Increase your holdings at no cost

[nioka]

The volatility in this bearish market allows an investor to increase their holding at no cost. This can be done by exchanging one share for another and back again and increasing the numbers in the process. Anyone following the ADI thread will see that I have been doing this by switching back and forth with ADI and AUT for some time. At no cost I have increased my holding in ADI by more than 50% and recovered my initial outlay plus some profit in the process.

To start you need to find another stock with the same interests as one you hold. Calculate relative values and trade the difference in the SP according to those values. Initially I started with ADI and AUT, gave them relative values and trade the highest value one for the lower value one. I have also increased my holding in MCR the same way by trading it with AGM,ZFX, OXR and now OZL. The number of extra shares held makes up for the price fall.

I also traded AOE for BUL. Hasn't been successful yet as BUL is dragging the chain but I live on hope there.

I have been back and forth between TAS and TASO, MOS and MOSO and TEY and TEYO with some success.

I am considering trading my NSL for CAG. My NSL are free carried, my CAG are showing in red ink.

I'm interested in any suggestions for other stocks with relative values and fluctuating prices.

 

[Aussiest]

Re: Increase your holdings at no cost.

I don't really get what you're saying. Care to elaborate?

 

[nioka]

Re: Increase your holdings at no cost.

I don't really get what you're saying. Care to elaborate?

The best way to check the idea would be to read the ADI thread. You use the "out of sync" price changes to trade one share for more of one with comparative value. Then trade back when they get back in sync or out of sync the other way.

 

[roland]

Re: Increase your holdings at no cost.

Sounds like you have confused the issue by being specific with stocks. You could just pick any 2 or more oscillating stocks and do the same thing. In fact just 1 oscillating stock would do as well.

Not a lot different to buy low, sell high and then buy more when low again using the profits from the previous high sell.

 

[nioka]

Re: Increase your holdings at no cost.

Sounds like you have confused the issue by being specific with stocks. You could just pick any 2 or more oscillating stocks and do the same thing. In fact just 1 oscillating stock would do as well.

Not a lot different to buy low, sell high and then buy more when low again using the profits from the previous high sell.

The difference is that you are never out of the market. When I was doing this with one stock I found that sometimes I sold and couldnt buy in again because of price jumps or was caught with one that kept falling. By chosing 2 related stocks you have nothing to lose all you are doing is cashing in on the fact that one is slower to react than the other.

The issue is not confused, this method takes out a lot of the risk if you make simultaneous trades.

 

[So_Cynical]

Pretty much what im doing with 8 stocks, helps to be in different sectors as
your more likely to get 1 lot going up while the others are falling.

Like Banking and Mining have done.

 

[wayneL]

Sounds like basic trading to me.

 

[tech/a]

I remember Radge talking about this at one time.
From memory he was looking at 2 stocks in the same sector and trading the one slowest to react---he had a name for this type of trading.

I'm sure he will elaborate if he wants to.

 

[lesm]

Think you will find it is called 'pairs trading', if I have interpreted nioka's description correctly.

Cheers.

 

[prawn_86]

I think oilers are the easiest to do this with (not that i have ever done it), because they often have different % interests in the same well therefore they have an asset which is common to them both so you can start your valuation there.

 

[Aussiest]

Re: Increase your holdings at no cost.

Sounds like you have confused the issue by being specific with stocks. You could just pick any 2 or more oscillating stocks and do the same thing. In fact just 1 oscillating stock would do as well.

Not a lot different to buy low, sell high and then buy more when low again using the profits from the previous high sell.

I get it now. Not going over the ADI thread unless i have time, but interesting theory... As long as they continue to oscillate.

You'd probably have a few standbys incase one stopped oscillating against the other.

 

[nioka]

I suggest a requirement that is necessary is the commitment to invest in the stocks in the first place. Once invested then the method is used to increase your holding without the need to outlay more capital. You have the opportunity to do this regardless of the state of the market. A volatile market helps. This is not a trading plan as such. It is an investment plan using opportunistic trading to increase the holding without outlaying any extra funds.

It works!!

 

[mattyhammer]

I'm interested in any suggestions for other stocks with relative values and fluctuating prices.

Nioka,
Would GGP and MDA be in the area you are talking about? I'm very new to the whole trading thing (and sucking at it to be quite honest) so just asking questions to get on top of it.
FYI, I grew up in Yamba. Nth NSW is a top piece of the planet.

 

[nioka]

Nioka,
Would GGP and MDA be in the area you are talking about? I'm very new to the whole trading thing (and sucking at it to be quite honest) so just asking questions to get on top of it.
FYI, I grew up in Yamba. Nth NSW is a top piece of the planet.

With hindsight yes. You could have sold 1000 MDA and purchased 2000 GGP which could now be 3000 MDA. ie 1000 turned into 3000 at no cost. However there is not enough regular crossing over in value to do this on a continuing basis but it may be worth watching. They do have some similar interests and one may be slower to react to announcements than the other and in that case they do not have to cross over in price. Just remember you need to take market cap, percentage interest in any project, cash on hand (or debt) etc into account. DYOR. I,m often wrong.

Yes. The Clarence takes some beating but don't tell everyone, crowds spoil the fishing.

 

[nioka]

Trading two closely related stocks is still working OK even in this turbulent market. Since my last post I have traded again between ADI and AUT quite successfully and between MCR and OZL with even more success. On today's price you can get 1.3 MCR for 1 OZL. When I last traded to OZL I got 1.1 OZL for each MCR. Plenty of volume with those stocks has made it easier than the ADI and AUT where the volume has not been there for an easy swap. Tomorrow I would expect to have a 50% increase in my holding in MCR in 6 weeks without outlaying an extra cent.

PS In addition there will be dividends from both.