Ask Colin

When teaching your methods, you do not seem to use daily and weekly exponential moving averages, but do so in Shares and Shares Weekly. Why?

When teaching my methods, I teach what I personally use in my trading plan. However, when I write in Shares and Shares Weekly (ceased publication 14.12.02), I am addressing a wide audience and sometimes show quite long term situations and other times quite short-term situations as well as lots in between.

So, I use the methods that suit what I am talking about and also sometimes what shows the picture most clearly.

Since I started teaching my methods, I have begun using a 260-day moving average (simple, rather than exponential, but it does not matter much), which is also the same as the 52 week moving average or the 12 month moving average. Obviously none of us has a trading plan that is set in concrete forever and I continue to refine what I do. This is one of the things I have added to my plan.

It is most important to understand that the use of a 260-day moving average does not change my basic method at all. In fact it may not stay in my plan long-term. (2008 update - it is still there) However, for now it seems to be useful. The reason the use of the moving average does not change anything is that I am still exploiting the Value model and the Growth model. I do not trade the crossovers of the 260-day moving average. I use it only to clarify the direction of the trend and some information about the consistency and volatility of the trend. Thus, it only helps me see what I have been looking for all along. It also seems to help my students.

I have been presenting them in articles, columns and various talks and presentations around the country. The best presentation of them is in the mini course that is now on the subscription web site.