Using TA to time entries and exits

Why don't you post a link to the original site where you took all this information from?

It's all here: http://www.incrediblecharts.com/indi...moku-cloud.php

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Originally Posted by KW

Better yet, why don't you stick to the thread topic and show how using an Ichimoku Cloud would have signalled an entry or exit on a stock. This thread is about applying TA in real life not regurgitating its theory.

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I have spent a lot of time looking at Ichi and have not found it useful as a trading tool.

Sticking my non trading nose in (and knowing NOTHING about the company and just looking at the 10 year (not the one year) chart) I, as a long termer, would have held and be looking to buy more...but as a trader I suppose I could see the point in selling and looking to buy back in as it recovers... Is this your plan?

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Originally Posted by KW

MTU had been flirting with the 200 day MA for the last six months, but the breach was never confirmed as the share price quickly bounced back up each time. However, after the third time it happened and the price did not go on to make a higher high, but once again fell below the 200 day MA and this time stayed there (and the RSI had never moved back into positive territory) , I decided enough was enough and MTU was sold on the 7th April for $5.83. Was that a good TA decision - you tell me :eek2:

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Originally Posted by BIRMANBOY

Sticking my non trading nose in (and knowing NOTHING about the company and just looking at the 10 year (not the one year) chart) I, as a long termer, would have held and be looking to buy more...but as a trader I suppose I could see the point in selling and looking to buy back in as it recovers... Is this your plan?

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Birmanboy, at what point would you be getting out this stock? It has dropped 22% from its peak. Would you be getting out if it droped 30%, 40%...?

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Originally Posted by BIRMANBOY

Sticking my non trading nose in (and knowing NOTHING about the company and just looking at the 10 year (not the one year) chart) I, as a long termer, would have held and be looking to buy more...but as a trader I suppose I could see the point in selling and looking to buy back in as it recovers... Is this your plan?

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Birmanboy, at what point would you be getting out this stock? It has dropped 22% from its peak. Would you be getting out if it dropped 30%, 40%...?

Ride em cowboy..... hypothetically speaking since I am not a trader. If you forced me to make a decision I would be looking at underlying company information, its place in the industry, overall market conditions etc. etc. Presumably as a trader I would have a set range to sell and a set range to buy. If one wants to be successful presumably it would make sense to have pre-established guidelines and stick to them. Discipline is important to my way of thinking. I imagine traders like to measure and evaluate their trading systems and if you don't follow the rules you cannot test the results. I cannot imagine a trader letting something drop that much but I suppose it depends on the previous trading patterns it could well be that some shares have greater volatility and one could set a wider range between events. As a holder I must confess to letting shares get into your 30% range but MOST of the time they have recovered and in the meantime I have been getting dividends. Obviously completely different when trading. I have recently started some trading and have had one success and one failure (so far) but have yet to develop any real rules of engagement .

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Originally Posted by lou

Birmanboy, at what point would you be getting out this stock? It has dropped 22% from its peak. Would you be getting out if it droped 30%, 40%...?

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Ah ha I assumed you were trading it based on the thread. So if you owned it for 2 years buy price would have been approx. 3.30 and selling it at 5.83 is a very nice return just from growth alone. As I said previously, looking at the ten year chart shows a better picture but that's purely superficial and I know nothing on the companies prospects and current position. I can see your rationale if there are other more attractive prospects available. Not sure if I agree with your point that good companies never lose their mojo. Buying strong companies at the height of their strength can be limiting to the upside potential in comparison to a basically sound company that has lost its way temporarily. Tortoise and hare. However everybody works to their own systems and achieving that sort of return on a regular basis would make your system the envy of most people.

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Originally Posted by KW

I am not a trader, this was not a trading stock (having owned the stock for two years). I am a long term investor in solid companies in strong uptrends, which MTU is not anymore. So while it goes back on the watchlist, it may be some time before it looks to recover the momentum it used to have - like FXL. In the meantime there are other opportunities where the risks are lower and the rewards are greater. I simply don't like sitting around waiting for stocks to recover their Mojo - a good stock never loses it in the first place. You only have X amount of $ to spend in the market, so your aim should be to have that $ invested in only the very best stocks you can find, not the stragglers.

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Whatever gets you up in the morning:). How does your system cope in a sustained down market...surely must be a lack of suitable options then? What/how do you change? I use elements of TA for buying and buying more but death is my exit strategy (based on premise of dividends for life). Of course this theory /strategy has no proof available since I have been in market relatively short period and haven't died recently so all a bit of work in progress.

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Originally Posted by KW

The problem is that you don't know how long "temporarily" is. Could be years before it recovers, or it may never do so. One profit warning is usually followed by others. The risk of waiting it out can be lethal if the company continues to fail - see Forge as an example. I tend to bail on the first sign of bad news. When you have a lot of money at stake, capital protection outweighs everything else. That and I'd rather get 20% per annum growth consistently than 100% growth on occasion.

Its not as if there is ever a shortage of strong performing companies to choose from. And some growth companies may only achieve it for a few years before growth begins to stagnate and your future returns become limited. So you run with the good ones for so long as they are outperforming the rest of the market, and you move on from the "still good but not great" companies. That is in essence the value of TA and timing the stock/market - your money is always where it is working hardest, otherwise you are just a FA investor at the mercy of the market to recognise hidden value in a stock. Both approaches work - but I believe the FA/TA combo accelerates returns (and when applied to long term investments those returns are not eaten away by overtrading or commission costs, which is usually what kills pure TA driven trading returns).

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Originally Posted by KW

I would remain in high yield stocks (eg. REITs) for the dividends, but would exit all my growth stocks. I would be buying contrarian ETFs like QID and BEAR if they showed they were in a TA uptrend. Otherwise I would be in cash waiting for the bottom to be found.

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I like your style. Watching CNBC this morning they put up a chart of the Nasdaq and it showed a very clear head and shoulders pattern with all the risk too drop off from the right shoulder. With the Russian / Ukranian situation potentially affecting European stocks and having world-wide trading implications, (one of their expert analysts after just coming back from the Ukaraine thought that it seems almost inevitable that Russia will invade eastern Ukaraine), its hard to see very high PE and no PE stocks, (i.e.like those trading on nothing but thin air and promises and future sales growth with no demonstatable proven profit record) not getting their wings clipped as a rotation towards value stocks and safe havens gathers momentum. Well run, moderatly geared high dividend REIT's look like a good place to hide, as is good old fashioned cash or short term high quality bonds.

Hi KW. My first post - very interesting thread. If you don't mind me asking, what sort of returns have you averaged using your current approach?

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Originally Posted by KW

Even better, the listed trusts usually also suffer a P/E contraction along with the general market, pushing their yields up. It is often a good chance to buy them cheap, in order to get more cashflow in the future. I think most of my REITs are currently delivering 14-28% yields now on my buy price a few years ago. Keep reinvesting the cash, and the magic of compounding does the rest.

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Yes we've seen that with Goodman property trust which for no reason has been beaten back to trade slightly under NTA and showed a fully tax paid dividend yield of 6.5% based on my recent extry price. They're only distributing about 80% of their profit so the gross dividend yield for those on a 33% tax rate here at 9.7% understates their true earnings. Developments of their land bank are progressing well.

Would you please be so kind as to share your two most preferred Australian REIT's together with their current yeilds based on current pricing, that would be most appreciated.

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Originally Posted by KW

Current long term income and growth portfolio (21 stocks) is up 125% with shares purchased between 2011 and 2013. This doesnt include the stocks I've sold this year though, as I havent reinvested the profits yet. My smaller more speculative portfolio is up over 300% with shares purchased 2013-2014.

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Very impressive, thanks for answering.

Are all of those in your growth portfolio from NZX and ASX?

Thanks I'll look into those.

KW, great thread. I've only just discovered it. I am an FA investor but try to use some sort of TA to help my timing, although haven't got to the point where I have a system. I rely more on my ability to know whether something is undervalued or overvalued and position myself accordingly.


Curious to know whether you use EMA or SMA and why? I can see the merits in both, but am leaning towards EMA especially when considering longer time frames

KW, very interested to know how you set trailing stops?