Ask Colin

TRADING STRATEGY

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  1. What is the optimum number of trades? (question answered Dr Alexander Elder)
  2. How canI adapt your risk management for my trading plan?
  3. I see Ansell as a stock ready to buy, but how would your approach be to adding this stock to a portfolio?.  
  4. Is there a general approach to testing a trading plan?
  5. Apart from sticking to the big companies which have good liquidity, and scanning them in search of a profitable trade, is there any easy way, or faster way, to find where the good trades are?
  6. Would you ever consider selling everything, and not buying anything again until the chart of the market showed positive signs of recovery?
  7. I find buying in tranches, position sizing and stop-losses a pain. Is there an alternative?
  8. How much weight do you give to the US market in deciding market exposure in your trading strategy?
  9. Will technical analysis be less effective for share trading as more people begin using it?
  10. The advice offered by some brokers is not always accurate.  
  11. What is High Frequency Trading?
  12. What is algorithmic trading?
  13. What do you think of buying a stock as a long term core investment, but trading in and out of it as well on a short-term basis?
  14. I thought I had trading sown up. From May 03 up to November 03, I couldn't help but make money. Then it all dried up from November 03 onwards. My dilemma is whether I somehow changed my trading style and am not aware of it, or is the change in market conditions my difficulty?
  15. In December 2003, I bought Ammtec (AEC) at $1.56. It climbed to $1.85, but then fell through my stop. Can you give me some pointers? (Full question is in the answer file)
  16. You wrote an article in Shares magazine on 5 and 22-day moving averages. In your portfolio you have purchased ABC Learning Centres (ABS) on 10 March 2004. However, applying the moving averages, the trend has failed. What is the reason for holding those shares?
  17. What strategy do you adopt when companies make heavily discounted share issues as happened with Alinta (ALN) recently?
  18. In your April 2004 article in Shares magazine, you describe springs and upthrusts, but the ideas behind them seem at odds with your investment plan. Why is that?
  19. I have read that if you are out of the market on the best 10 or 20 days, it seriously reduces your return? What do you think?
  20. In Newsletter 34 you asked a potential short term trader for 15%pa return over two years. If you only trade the long side, how can you do this?
  21. What do you mean by short term trading?
  22. Do you use a broker who takes stop loss orders?
  23. Does taxation affect your investment decisions?
  24. Should I buy a stock if the market is showing a bearish divergence?
  25. How would you have traded Australand after your column in Shares Weekly June 30 2001?
  26. Does your method rely on taking every trade so that the few large winners overcome the many small losers?
  27. What is the "auction" that takes place before the ASX opens?
  28. You have suggested selling a stock once it starts going sideways. How do you determine when to sell in this situation?
  29. How can I know which stocks are going down because of general market sentiment and which ones are going bust?
  30. Where is the fine line between cutting losses and having the patience to allow your trade time and room to work?
  31. What do you do when a stock stagnates for maybe weeks or months between a breakout buy signal and a stop-loss level?
  32. Do you still continue building a position in an uptrending stock if there is a bear market?
  33. What should I do with the dogs I have left after the 2000/01 aftermath?
  34. I am a regular reader of your section in the Shares magazine. I am currently looking at Telstra as a good defensive buy at this time . I noted that you predicted it could go down as far as $4.00. I was wondering if you would mind elaborating further as I can't see how that would occur given that it is well supported by the mums and dads. I also think whoever is elected will not increase regulatory control. I enjoy your articles, although I am not a technical analyst myself. I look to the fundamental analysts for guidance.
  35. A major shareholder announced in the paper that he wants to take over the company, he made a bid of $1.76. Fundamentally the share is worth much more than what they offer....the share was in a trading range of around 1.65 it obviously shot up by him putting in a take over bid.... What is generally the trend of a share when this type of event happen.... Also what about the last 10% shareholders if the take over is up to say 90%..of the issued shares?
  36. The monthly 14 period RSI shows a strong triple divergence in August 2001. Is RSI the appropriate tool to get out before the market tops out?
  37. In your article in the September 2001 issue of Shares Magazine you illustrate several wonderful examples of charts that have trended strongly over long periods. In some of these, however, the trend line at a point in time would have been broken. Each of these then continued onward and upward but, would you have sold out about the time the trend line was broken and bought back again later as they resumed trending ? If not, ie you would have stayed put, how does one know that the price reversal below the trend line will not continue downward and wipe out your profits?
  38. Should I use a company dividend reinvestment scheme for my investments?
  39. I have been watching the video that you made when you were in the U.S. You mentioned that under certain market conditions, you would be out of the market entirely. What specific trading conditions do you look for to make this decision? I know that you discussed about the advance/decline line as one of the indicator to use.
  40. I have a moderate amount invested in Australian shares. I read the daily financial press, Age, Australian, Financial Review and Herald Tribune where there used to be a column that I really thought was good by James Glasser, and also investment books ("The Warren Buffet Way", "The Art of Investment" by Barrie Dunstan, "The Intelligent Investor" by Benjamin Graham). The advice I have come to adopt is to ignore the daily "flak" of the market and simply buy and hold a share of several good Australian companies. Time in the market not timing the market, unless of course taking advantage of a situation where a company becomes ridiculously cheap or expensive. On paper the portfolio has increased about 29% over the past 12 months including dividends. I have 15 companies in the portfolio with the main contributors increasing in capital value between 60-120% over their purchase prices. The $64 question is should I be trading more and if so why?
  41. Should I use fundamentals for market direction and technical analysis to pick the bottom of trends?
  42. I have a question that I hope you might answer for me. Biota Holdings price has fallen faster than a speeding bullet with no support insight except for zero dollars. I know that when the price was around $4.40 there was a future earnings downgrade that started the slide. ( Not enough people catching the flu in the northern hemisphere.) My question is where is the pressure coming from to push the price down? I could not in my worst thoughts imagined that it would go so low.
  43. Why are the opening and closing prices so emotion-charged?
  44. Regarding your pick for Shares Magazine Feb 2001, page 67. The chart for Housewares International (HWI) looks decidedly a sick dog nowadays. Tech analysis is cute, but until you know the people running the show isn't it a bit academic? The real truth is that no-one really knows what is going to happen next week - though many pretend they can.
  45. I regularly read your column with interest and would welcome your view on this small cap stock ...yours views on its upside potential or is this price it? To Which Colin replied: I am not a licensed adviser and regret I can not give advice about specific stocks. Which prompted a further question: Thanks anyway, I don't want advise just your opinion would be appreciated.
  46. I bought CWO some six months (oct/2000) @ 4.34 and watched them rise to approx 5.50 and did not sell, a lesson that will not need to be repeated. Should I sell now or hold?
  47. Do you keep holding a stock when it breaks out and then just goes sideways, or do you switch into another stock?
  48. It seems that the bull run has all but ended (early January 2001). Should I be trying to trade the bear market, or is there no alternative to waiting for a new bull market?
  49. I have come across you and other experienced traders saying that the strong stocks at the beginning of a bull market tend to stay the winners. How do I recognise these stocks at the beginning of a bull market?
  50. I have been making a transition from buying mutual funds on a long term basis to buying stocks on a short term basis and selling short a little bit. I assume we are now (December 2000) in the phase 2 of a bear market. Would you advise me to sell my mutual funds now and do you have any other recommendations to help me with my transition?
  51. How do you set your stop-loss?