Colin Nicholson: Building Wealth Through Shares | Ask Colin

Why do your moving averages never seem to touch the price bars?

Mon, 30 Jun 2008 19:28:00 -1000

I assume you know what a moving average is. If not there are articles on my members web site

www.bwts.com.au (not free) and on the internet (free). Just put "Moving average into Google" and you should find lots of explanations like http://en.

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Do you have a view on the significance of the Coppock turning up without having first been in negative territory?

Mon, 28 Apr 2008 13:45:00 -1000

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Is your sell stop triggered by an intraday violation of your stop level or by a close below your stop level?

Wed, 09 Apr 2008 20:10:00 -1000

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Could you give an example of your analysis of peaks and troughs?

Mon, 31 Mar 2008 18:03:00 -1000

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Can I still get the videotapes and/or DVDs of your investment plan?

Mon, 31 Mar 2008 17:12:00 -1000

I originally taught my investment plan in a two-day seminar. This was very exhausting, but it was great for making sure I was talking at the right level and addressing typical questions from the participants. Later I did it as an investment camp. I videotaped the camp presentations. When the videotapes were all gone, I transferred it to DVD. Alas they have also all gone long ago.

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What is your view of the effectiveness of mechanical trading systems in general and the Sharefinder SPA 3 system in particular?

Mon, 17 Mar 2008 09:53:00 -1000

There is already quite a lot of comment on my web site about computerised trading systems. Not only my views, but links to Trevor Sykes excellent columns on Star Trader (it went under several names) and also ASICs warning on the Articles page.

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How do I convert the Coppock spreadsheet from the Data Files page of your web site into a chart?

Wed, 27 Feb 2008 08:34:00 -1000

Firstly, you do not need to chart the data to read the spreadsheet. The signal comes when the last column has gone negative and then ticks up to less negative than it was. I usually make a comment alongside the signals see May-June 2003 on the ASX All Ordinaries spreadsheet.

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For the first time in 15 years, the ANZ bank monthly RSI has dipped below 50 (Question sent in February 2008). Although oversold, is it common for stocks to go beyond these oversold indicators before they stabilise?

Wed, 20 Feb 2008 09:27:00 -1000

First, I have to state that what I am saying below is NOT about ANZ as such and is not giving any view about ANZ or what you should do about it. I have to make this caveat to protect myself in that I never respond to queries about specific stocks for fear that I am giving advice. This is because I have chosen to be an educator of investors rather than to be a licensed adviser.

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Should a beginner buy MetaStock, Insight Trader or something else?

Sun, 10 Feb 2008 15:43:00 -1000

MetaStock is the most popular charting software on the market. This is partly because it has been around a long time, but also it is widely advertised and promoted. You need to be aware that it originates in the US and getting support is not easy. One of the big selling points for Insight Trader for me is that there is local support available at a reasonable price.

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Can you recommend charting software to chart Relative Strength Index (RSI) for stocks?

Sat, 09 Feb 2008 10:59:00 -1000

I do not recommend software, because I do not have time or inclination to test charting software.

For my own purposes, I use Insight Trader charting software and it will draw RSI in a sub-chart under the price chart, which is the usual configuration. You may select the time period parameter for the RSI calculation.

RSI is an extremely popular indicator in the momentum oscillator category. It can also be used in trending systems with some reservations.

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What is the difference between Relative Strength and Relative Strength Index (RSI)?

Sat, 09 Feb 2008 00:00:00 -1000

There is actually no connection between them whatsoever. They are completely different. This is one of the ongoing confusing things in technical analysis.

Relative Strength is simply the price of one security divided by the price of another security or by the value of a market index. It shows whether the stock is stronger or weaker than the reference stock or index.

RSI stands for Relative Strength Index and is a momentum oscillator.

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Your Insight Trader filter rules for New Highs and New Lows, uses 260 days. This refers to days the stock traded and not market days. Would it not be better to use 52 weeks or 12 months?

Sat, 09 Feb 2008 00:00:00 -1000

Everything you say is true. However, there is a problem with using weeks or months in the formula too. I did some testing, comparing the filter results with the AFR. What I found with using weeks instead of days was that if a high was made on the last day and also an identical high was made on a day earlier in the week, it counted the latest high as a new high. Obviously this is not right either and it would be worse with a monthly filter.

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How up-to-date are the price earnings (PE) ratio numbers in the Australian Financial Review and elsewhere?

Thu, 22 Mar 2007 15:57:00 -1000

As stated at the top of the table each day in the Australian Financial Review, the earnings figures used are historical rolling 12 month totals based on company provided data in interim and annual reports.

It is my understanding that most historical ratios would be calculated this way. The only time you need to be a bit careful is around the reporting season when the rush of results sometimes means there is a delay of a week or more in updating the data in the tables.

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How is Average True Range calculated?

Sat, 03 Feb 2007 13:22:00 -1000

True range is the greatest of three measurements:

1. The price difference between today's high and today's low
2. The price difference between today's high and yesterday's close
3.
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How do I get data from a spreadsheet into an Insight Trader data file?

Mon, 23 Oct 2006 18:13:00 -1000

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Using Insight Trader, how do I construct a saved chart arrangement of the relative strength of all GICS indices to the All Ordinaries index, rebased to 100, with a regression line and with each chart ordered by the slope of its regression line?

Thu, 24 Aug 2006 21:25:00 -1000

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To follow one of your suggestions regarding sector rotation, I would like to construct a saved chart arrangement in Insight Trader of all of the GICS indices, to show the relative strength of each index.

Thu, 24 Aug 2006 21:17:00 -1000

I am going to be a bit pedantic about this aspect of your question. This is not to be clever, but to bring out some points that I believe are very important and not well understood.

Firstly, you refer to one of my suggestions. This could be just loose language, but I did not intend that my reference in The Aggressive Investor on page 59 to sector rotation was a suggestion. It was intended as no more than an interesting observation on the second phase of a bull market.

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How do you factor capital gains tax into your thinking?

Mon, 07 Aug 2006 15:58:00 -1000

This is not an easy question for me to answer for you for a number of reasons. I have no expert knowledge in this field. I am not qualified or licensed to advise you. I am therefore not legally able to give you any advice in this area. The incidence of capital gains tax can be different, depending upon how your tax affairs are structured.

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If you use Metastock software, how do you calculate Coppock indicator on the software?

Mon, 07 Aug 2006 00:00:00 -1000

I do not use Metastock software. I use Insight Trader software. Insight Trader uses Coppock's original method.

On my web site, in Newsletter No 1, is a formula I was given for calculating the indicator in Metastock. As I read it, it seems to replicate Coppock's original formula, providing Metastock's algorithm for a weighted moving average is the same as Coppock's.

Coppock also made one additional step, which is not included in this formula.

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My accountant says losses and expenses related to active futures trading can't be deducted against income from a full time job, unless the profit made in trading is over $20,000. Is this so?

Mon, 07 Aug 2006 00:00:00 -1000

This question is outside my expertise. I sought help from Tony Compton, who has provided the magnificent reply below. In the area of taxation, it is important that you understand the nature of advice of this sort. Please carefully read the disclaimer at the end of Tony's answer, for your own protection.

The accountant is either wrong or his client did not understand what he was told.

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Looking through your web site i found your Portfolio. Why don't you put a watch list as well?

Mon, 30 Jan 2006 19:54:00 -1000

Answer
This sounds like a good idea until you consider:

The purpose of the portfolio disclosure page on my web site is to enable readers of my columns and articles to know whether I hold a stock that I have discussed.
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There are many sites where they forecast the EPS Growth. One site has an ASX overall Top 10 forecast EPS Growth as at 06/01/06 (EPS Growth (%) F/Year), ranging from GLB 4900% down to HDR 120%. What are your thoughts on these types of forecasts?

Sat, 14 Jan 2006 16:38:00 -1000

I know nothing about how these forecasts are generated, but it sounds to me as though they may have some automated system that is based on a formula. Then again, it may be that they are analysts' forecasts - maybe the consensus of the published analysts' forecasts.read more )

Is there charting software which will let me find shares that meets a certain criteria?

Fri, 06 Jan 2006 20:06:00 -1000

I most definitely do. Insight Trader charting software, which I use, specialises in doing the sort of filter of the database of shares that you describe. It is very fast and there is additional functionality: If you have first set up a template chart the way you want to look at each stock that the filter run finds, you can click one button and create a chart for every stock in the list ready for you to analyse them.

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Where can I find commodity prices on the Internet?

Wed, 04 Jan 2006 20:56:00 -1000

This question arose out of this item in Newsletter No 55:

Help Wanted - Commodity Prices
From 16 January (2006) the London Metals Exchange will only provide price information by paid subscription. I have a reader who is looking for new free sources on the internet for commodity prices especially for aluminium, copper, lead, nickel, tin, zinc, silver, coffee and crude oil.

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Your Research Report No 2 included a write-up on the Coppock Indicator. Is it still available?

Sun, 01 Jan 2006 09:05:00 -1000

No it is not still available. Some of the material on the Coppock indicator is in articles on my members only website and in my book The Aggressive Investor. The material from Reserach report No 2 is below:

Colin Nicholson: Building Wealth Through Shares | Ask Colin

Why do your moving averages never seem to touch the price bars?

Do you have a view on the significance of the Coppock turning up without having first been in negative territory?

Is your sell stop triggered by an intraday violation of your stop level or by a close below your stop level?

Could you give an example of your analysis of peaks and troughs?

Can I still get the videotapes and/or DVDs of your investment plan?

What is your view of the effectiveness of mechanical trading systems in general and the Sharefinder SPA 3 system in particular?

How do I convert the Coppock spreadsheet from the Data Files page of your web site into a chart?

For the first time in 15 years, the ANZ bank monthly RSI has dipped below 50 (Question sent in February 2008). Although oversold, is it common for stocks to go beyond these oversold indicators before they stabilise?

Should a beginner buy MetaStock, Insight Trader or something else?

Can you recommend charting software to chart Relative Strength Index (RSI) for stocks?

What is the difference between Relative Strength and Relative Strength Index (RSI)?

Your Insight Trader filter rules for New Highs and New Lows, uses 260 days. This refers to days the stock traded and not market days. Would it not be better to use 52 weeks or 12 months?

How up-to-date are the price earnings (PE) ratio numbers in the Australian Financial Review and elsewhere?

How is Average True Range calculated?

How do I get data from a spreadsheet into an Insight Trader data file?

Using Insight Trader, how do I construct a saved chart arrangement of the relative strength of all GICS indices to the All Ordinaries index, rebased to 100, with a regression line and with each chart ordered by the slope of its regression line?

To follow one of your suggestions regarding sector rotation, I would like to construct a saved chart arrangement in Insight Trader of all of the GICS indices, to show the relative strength of each index.

How do you factor capital gains tax into your thinking?

If you use Metastock software, how do you calculate Coppock indicator on the software?

My accountant says losses and expenses related to active futures trading can't be deducted against income from a full time job, unless the profit made in trading is over $20,000. Is this so?

Looking through your web site i found your Portfolio. Why don't you put a watch list as well?

There are many sites where they forecast the EPS Growth. One site has an ASX overall Top 10 forecast EPS Growth as at 06/01/06 (EPS Growth (%) F/Year), ranging from GLB 4900% down to HDR 120%. What are your thoughts on these types of forecasts?

Is there charting software which will let me find shares that meets a certain criteria?

Where can I find commodity prices on the Internet?

Your Research Report No 2 included a write-up on the Coppock Indicator. Is it still available?

The Coppock Indicator