (18% at the time). However, the stock market turned up much earlier than I had anticipated, so I was locked in for a few years. 18% sounds a lot, but the inflation rate than was very high.Sun, 18 Dec 2011 22:47:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/1175-iandnbsphave-started-learning-andnbspbutandnbspget-confusedandnb/ You are starting on a journey that many have made before you. It often works like this: you read one book and it all seems clear. Then you read more books and it seems to get murkier. This is very normal. It takes some time before all the pieces fit into a trading/investing plan, or are discarded.Another thing is that when you read a book a technique seems to be fine, but then you have trouble with using it in practice. This is also normal, so just keep working at it until it comes clear.Mon, 28 Nov 2011 21:21:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/1174-for-a-beginner-what-is-the-best-charting-ta-software/ My advice is to do the Kaplan subject FIN231 first. You do not need software to do it. When you begin to understand what markets you wish to trade/invest in, and have a basic idea of how your will go about it (what indicators and chart types you need), that is the time to look at software. Until then, you should be able to get by with some free software on the Internet: Yahoo/finance, bigcharts.com and your online broker’s website (if you have one).Mon, 28 Nov 2011 21:17:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/1173-why-does-telstra-not-appear-on-the-52-week-scan-18-november-2011/ I run these scans as of each Friday. That means that providing a stock traded all five days of the week, it will only appear on the scans on those weeks where there was a new yearly high. If you put up a weekly bar chart, it will be evident that there have only been two weeks when Telstra would have made the list:Week ending 19 August andWeek ending 21 OctoberWhen I checked the scans for those two weeks, sure enough, Telstra was listed.Sun, 20 Nov 2011 20:37:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/1172-why-do-you-compare-your-returns-to-the-accumulation-index/ You are correct that the Accumulation index is not a perfect comparison. The differences are:The index notionally reinvests dividends on the ex-dividend date which is quite a few weeks ahead of the actual payment date. I cannot reinvest a dividend until the payment date, so this makes it difficult for me to ever catch up.Fri, 18 Nov 2011 00:45:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/32-weinstein-specifies-that-price-dividend-ratios-of-14-to-17-gross/ I think your calculations are correct, except they would not be grossed up figures. There is no imputation system in the US and the statistics we get here are also not grossed up, but nominal yields.I do not use the ratios, but I keep long-term charts of the ASX Dividend Yields for the All Ordinaries index. Likewise, I keep long-term charts of the All Ordinaries PE ratios. I now take the weekly figures out of the AFR.Mon, 10 Oct 2011 05:07:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/158-what-software-packageandnbspis-strong-in-technical-analysis-espe/ I suggest that you also evaluate Insight Trader (www.insighttrading.com.au). It has exceptionally strong filtering functions in its Systems module. I use it, for example, to scan for new 52 week highs and lows, advance and decline data and, using the fundamental data supplied with Data Base Manager, I scan for stocks that are undervalued on fundamentals. You can also scan by sector or sub-sector and by all sorts of technical analysis functions.Thu, 04 Aug 2011 04:48:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/12-which-dow-phase-are-we-currently-in-early-2001-and-when-are-we-l/ My reading of the Dow Phase Analysis is that we are in stage 1 of a Bear market - the abandonment of hope. I say this because we have clearly passed the top in the Nasdaq index and started down.We are seeing lots of profit warnings, which are the signs that the ridiculous hopes on which speculation was based are being crushed by emerging reality. Each time there is a major profit warning, the stock concerned falls sharply and drags the market down with it.Thu, 28 Jul 2011 05:44:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/99-how-can-i-draw-a-valid-trend-line/ The rules for valid trend lines are very clear, as taught in FIN 231 Technical Analysis  at Kaplan (previously E114 Technical Analysis at FINSIA/SIA. The problem with the example you sent is that you have a tentative trend line, but not a valid trend line. The reason is that there was a strong acceleration in the price that is shown by the price running way above the tentative trend line. The result has been that the line has never been validated.Wed, 01 Jun 2011 06:58:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/115-what-is-theandnbsplook-back-period-for-the-new-high-new-low-indi/ The new highs and new lows are for 52 weeks. That is, today's high is a new high for the last 52 weeks or today's low is a new low for 52 weeks.I am not a Metastock user, but I understand it can interrogate a database, so it should be able to filter out a list for you. Insight Trader also gives the total number of hits for a filter run. You may have to add them up in Metastock. You will, of course, need a database of all stocks on the ASX.Fri, 20 May 2011 02:42:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/159-is-there-aandnbspmetastock-formula-that-can-create-the-new-high/ In Shares magazine you had an article about new highs and new lows. I have got the MetaStock program and I would like to know if there is a formula that can create the new high-new low indicator.You can chart the data in Metastock easily enough. Download the historical data file in ASCII from my web site and import it into Metastock. You chart the cumulative column.As for creating the data in Metastock, it is not easy.Fri, 20 May 2011 02:39:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/82-how-can-i-set-up-the-new-high-new-low-indicator-in-metastock/ I am not a Metastock user, so I cannot tell you exactly. However, what you are going to have to do, I think is take the ASCII file I give you and drop it into a spreadsheet. Then create a column that is the cumulative difference of the daily New High minus New Lows.Since Metastock does not cope with negative numbers, I would add a large number at the start like 50,000, so that it never goes negative.Then you put the date field and the cumulative column into a Metastock file.Fri, 20 May 2011 02:36:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/135-i-note-that-elder-says-nh-nl-doesnand39t-work-in-markets-dominat/ I believe that Dr Elder is correct. His point would also be true for any other breadth indicator such as the Advance Decline line. The whole idea is that stock market indexes measure what the large stocks are doing. The breadth indicators measure what the plurality of stocks - the broad market - is doing.Fri, 20 May 2011 02:35:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/124-what-are-the-filter-rules-for-the-insight-trader-systems-module/ Set up these filter rules:New HighsH(D):>:MAX(260,D-1)New LowsL(D):<;:MIN(260,D-1)Run them using a file you have created of all ASX stocks (use Generate Hilite List). Set the date you want to filter and set notrades days to zero.This generates a list, but the table shows the total hits, which is the figure you enter into your data file.Fri, 20 May 2011 02:29:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/166-whatandnbspfilter-you-are-using-in-insight-trader-to-calculate-n/ The filter rules are provided in the answer to a separate question.Here are the steps for the daily update procedure: (1) Use Generate Hilite List to create a list of all ASX stock codes. Do not include the indexes. Sort them first to bottom of the list and do not select them. Save it as ALL ASX. It is also important to update Data Base Manager using the Webupdater each Tuesday and recreate the ALL ASX list.Fri, 20 May 2011 01:21:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/151-where-does-the-andquotsteadiesandquot-category-fit-into-the-new/ Each day those stock that trade will either:          Rise in price - called Rises or Advances          Fall in price - called Falls or Declines          or their price will not change - called Steadies.These three totals are used in the Advance - Decline indicator.Tue, 03 May 2011 01:29:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/191-is-there-a-role-for-intraday-data-in-trading-decisions/ It all depends on your time frame. If you are trading in and out during the day (a day trader), then you cannot do without it (and the cost of it and the brokerage will probably depress your profitability).If you buy for several days or any longer time, you probably don't need intraday data very much, if at all. Although I am an investor, I sometimes use intraday data when I am finessing an entry or an exit.Mon, 18 Apr 2011 04:40:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/187-the-advice-offered-by-some-brokers-is-not-always-accurateandnbsp/ This was not really a question, but it raises important issues, so I would like to respond.Hindsight is a wonderful thing. If I could get a broker to take my orders on hindsight, I would be very rich. Seriously, predicting the future is impossible. All any of us can do is to assess value or prospects of a company and so try to invest where the odds seem to be in our favour.Your detailed question involved a company called harris Scarfe.Fri, 25 Mar 2011 05:39:00 -1000http://www.bwts.com.au/index.cfm/resources/ask-colin/1171-what-is-high-frequency-trading/ High Frequency Trading is activity aimed at bombarding the market with high volumes of small orders in order to profit from small, often fleeting, price discrepancies in the prices quoted for single stocks (perhaps on multiple stock exchanges) or between pairs or groups of stocks. Indices may also be traded as derivatives.Thu, 24 Mar 2011 23:14:00 -1000