How to Implement. Module 5 Importance. Review Module 4. 5 Key Principles. Action Items

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1 Disclaimer The VectorVest Program ( the System ) which we promote is not intended to provide you with specific or personalized advice. In all circumstances where you are looking to apply the System to your own personal needs you should consider whether you should first seek advice from a suitably qualified investment professional. Figures and information provided refer to the past and past performance and are not a reliable indicator of future results. Where stocks are quoted in foreign currencies, returns may increase or decrease as a result of currency fluctuations. In the event that you, as a recipient of this presentation, have any doubts as to the suitability of the investments or services promoted you should seek advice from a suitably qualified investment professional. You should be aware that the value of shares and other stocks may rise or fall. The rules on tax can change, and these changes may have an influence on the effectiveness of the System in the future. It is for you, as the tax payer, to assess the System s effectiveness throughout the process. Some assets are more readily realizable than others, and you should bear in mind that it may be difficult to deal in or obtain reliable information about their value. You should always take account of dealing charges. In addition to any initial charge quoted there may also be a bid/offer spread or dilution. Investments in options and other forms of derivatives may expose you to a higher degree of risk given market circumstances relative to other forms of quoted investments. The System even if used in its entirety, cannot be guaranteed to provide specific returns in the short, medium or long term and you should bear in mind that individual securities may and can fluctuate considerably in value from day to day. The System has been designed without any reference to the specific interests of a particular investor. We reiterate, when using the System, you must take into account your own specific needs and liabilities. 1

2 Review Module 4 Module 5 Importance 5 Key Principles How to Implement Action Items 2

3 Trade Set-Up Game Plan 3

4 The way you set-up your trade & manage risk is just as important as finding the right trade. 4

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9 Key Principles Step In 1 9

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11 Diversify by Industry/Sector 2 11

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17 Follow the 1% Rule 3 17

18 Maximum Risk Per Trade Portfolio Value X 1% = Max Risk $50,000 X 1% = $500 $100,000 X 1% = $1,000 18

19 Equal $$ Weight 4 19

20 How many stocks should I trade? V O L A T I L I T Y Aggressive Prudent Conservative 5 Stocks 10 Stocks 20 Stocks 20

21 Size Your Position 5 Use Max Risk, Stop Loss, and Position Value to Calculate Position Size Portfolio Value Position Value Max Stop Loss Max Risk (1%) $100,000 $20,000 5% $1,000 $100,000 $10,000 10% $1,000 $100,000 $5,000 20% $1,000 21

22 Current Price = $ Stop Loss = $ Trade Risk = $27.49 Trade Risk 22

23 $100,00 Portfolio Max Risk Per Trade = $1,000 $1,000 / $27.49 = 36 shares The maximum # of share you can buy is 36. Trade Risk 23

24 36 shares * $ = $7,088 This will work since it is below the maximum allowed position size of $10,000. Trade Risk 24

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26 Run a Prudent bottomfishing search. Price Matches Earnings is acceptable. 2/19 High Price = $80.94 Do your position sizing! 26

27 2/19 High Price = $ /22 Open Price = $82.09 Order filled 27

28 Perfect Match!! 2/19 High Price = $30.35 Do your position sizing! 28

29 2/19 High Price = $ /22 Open Price = $30.51 Order filled Green light on 2/22 but market opened lower and moved lower on 2/23. Green light 2/23 29

30 Green light on 2/24. Get your shopping list ready. (Market moved higher on 2/25) Green light Graph top stocks and look for candidates. Two met our criteria. 30

31 Still Prudent Bottom-Fishing 2/24 High Price = $37.95 Do your position sizing! 31

32 2/24 High Price = $ /25 Filled Price = $38.10 Order filled 2/24 High Price = $ Do your position sizing! 32

33 2/24 High Price = $ /25 Open Price = $ Order filled 33

34 Another Green light on 2/25. Get your shopping list ready. (Market moved higher on 2/26) Green light Graph top stocks and look for candidates. A few met our criteria. 34

35 Still Prudent Bottom-Fishing 2/25 High Price = $ Do your position sizing! 2/25 2/26 35

36 2/25 High Price = $ /26 Price never went higher NO FILL 2/25 2/26 2/25 High Price = $41.35 Do your position sizing! 2/25 2/26 36

37 2/25 High Price = $ /26 Open Price = $42.01 Order filled 2/25 2/26 37

38 2/25 High Price = $44.48 Do your position sizing! 2/25 2/26 38

39 2/25 High Price = $ /26 Filled Price = $44.63 Order filled 2/25 2/26 Green light Another Green light on 2/26. Get your shopping list ready. (Market moved higher on 2/29 so you may have entered even though the market closed lower.) 39

40 MTI < 1.0 so still bottom fishing. AMZN & DIS met criteria. Only AMZN got filled. Green light Next Green light on 3/1 Get your shopping list ready. MTI is now 1.05 Look for trending stocks. 40

41 Example of using Stock Viewer and focusing only on RV > 1 and RS > 1. Several stocks met criteria. Also checked Safe & Sound search. Several stocks met criteria. 41

42 3/1 High Price = $ /2 Filled Price = $44.50 Order filled 3/1 High Price = $ /2 Price didn t move high enough NO FILL 42

43 3/1 High Price = $ /2 Price didn t move high enough NO FILL Price near resistance - SKIPPED NO FILL 43

44 3/1 High Price = $ /2 Price didn t move high enough NO FILL 3/1 High Price = $ /2 Filled Price = $29.21 Order filled 44

45 Green light Next Green light on 3/2 Get your shopping list ready. MTI is still over 1.00 Look for trending stocks. Found TSN and it filled. 45

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