Ask Colin

ENTRY STRATEGY

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  1. I have trouble buying new highs when a stock is rising strongly, can you help?
  2. I find it hard to get set at the previous closing price. How do you set buying quotes at the start of a day?
  3. Many buy signals tend to fail in weak markets, so I am reluctant to invest. Any thoughts?
  4. In early 2004 you increased your portfolio holdings significantly. Does this indicate increased confidence in the market?
  5. In your July 2003 Shares magazine article you mention buying into an uptrend by studying the downswings for a signal they have ended. What does this mean?
  6. Isn't there an element of pyramiding in your multiple entry technique?
  7. To buy troughs in a trend, is MACD a useful indicator for an investor?
  8. To use a moving average to buy troughs in a trend, should an investor use a weekly chart?
  9. What tactics do you have for buying once you have picked a stock to buy?
  10. With three moving averages, exactly when is the signal given on the chart?
  11. If I use a 21-week exponential moving average crossover for entries and exits (with time filters) I get a lot of false starts, but losses would have been greater without it. What do you think?
  12. In your June 2002 Shares article on MACD, you said it was a powerful exit indicator. Can't it also be used for entries or at least to monitor developing opportunities?
  13. I read your recent article (Shares August 2002) in which you described the candlestick reversal patterns "Hammer" and "Hanging Man". Are they buy and sell signals respectively?
  14. Buying breakouts only seem to have a 40 to 50% success rate. Is there an additional filter that increases the hit rate?
  15. If I place a limit order after a breakout, I often never get a fill. What is the best way to get in after a breakout?
  16. If you wait for the correction for a few days and then when it occurs it is above the original breakout do you still proceed with the trade?
  17. When you make the original purchase of a stock after the breakout has occurred and then you are waiting for the correction ... do you continue to wait for a correction if the stock is trending strongly or do you abandon the stock?
  18. Questions on the Trendlines column in Shares magazine December 2001 (complex question)
  19. I was hoping that you would be able to inform me as to what your strategy would be in this situation: A stock as broken out of its accumulation period, and you purchase the next day. Following your trading pattern, you await a correction to purchase your second lot, but the stock continues to trend up. In other words, no correction below you original entry comes. Is there a point at which you would decide to purchase more without a correction?
  20. I would like to know what charts - daily, weekly, or monthly - do you make your decisions to enter/exit trades? It seems to me that at times these 3 charts (on the same stock) can indicated 3 different trends - up, down and sideways.
  21. I was interested in your 'Trading' column in November Shares magazine where you talked about market panics and specifically your experience with Boral (BLD). As the price hit your stop level you sold as per your plan. So, without taking up too much of your time: (1) when do you consider buying again? (2) Have you bought back into Boral? Or are you waiting it out to see if the downward trend in the general market continues?
  22. When a breakout is to a price above your upper channel, would you still buy?
  23. I have read Alexander Elder's book Trading for a living with great interest. I notice that he suggests that shares should be bought around FAIR VALUE at between the 22 and 30 day SMA. I think that you are also an advocate of this method. Most Buy signals are produced by a stock breaking out of a range or continuing a trend. The problem is that most of the time this then greatly exceeds the 22 day SMA in price. Does one: 1. Ignore fair value and bid the market price or 2. Does one bid the 22 day price and hope for the best that a retracement will allow one to pick up the shares?
  24. What is your buy order is usually based on?. Today (20 July 2001)I am actually very doubtful on executing buy order for Pasminco Ltd, the stocks for this company have broken out my resistance trend line but I am quite worried that Pasminco might be insolvent. In this case, what is your opinion for Pasminco, should I buy the stocks once the breakout occurs or I should also considering on its fundamental analysis as well?
  25. I have over the last few months made a close study of Sam Weinstein's book Profiting in Bull and Bear markets He uses the Comparative Relative Strength and buy stop technique etc to buy strong stocks in strong sectors on a breakout. This appears to work very well but every now and then a 10 to 15% retracement will kick one out of the trade. I notice in one of your newsletters that Elder suggests that one should buy a share near the 22 to 30 day MA. This technique presumably stops one chasing a price and paying too much on entry? Please tell me if my interpretation is wrong
  26. I really enjoyed the seminar in Sydney and got heaps out of it. A quick question on your breakout method. We enter a trade on a breakout above resistance... If the breakout is very large and moves far above resistance, would you buy with 1/3 of the position on the next day simply because the entry criteria has been met or would you wait until the second entry criteria (the pullback to resistance) and buy with 2/3 of the position?
  27. In your seminar, I liked the idea of splitting the entry points into a trade as it feels less risky than putting the whole 6% of capital on the first trade which has been my approach up till now. I was wondering if the increased cost of brokerage makes it too costly, although I guess by the time the 2nd and 3rd trade have been made the upward trend of the share will have been confirmed which probably off-sets the extra brokerage?
  28. I often do not buy a stock because of the lack of depth. Am I focussing too much on market depth?
  29. I am thinking (early October 2000) about investing in managed funds. However, am I interpreting your articles correctly as suggesting I would be better to wait?
  30. Which one indicator is best to identify strongly trending markets?
  31. 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?
  32. You refer to an initial position size of 6%.... with minimum entry of 2%. You recommend selling half if the trade is successful and reaches 12% of capital to maintain balance and diversification. In some examples you refer to further purchases as it takes out the top in each swing... Do you mean that you keep buying until your holding equals 6% of capital? Would you ever consider exceeding the initial 6%?