In the last article I discussed two examples of how and why volume can show the changing face of supply and demand. When the order of supply and demand is change we will get a change in market direction, sometimes a significant change in trend or otherwise some degree of retracement of the prior move. We will now continue on from that discussion and show larger periods of transition which can lead to quite substantial turning points in the major trends. These can be easy to identify, but do require some patience. If you did not read the prior article it would now be worth reviewing that before going on. (more…)

The power of correct volume analysis cannot be overlooked. Unfortunately the ability to read volume correctly is not readily discussed or freely available. Off-the-cuff remarks such as, “increased volume on advances is bullish and increased volume on declines is bearish” are bantered around but that’s as far as it goes. The correct use and application of volume can make for some quite startling insights into price action, especially when one is swing trading or leaning against support and resistance points or zones of confluence. (more…)

The most important part of investing and trading is psychology. Investing is a constant struggle where the battleground is not the market or advice given but comes from within you. You will face stress over losses, you will be in turmoil in deciding to enter or exit a position and it will place many demands on you that force you to think of who you are and what you’re trying to achieve.  But the crux comes when you learn things about yourself that you’d prefer not to acknowledge. You will automatically push them aside into your subconscious and be left with the easy part, such as laying blame or exploring a better way. This theme runs through all our lives in various formats.

Unfortunately the decision making processes throughout our lives, including ongoing management of investments, are formed within our belief systems that in turn have been seeded by our early childhood experiences and, less so, our experiences since then. I say unfortunately because talking a person out of their misconceived investment beliefs is like trying to talk someone out of their religion. It doesn’t matter that they can’t demonstrate positive results. They believe anyway, and that is that. Of course that is good for the rest of us, because if some didn’t lose there would be nothing to win. (more…)

Preface: This article has been designed and optimized for the The Chartist’s Growth Portfolio. The principles contained herein are effective for any trend following strategy of any time frame, but all references will be directly related to the The Chartist’s Growth Portfolio.

The term ‘pyramiding’ refers to the adding of positions to an existing holding as the share price moves in the direction of the current trend. For pyramiding in bullish market environments this means adding positions as the price continue to rise. It does not refer to adding to positions as price falls. Adding to losing positions is a quick way to the poor house. The simple concept of trend following is to buy strength; buy high and sell higher.

The key benefit of pyramiding is that a clean and sustainable trend will allow excessive gains to be made with minimal additional risk taken. It could be argued that one single clean and sustainable trend can double or even triple a non-pyramided account return in any given year.

Obviously there are downsides as well that we will discuss later in more depth. (more…)

A recent release from The Industry Super Network (ISN) – the umbrella organization for industry super funds here in Australia, suggests that high embedded fees, including commissions to financial planners, is the main cause for the poor performance of for-profit retail super funds. And, according to Australian Prudential Regulatory Authority (APRA) data, the average return for retail funds over the last 13-years has been 3.6% and 5.5% for industry funds.

Is it possible for retail investors to navigate their way around these funds and take control of their direct SMSF equity investments for themselves and in doing so reduce these excessive fees and possibly generate better returns?

The answer is emphatically yes. (more…)

May 2010

Nick, tell us a bit about your history as a trader?

I originally got the bug after watching someone else plot a 5 and 10 day moving average crossover system by hand. I could see how and why the strategy worked, at least in its simplest form. From there I simply progressed through the ranks of working at various banks, both here in Australia and overseas, and taking on the passion. I have now been trading for 25-years, from the trading floor of the SFE to dealing rooms in London and Singapore. I have a passion and work hard at it every day. (more…)

An insightful conversation with The Chartist’s very own Nick Radge

1. How do I identify a list of stocks to work with?

It can be done through riding with the clean and sustainable trends. Money can be made by following big swings or trends that lasts six to twelve months in time. This is similar to 2009 trend which are very profitable.

Trading for the high beta stocks is also a good strategy. Know that clean and sustainable trends tend to be found to the ASX 100 through 300. Generally stocks under the ASX 100 are too institutionalized. They also tend to become quite choppy and back fill and does not show very sustainable trend. Above ASX 300 tend to become too volatile and illiquid and so you have to be balanced. (more…)