Introduction to Sure Fire Success

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2 Introduction to Sure Fire Success VectorVest, Inc

3 Sure Fire Success Trading System User s Guide Welcome to Sure-Fire Success, a collection of complete trading-systems that make it easier than ever to make money in the stock market. Through thousands of historical tests, this system has been shown to consistently and dramatically outperform the S&P 500 by providing quick, precise answers for when to buy, what to buy and when to sell. This is by far, the most impressive trading system that VectorVest has come across in more than 25 years of stock market experience. So, if this market has shaken your investing confidence, don t throw in the towel just yet you ve never been closer to Sure-Fire Success. Sure-Fire Market Timing VectorVest has found the most reliable way to make money in the stock market is to buy stocks when the market is rising. The Color Guard, found on VectorVest s home page, vividly shows when the market is rising on a week-over-week, as well as a day-over-day basis, with a green light in the price column. Of course, not all green lights are created equal. The very best time to buy is when the market is rising from a bottom and gaining momentum. This is when stocks are at their lowest price (and lower risk) and it s a great time to go bottom-fishing and bargain hunting. Over the years, VectorVest has found that buying stocks on the first green light after a Confirmed Market Down signal 1 is an excellent way to buy as close to a bottom as possible, but you still need to make sure that momentum is picking up too. That s where VectorVest s proprietary Relative Timing (RT) indicator comes in. Relative Timing uses a sophisticated mathematical algorithm to analyze and track changes in price momentum that are difficult, if not impossible, to catch just by watching a security s price. Amazingly, this indicator can sense impending changes in price direction. When price movement is speeding up, RT rises, when it s slowing down, RT falls. Because this indicator is so quick to detect changes, a 10 and 15-day moving average of RT is applied to confirm momentum is indeed improving when a green light shows up. VectorVest refers to this as the RT Kicker. When the light is green and the 10-day RT moving average has crossed above the 15-day RT moving average Bingo! We have the opportunity to buy stocks we ve been waiting for. But what about when a rally runs out of steam? This knowledge is even more crucial. Price can continue going up, luring investors to keep buying all the way up to the edge of a very steep cliff. How do you know when it s too late to buy? VectorVest, Inc

4 Just as RT recognizes when momentum is building, it s also able to spot when the rate of price increase is slowing down well before the end of an uptrend. So even if there is a green light (because the market is deceptively moving higher) the RT Kicker knows the difference and gives a signal to remain neutral 2. Should market conditions worsen, VectorVest then issues a Confirmed Market Down Call, alerting investors to consider exiting their positions 3. All of this information every Up, Down and Neutral signal can be instantly displayed on any VectorVest Graph. The work has already been done for you, simply select GLB/RT Kicker from the timing markers at the bottom of the chart window. A green triangle means it s okay to buy stocks, a yellow circle shows you when it s time to remain neutral and a red triangle tells you when the trend is over and it s time to sell. Figure 1. VectorVest Market Timing Graph and the GLB/RT Kicker Signals 3/21/12-8/28/12. As illustrated in Figure 1., the GLB/RT Kicker provides an unparalleled way of analyzing market momentum and answering the question of when to buy stocks and when to sell. VectorVest, Inc

5 Sure-Fire Stock Selection Now that you know when to buy and when to sell, it s time to find out what you should buy and sell. Selecting from hundreds, let alone thousands, of stocks can be an overwhelming, time-consuming, pain-in-the-keester but not with the Sure-Fire System. VectorVest has conducted more than 4,000 historical portfolio tests to reveal which automatic stock scans provide the most consistent and profitable results year after year. Combined with the GLB/RT Kicker and reasonable stop-losses, the four scans that VectorVest has identified show an astonishing 90.69% average success rate even during some of the worst market conditions investors have ever faced! Better yet, these stock scans have demonstrated the ability to outperform the S&P 500 by more than 1,300%*. That number is not a typo. VectorVest s tests show that the average annualized rate of return of over 720, 18-month portfolios gained 84.18%, while the S&P has averaged an annual gain of 6.07% over the same time frame, that s a 1,394% increase in performance! Figure 2. Stock Scan Name (Strategy) Portfolios /Winners Win% (Profitable Portfolios) Avg ARR% Avg Max Drawdown SFS S&P500/RT 180/ % 76.97% 28.56% SFS S&P500 Stop Asc 180/ % 72.47% 26.37% SFS Mini Rockets Long II 180/ % 37.64% 23.61% SFS Russell 2000/RT 180/ % % 23.82% S&P 500 Index 180/ % 6.07% 27.67% VectorVest created 180 test portfolios for each stock scan. Each test portfolio began a different week, starting 11/1/2007, and ended 18-months from the start date. Portfolios were set to maintain 5 stocks positions when possible and use a 30 Gain/10 Loss. Results reflect commissions of $9.95 per trade. Individual results for each scan are shown in Figure 2. A grand total of 720 portfolios were tested, averaging a winning percentage of 90.69% and an annualized gain of 84.18%. Test results are current as of 10/5/2012. *This number was originally reported as 12,000% based on the total performance of the S&P 500 (-3.30% from 11/1/07-10/5/12). Corrected 10/22/12 to reflect results using similar test conditions to the stock scans listed. Each of these stock scans use a variety of powerful proprietary indicators that combine fundamental and technical aspects of a stock to target the best candidates for your portfolio. These searches can be accessed from VectorVest s scanning tool, UniSearch. In the UniSearch section of the VectorVest program, you ll actually find over 200 pre-set stock scans, but these particular searches are located in the group Searches Sure-Fire Success. Each scan already has specific conditions set up and will search more than 8,000 stocks to deliver only the ones that meet the search parameters. All of the results will be ranked from best to worst, making your decision making a breeze. It s as easy as clicking the Run button to have your Sure-Fire stock selection appear in seconds. VectorVest, Inc

6 Sure-Fire Money Management The hardest decision is knowing when to sell a stock. Should I take the profit I have? Should I sell now before my loss gets worse? Will the price go up as soon as I sell it? These are questions that almost every trader struggles to answer, but no trading system would be complete without sensible money management. Setting stop-losses helps you take profits and limit downside risk. When setting stop-losses, it s important to choose the right combination for the stocks you re trading. A poor fit can turn would-be winners into discouraging disasters. Here again, VectorVest was able to ascertain the optimal combination of gain/loss for each stock scan based on extensive research and historical testing. Figure 3. (Closing Price) Stops Figure 4. (Intraday High/Low Price) Stops Stock Scan Gain Loss Stock Scan Gain Loss S&P500/RT S&P500/RT S&P500 Stop Asc S&P500 Stop Asc Mini Rockets Long II Mini Rockets Long II Russell 2000/RT 50 8 Russell 2000/RT The majority of portfolios tested were trading using stop-losses based on the closing price and sold at the next day s open, the most profitable combinations are shown in Figure 3. This type of management is well-suited if you happen to be one of the many who are occupied with other things during the day and prefer to make trading decisions after market hours. VectorVest 7 s Backtester tool was used to perform additional testing to judge the effect of using the more volatile price-action that occurs during market hours (rather than the closing price) to determine when the stop-loss/gain had been reached. Generally speaking, the gain/loss combo based on the closing price needed to be increased by 5% to compensate for intraday volatility. (All stock positions were still sold at the next day s open price.) The research shows that even higher portfolio gains can be achieved using stop-losses/gains calculated from the current day s high and low, instead of the closing price. But if the huge portfolio gains in Figure 6 are starting to make your fingers itch to place a trade, be sure to come prepared for the increase in drawdown (volatility) that accompanies them. Figure 5. Portfolio Results-Closing Price Based Stops (from Figure 3) 11/1/07 9/19/12 Stock Scan Total Portfolio Gain ARR Drawdown S&P500/RT % 58.33% 45.85% S&P500 Stop Asc % 95.41% 29.78% Mini Rockets Long II % 43.09% 35.07% Russell 2000/RT % % 32.56% VectorVest, Inc

7 Figure 6. Portfolio Results High/Low Based Stops (from Figure 4) 11/1/07 9/19/12 Stock Scan Total Portfolio Gain ARR Drawdown S&P500/RT % 64.10% 39.19% S&P500 Stop Asc % 79.57% 32.44% Mini Rockets Long II % 49.86% 35.07% Russell 2000/RT 1,403.36% % 44.54% As you can see from the results above, both the intraday and closing-price based stops, produced extraordinary gains and enable both active intraday traders and more casual end of day traders to take advantage of the benefits that can come from investing in the stock market. Achieving Sure-Fire Success When intelligent money management is paired with great stock selection and accurate market timing, you have a complete trading system that will help you take control of your portfolio to achieve your investment goals with confident assurance. That s what the Sure-Fire Success Trading System has been designed to do, but don t take our word for it, use this guide to test it for yourself (historically as well as going forward) completely risk-free. VectorVest, Inc

8 BackTesting the RT Kicker (Long Only) VectorVest, Inc

9 RT Kicker: Sure Fire Success with the Russell 2000/RT Description: This search finds stocks from the Russell 2000 Index. The stocks are ranked by Relative Timing in ascending order to find the stocks have suffered the worst downturns and offer investors the best values. VectorVest 7 Backtester Settings: Account Settings/Advanced: Pay Commission: Checked. $9.95 per trade. Initial investment: $100,000 Use Margin: Unchecked Account for Interest: Unchecked Execute Buys/Sells at Next Day s Open Execute test in daily pricing mode Market Timing: (AutoTester Only) Use Market Timing: Checked Market Timing List: GLB/RT Kicker Automation Rules (Up): (AutoTester Only) Buy Long Search: Russell 2000/RT Stop Criteria: % Gain/Loss Gain: 50% Loss: 13% More Settings: Try to maintain 5 positions Checked Automatically replace closed positions When opening new positions: Try to open all 5 positions immediately. VectorVest, Inc

10 Unchecked: Close any position when entering this situation Invest average portfolio value Odd Lots Limit Repurchases Checked; Don t repurchase a stock I CURRENTLY own. Checked: Don t buy if stock violates stop criteria at purchase. Checked: Maximum % of a stock s average volume 10% Automation Rules (Down): (AutoTester Only) Go to Cash Automation Rules (Neutral): (AutoTester Only) No Action Test Period 11/1/07-9/19/12 VectorVest, Inc

11 RT Kicker: Sure Fire Success with S&P 500 Stop Asc. This search finds stocks from the S&P 500 Index, which is comprised of the top American companies. The stocks are ranked by the VectorVest Stop Price in ascending order to find the stocks that have the lowest 13-week adjusted moving average of price. These low-price, low-momentum stocks can offer big breakouts when the market turns up. VectorVest 7 Backtester Settings: Account Settings/Advanced: Pay Commission: Checked. $9.95 per trade. Initial investment: $100,000 Use Margin: Unchecked Account for Interest: Unchecked Execute Buys/Sells at Next Day s Open Execute test in daily pricing mode Market Timing: (AutoTester Only) Use Market Timing: Checked Market Timing List: GLB/RT Kicker Automation Rules (Up): (AutoTester Only) Buy Long Search: S&P 500 Stop Asc. Stop Criteria: % Gain/Loss Gain: 50% Loss: 10% More Settings: Try to maintain 5 positions Checked Automatically replace closed positions When opening new positions: Try to open all 5 positions immediately. VectorVest, Inc

12 Unchecked: Close any position when entering this situation Invest average portfolio value Odd Lots Limit Repurchases Checked; Don t repurchase a stock I CURRENTLY own. Checked: Don t buy if stock violates stop criteria at purchase. Checked: Maximum % of a stock s average volume 10% Automation Rules (Down): (AutoTester Only) Go to Cash Automation Rules (Neutral): (AutoTester Only) No Action Test Period 11/1/07-9/19/12 VectorVest, Inc

13 RT Kicker: Sure Fire Success with S&P500/RT This search finds stocks from the S&P 500 Index, which is comprised of the top American companies. The stocks are ranked by Relative Timing in ascending order to find the stocks have suffered the worst downturns and offer investors the best values. VectorVest 7 Backtester Settings: Account Settings/Advanced: Pay Commission: Checked. $9.95 per trade. Initial investment: $100,000 Use Margin: Unchecked Account for Interest: Unchecked Execute Buys/Sells at Next Day s Open Execute test in daily pricing mode Market Timing: (AutoTester Only) Use Market Timing: Checked Market Timing List: GLB/RT Kicker Automation Rules (Up): (AutoTester Only) Buy Long Search: S&P 500/RT Stop Criteria: % Gain/Loss Gain: 35% Loss: 15% More Settings: Try to maintain 5 positions Checked Automatically replace closed positions When opening new positions: Try to open all 5 positions immediately. Unchecked: Close any position when entering this situation Invest average portfolio value Odd Lots VectorVest, Inc

14 Limit Repurchases Checked; Don t repurchase a stock I CURRENTLY own. Checked: Don t buy if stock violates stop criteria at purchase. Checked: Maximum % of a stock s average volume 10% Automation Rules (Down): (AutoTester Only) Go to Cash Automation Rules (Neutral): (AutoTester Only) No Action Test Period 11/1/07-9/19/12 VectorVest, Inc

15 RT Kicker: Sure Fire Success with Mini Rockets Long II This search finds stocks between $5 and $10 that have either a Buy or a Hold Rating from VectorVest. These are considered aggressive growth stocks that have below average Relative Safety but positive earnings growth. The stocks are ranked to find the best combination of good fundamentals (high Value-Safety-Timing) and low stock price. VectorVest 7 Backtester Settings: Account Settings/Advanced: Pay Commission: Checked. $9.95 per trade. Initial investment: $100,000 Use Margin: Unchecked Account for Interest: Unchecked Execute Buys/Sells at Next Day s Open Execute test in daily pricing mode Market Timing: (AutoTester Only) Use Market Timing: Checked Market Timing List: GLB/RT Kicker Automation Rules (Up): (AutoTester Only) Buy Long Search: Mini Rockets Long II Stop Criteria: % Gain/Loss Gain: 30% Loss: 15% More Settings: Try to maintain 5 positions Checked Automatically replace closed positions When opening new positions: Try to open all 5 positions immediately. VectorVest, Inc

16 Unchecked: Close any position when entering this situation Invest average portfolio value Odd Lots Limit Repurchases Checked; Don t repurchase a stock I CURRENTLY own. Checked: Don t buy if stock violates stop criteria at purchase. Checked: Maximum % of a stock s average volume 10% Automation Rules (Down): (AutoTester Only) Go to Cash Automation Rules (Neutral): (AutoTester Only) No Action Test Period 11/1/07-9/19/12 VectorVest, Inc

17 The RT Kicker Combo: Making Money in UP and Down Markets VectorVest, Inc

18 The RT Kicker Combo: Making Money in Both Up AND Down Markets Take a moment and try to picture the market as a great ocean -- your portfolio is just a small boat drifting on the tide. If you want to get anywhere, it makes a lot more sense to go with the tide, rather than against it, right? Unfortunately, some investors try to fight the tide which can push their portfolio back years in terms of value. Preventing this type of setback requires investors to become multi-directional; buying stocks when the market is rising and short-selling or buying contra etfs when the market is falling. This flexible trend-following style of trading delivers two BIG benefits: it can help you keep your portfolio growing no matter what happens in the market and it can help you reduce your overall risk. VectorVest created the RT Kicker Combo Timing System to help you successfully take advantage of both sides of the market uptrends, as well as downtrends. This spin-off of the original RT Kicker adds a bearish twist to identify more downside opportunities. When the ColorGuard s Price light turns red and the 10-day RT moving average has crossed below the 15-day average, the RT Kicker Combo gives a down signal and a red triangle appears above price on the Market Timing Graph (select the RT Kicker Combo at the bottom of the graph to display the signals). A Smooth Transition As the market struggles to turn the tide and reverse the trend, volatility often increases. The market surges forward and crashes back in short choppy waves that are enough to make you want to abandon ship. This is where the right money management techniques can make a big difference. Rather than closing all positions every time a new timing signal appears, our studies have shown that hedging provides a much smoother transition from one trend to the next. Hedging, simply means that you have both bullish and bearish positions open at the same time. For example, as a rally comes to an end and the down signal appears, you will begin to replace the stocks you own by selling short or buying contra etfs but this replacement only occurs when a stock s stop-loss has been met. While it is possible, it s unlikely that all of your positions will need to be replaced on the same day which will ideally ease your portfolio into the new trend as it develops and strengthens. Sure-Fire Combo Strategies VectorVest extended their research and testing to identify the perfect pairing of bullish and bearish stock searches to use with the RT Kicker Combo. When put to the test, these pairs produced incredibly smooth equity curves, extraordinary gains and a lower risk factor than test portfolios that only traded the uptrends. VectorVest, Inc

19 Sure-Fire Up Search Up Stop-Loss Dn Search Dn Stop-Loss Total Max Gain Drawdown S&P 500 Stop Asc 50%G/10%L Doug s Downers SC 30%G/15%L % 29.56% S&P 500 Stop Asc 50%G/10%L Stinky Stocks 30%G/15%L % 29.70% S&P 500 Stop Asc 50%G/10%L Ballistic New Highs-Short 35%G/15%L % 18.63% S&P 500 Stop Asc 50%G/10%L Crash Landers 50%G/20%L % 22.66% S&P 500 Stop Asc 50%G/10%L None None % 34.58% Portfolios were tested from 11/1/07 to 10/26/12 using VectorVest 7 Backtester as illustrated in the Strategy of the Week 10/26/12. You ll find all of the searches used to produce these fantastic results in the UniSearch group, Searches RTCombo Pairs. VectorVest, Inc

20 BackTesting the RT Kicker Combo (Long & Short) VectorVest, Inc

21 RT Kicker Combo: Sure Fire Success with S&P 500 Stop Asc & Doug s Downer s Super Charged (SC) Up Search: S&P 500 Stop Asc. (As described on page 8.) Dn Search: Doug s Downer s Super-charged. This search finds stocks over $5.00 with a SELL recommendation. These stocks have negative forecasted earnings per share and negative earnings growth. The stocks are ranked for the worst combination of earning s yield and price momentum. This is a shorting search. VectorVest 7 Backtester Settings: Account Settings/Advanced: Pay Commission: Checked. $9.95 per trade. Initial investment: $100,000 Use Margin: Unchecked Account for Interest: Unchecked Execute Buys/Sells at Next Day s Open Execute test in daily pricing mode Market Timing: (AutoTester Only) Use Market Timing: Checked Market Timing List: RT Kicker Combo Automation Rules (Up): (AutoTester Only) Buy Long Search: S&P500 Stop Asc. Stop Criteria: % Gain/Loss Gain: 50% Loss: 10% VectorVest, Inc

22 More Settings: Try to maintain 5 positions Checked Automatically replace closed positions When opening new positions: Try to open all 5 positions immediately. Unchecked: Close any position when entering this situation Invest average portfolio value Odd Lots Limit Repurchases Checked; Don t repurchase a stock I CURRENTLY own. Checked: Don t buy if stock violates stop criteria at purchase. Checked: Maximum % of a stock s average volume 2% Automation Rules (Down): (AutoTester Only) Sell Short Search: Doug s Downer s Super-charged Stop Criteria: % Gain/Loss Gain: 30% Loss: 15% More Settings: Try to maintain 5 positions Checked: Automatically replace closed positions When opening new positions: Try to open all 5 positions immediately. Unchecked: Close any position when entering this situation Invest average portfolio value Odd Lots Limit Repurchases Checked; Don t repurchase a stock I CURRENTLY own. Checked: Don t buy if stock violates stop criteria at purchase. Checked: Maximum % of a stock s average volume 2% Automation Rules (Neutral): (AutoTester Only) No Action Test Period 11/1/07-10/26/12 VectorVest, Inc

23 RT Kicker Combo: Sure Fire Success with S&P 500 Stop Asc & Stinky Stocks to Sell Short Up Search: S&P 500 Stop Asc. (As described on page 8.) Dn Search: Stinky Stocks to Sell Short. This search finds stocks over $10.00 with a SELL recommendation. These stocks have negative forecasted earnings per share and below average price momentum. The stocks are ranked for the worst combination of value, safety and timing (VST). This is a shorting search. VectorVest 7 Backtester Settings: Account Settings/Advanced: Pay Commission: Checked. $9.95 per trade. Initial investment: $100,000 Use Margin: Unchecked Account for Interest: Unchecked Execute Buys/Sells at Next Day s Open Execute test in daily pricing mode Market Timing: (AutoTester Only) Use Market Timing: Checked Market Timing List: RT Kicker Combo Automation Rules (Up): (AutoTester Only) Buy Long Search: S&P500 Stop Asc. Stop Criteria: % Gain/Loss Gain: 50% Loss: 10% VectorVest, Inc

24 More Settings: Try to maintain 5 positions Checked Automatically replace closed positions When opening new positions: Try to open all 5 positions immediately. Unchecked: Close any position when entering this situation Invest average portfolio value Odd Lots Limit Repurchases Checked; Don t repurchase a stock I CURRENTLY own. Checked: Don t buy if stock violates stop criteria at purchase. Checked: Maximum % of a stock s average volume 2% Automation Rules (Down): (AutoTester Only) Sell Short Search: Stinky Stocks to Sell Short Stop Criteria: % Gain/Loss Gain: 30% Loss: 15% More Settings: Try to maintain 5 positions Checked: Automatically replace closed positions When opening new positions: Try to open all 5 positions immediately. Unchecked: Close any position when entering this situation Invest average portfolio value Odd Lots Limit Repurchases Checked; Don t repurchase a stock I CURRENTLY own. Checked: Don t buy if stock violates stop criteria at purchase. Checked: Maximum % of a stock s average volume 2% Automation Rules (Neutral): (AutoTester Only) No Action Test Period 11/1/07-10/26/12 VectorVest, Inc

25 RT Kicker Combo: Sure Fire Success with S&P 500 Stop Asc & Ballistic New Highs Short Up Search: S&P 500 Stop Asc. (As described on page 8.) Dn Search: Ballistic New Highs Short. This search finds stocks over $5.00 whose price has hit a new 52-week high. The stocks are ranked for the greatest difference between Price and Stop-Price to identify stocks that are potentially overbought. This is a shorting search. VectorVest 7 Backtester Settings: Account Settings/Advanced: Pay Commission: Checked. $9.95 per trade. Initial investment: $100,000 Use Margin: Unchecked Account for Interest: Unchecked Execute Buys/Sells at Next Day s Open Execute test in daily pricing mode Market Timing: (AutoTester Only) Use Market Timing: Checked Market Timing List: RT Kicker Combo Automation Rules (Up): (AutoTester Only) Buy Long Search: S&P500 Stop Asc. Stop Criteria: % Gain/Loss Gain: 50% Loss: 10% More Settings: Try to maintain 5 positions VectorVest, Inc

26 Checked Automatically replace closed positions When opening new positions: Try to open all 5 positions immediately. Unchecked: Close any position when entering this situation Invest average portfolio value Odd Lots Limit Repurchases Checked; Don t repurchase a stock I CURRENTLY own. Checked: Don t buy if stock violates stop criteria at purchase. Checked: Maximum % of a stock s average volume 2% Automation Rules (Down): (AutoTester Only) Sell Short Search: Ballistic New Highs-Short Stop Criteria: % Gain/Loss Gain: 35% Loss: 15% More Settings: Try to maintain 5 positions Checked: Automatically replace closed positions When opening new positions: Try to open all 5 positions immediately. Unchecked: Close any position when entering this situation Invest average portfolio value Odd Lots Limit Repurchases Checked; Don t repurchase a stock I CURRENTLY own. Checked: Don t buy if stock violates stop criteria at purchase. Checked: Maximum % of a stock s average volume 2% Automation Rules (Neutral): (AutoTester Only) No Action Test Period 11/1/07-10/26/12 VectorVest, Inc

27 RT Kicker Combo: Sure Fire Success with S&P 500 Stop Asc & Crash Landers Up Search: S&P 500 Stop Asc. (As described on page 8.) Dn Search: Crash Landers. This search finds stocks between $6.00-$20.00 that have poor fundamentals. These stocks have negative forecasted earnings per share and negative earnings growth. The stocks are ranked for the highest combination of value, safety and timing (VST) to find low-quality high fliers. This is a shorting search. VectorVest 7 Backtester Settings: Account Settings/Advanced: Pay Commission: Checked. $9.95 per trade. Initial investment: $100,000 Use Margin: Unchecked Account for Interest: Unchecked Execute Buys/Sells at Next Day s Open Execute test in daily pricing mode Market Timing: (AutoTester Only) Use Market Timing: Checked Market Timing List: RT Kicker Combo Automation Rules (Up): (AutoTester Only) Buy Long Search: S&P500 Stop Asc. Stop Criteria: % Gain/Loss Gain: 50% Loss: 10% More Settings: VectorVest, Inc

28 Try to maintain 5 positions Checked Automatically replace closed positions When opening new positions: Try to open all 5 positions immediately. Unchecked: Close any position when entering this situation Invest average portfolio value Odd Lots Limit Repurchases Checked; Don t repurchase a stock I CURRENTLY own. Checked: Don t buy if stock violates stop criteria at purchase. Checked: Maximum % of a stock s average volume 2% Automation Rules (Down): (AutoTester Only) Sell Short Search: Crash Landers Stop Criteria: % Gain/Loss Gain: 50% Loss: 20% More Settings: Try to maintain 5 positions Checked: Automatically replace closed positions When opening new positions: Try to open all 5 positions immediately. Unchecked: Close any position when entering this situation Invest average portfolio value Odd Lots Limit Repurchases Checked; Don t repurchase a stock I CURRENTLY own. Checked: Don t buy if stock violates stop criteria at purchase. Checked: Maximum % of a stock s average volume 2% Automation Rules (Neutral): (AutoTester Only) No Action Test Period 11/1/07-10/26/12 VectorVest, Inc

29 Real Time Trading with Sure Fire Success VectorVest, Inc

30 Sure Fire Success Going Forward (Paper trading) Now that you ve seen what Sure-Fire Success can do historically, it s time to move it into the future by paper trading with the VectorVest 7 Portfolio Manager. Paper trading (even though it s done without any paper at all) lets you practice your trading system without risking a penny until you are 100% convinced the Sure-Fire Success Trading System will work for you. Using the Sure-Fire Success Trading System is as easy as A, B, C: Long/Up ONLY A. Buy stocks when a green light appears in the Price column of the Color Guard AND a green triangle appears beneath the current day's Price bar on the Market Timing Graph set using the GLB/RT Kicker markers. B. To find your stock selections, use the searches located in the Searches - Sure-Fired Success Group in the UniSearch Tool. Select from the highest ranked stock or stocks you don't already have. We recommend the top 5 stocks. C. Close your positions to lock in profits and/or to limit losses when: 1. Your stop-loss is met. The gain/loss that we ve found to perform best can be found on page four. Research also showed that using a 30% Gain, 15% Loss exit criteria worked well overall for Long/Bullish positions. 2. A red triangle appears above the current day's Price bar on the Market Timing Graph using the GLB/RT Kicker markers. The red triangle signals a confirmed down call and you should consider selling all Sure-Fire stocks at this time. RT Combo Users/Up & Dn A. Begin to buy or short stocks based according to the current signal. Prepare to buy stocks when there is a green light in the Price column of the Color Guard AND a green triangle appears beneath the current day's Price bar on the Market Timing Graph set using the RT Combo markers. Prepare to short stocks when there is a red light in the Price column of the Color Guard AND a red triangle appears above the current day's Price bar on the Market Timing Graph set using the RT Combo markers. B. To find your stock selections, use the pair combinations suggested on page 14. Searches are located in the Searches - RT Combo Group in the UniSearch Tool. Select from the highest ranked stock or stocks you don't already have. We recommend the top 5 stocks. C. Close your positions to lock in profits and/or to limit losses only when your stop-loss is met. The gain/loss that we ve found to perform best can be found on page 14. Replace the stock according to the current signal. VectorVest, Inc

31 Creating a Paper Portfolio in VectorVest 7 1. Move to the portfolio tab of VectorVest and click New. 2. Give your portfolio a name, select the appropriate investment amount and commission. Click Ok. 3. Click on your new portfolio s name to select it. 4. Add stocks to the portfolio by clicking Manage Portfolio, then Buy from Search (or Short from Search if a combo user). Select the Sure-Fire search you want to use from the list. (You can add stocks manually instead using Add Trade ) 5. Change the number of stocks you want to purchase from 10 to 5, then click Buy Stocks. 6. Check your portfolio at the end of each trading day. Look at the ROI to see if your stop has been met. If it has, sell the position (select the stock, right click, choose Close Position ). 7. Check the GLB/RT Kicker Signal to see if it s okay to buy (green triangle), if you should stay neutral (yellow circle) or if you should sell all positions (red triangle). 8. If it s okay to buy stocks, repeat step (4). VectorVest, Inc

32 Useful Resources View Essays: 9/14/12 The GLB/RT Kicker 9/28/12 Sure-Fired Success Trading Systems 10/5/12 Finding the Holy Grail? 10/12/12 Angel s Secret Sauce 10/20/12 User s Guide to the Sure-Fire Success Trading Systems 10/26/12 RT Kicker Combo Strategy of the Week Videos: 9/14/12 Automating the RT Kicker 9/21/12 Stress-Testing the GLB/RT Kicker 9/28/12 Going Forward with the GLB/RT Kicker System 10/5/12 Finding the Holy Grail? 10/12/12 The Secret Sauce 10/20/12 The Sure-Fire Success User s Guide 10/26/12 RT Kicker Combo Special Notations Call us We want to help! VectorVest Customer Support Toll-free: Monday - Friday 24 hours/day ET, Saturday 9:00AM - 5:00PM ET Page 1. Note 1. A Confirmed Down Call is signaled when the price of the market has moved down week-over-week for two consecutive weeks and the VectorVest s Buy/Sell Ratio has moved from above 1.00 to below As a final factor, the price of the market must also close lower than the previous day. Page 2. Note 2. Neutral signals that current positions should be managed with stop-losses and no new purchases should be made. Page 2. Note 3. All investors must ultimately make their own decisions on the best course of action for their portfolio. VectorVest has no knowledge of an investors personal circumstances and does not provide individual investment advice. VectorVest, Inc

33 VectorVest is comprised of reports embodying a unique system of stock analysis. All the contents and recommendations are based on data and sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Users should be aware of the risks involved in stock investments. It should not be assumed that future results will be profitable or will equal past performance, real, indicated or implied. VectorVest and/or its principals may purchase or sell any of the securities herein. VectorVest and the logo style, geometric design are, individually and collectively, service marks owned by VectorVest, Inc. VectorVest is published daily by VectorVest, Inc Chartwell Center Drive, Cornelius, NC US/Canada International VectorVest, Inc