The Ultimate Guide to Stock Investing - …©LeadingTrader.com The Ultimate Guide to Stock Investing...

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©LeadingTrader.com The Ultimate Guide to Stock Investing With Alessio Rastani www.LeadingTrader.com

Transcript of The Ultimate Guide to Stock Investing - …©LeadingTrader.com The Ultimate Guide to Stock Investing...

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The Ultimate Guide to Stock Investing

With Alessio Rastaniwww.LeadingTrader.com

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Interview with Sir David Frost:

“Alessio, What did you mean, “be prepared”? How does one

know what to buy and when to buy? Can anyone do this?”

LeadingTrader.com

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The Ultimate Guide to Stock InvestingThe Ultimate Guide to Stock Investing

Taught in: • London• Hong Kong• Washington DCSoon in:• Netherlands• Sweden

“Alessio, based on your sound advice, I pulled my money out of the markets just before the 2008 stock market crash. You saved me a fortune, not to mention my pension.”Maurice E.

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1) Investing Golden Rules & Psychology

2) Understanding the big picture

3) Choosing Quality companies

4) When to buy and when to sell

5) Take Action!

The 5 steps to Stock Investing Success

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Fundamental

Technical

Execution

Structure of Event

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THE PATH TO FINANCIAL FREEDOM

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Robert KiyosakiRobert Kiyosaki

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WEALTH CHALLENGED

JOB or BUSINESS

SPEND

40+Years40+Years

10.40

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WEALTH INTELLIGENT

JOB/BUSINESS

SpendInvest in

themselves

BUY Income producing ASSETS

Financial Independence

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Why Should I Learn Stock Investing?Why Should I Learn Stock Investing?

BANK 7%BANK 7%

S&P 500 APPROX. 17%S&P 500 APPROX. 17%

DELL APPROX. 85%DELL APPROX. 85%

£5.5M£5.5M

£50k£50k

£20k£20k£10k£10k

$16k$80k

$32k

$8.8M

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Gold – 67 % return in 3 years

Yamana Gold (AUY) – 300% in 3 yearsPlus Annual Dividends

2005 - 2008Gold vs. Gold Stocks

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Gold – 112 % return in 4 years

Yamana Gold (AUY) – 240% in 4 yearsPlus Annual Dividends

2008 - 2012Gold vs. Gold Stocks

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1) What do we buy? (fundamental analysis)

2) How many do we buy? (money management)

3) When do we buy? (technical analysis)

4) When do we sell? (technical analysis & a bit of fundamentals)

4 Questions we ask BEFORE we buy a stock:

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1) Investing Golden Rules & Psychology

2) Understanding the big picture

3) Choosing Quality companies

4) When to buy and when to sell

5) Take Action!

The 5 steps to Stock Investing Success

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2) Understanding the big picture

What influences your share price:

80%

Economy

Market

Sector

Industry

Corp

18

80% of what the share does has nothing to do with the company!

}

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2) Understanding the big picture

a) The Economy

Economic Cycles:

1

2

3 4

5

1) Early Expansion 4) Early Contraction

2) Middle Expansion 5) Late Contraction

3) Late Expansion

Certain sectors perform better at specific points in

the cycle

Boom Bust

e.g. technology

e.g. Health care

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2) Understanding the big picture

During the economic cycle which sectors should I invest in?

1) Early Expansion – Capital Goods, Technology, Transportation

2) Middle Expansion – Capital Goods

3) Late Expansion – Energy, Basic Materials, Consumer Staples

4) Early Contraction – Utilities, Consumer Staples,

5) Late Contraction – Financials, Consumer Cycles

The next table is worth £10,000

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Which shares should I invest in?Which shares should I invest in?

Auto Parts, Automobiles, Broadcast Media, Building Materials, Entertainment, Hardware & Tools, Homebuilding, Hotel / Motel, Household Furn / Appl, Leisure Time, Manufactured Housing, Publishing, Restaurants, Retail, Shoes, Textiles, Toys.

Consumer Cyclicals

Insurance Brokers, Investment Bank / Brokerage, Insurance, Banks, Personal Loans, Savings & Loans, Financial.

FinancialsLate Contraction

Beverages, Cosmetics, Distributors, Foods, Health Care, Hospital Management, Household Products, House-wares, Medical Products & Supplies, Retail, Tobacco.

Consumer Staples

Electric Companies, Natural Gas, Miscellaneous.UtilitiesEarly Contraction

Beverages, Cosmetics, Distributors, Foods, Health Care, Hospital Management, Household Products, House-wares, Medical Products & Supplies, Retail, Tobacco.

Consumer Staples

Aluminium, Chemicals, Containers, Gold Mining, Metals, Paper, Steel.

Basic Materials

Oil & Gas Drilling, Oil, Oil Well Equipment & Services.EnergyLate Expansion

Aerospace, Electrical Equip, Engineering & Construction, Heavy Duty Trucks & Parts, Machine Tools, Machinery, Manufacturing, Pollution Control.

Capital GoodsMiddle Expansion

Airlines, Railroads, Truckers, Transportation.Transportation

Communication Equipment, Computer Software & Services, Computer Systems, Electronics, Office Equipment & Supplies, Photography / Imaging,Telecommunications.

Technology

Aerospace, Electrical Equip, Engineering & Construction, Heavy Duty Trucks & Parts, Machine Tools, Machinery, Manufacturing, Pollution Control, Packaging.

Capital GoodsEarly Expansion

INDUSTRIES IN EACH SECTORSECTORS (S&P 500)CYCLE

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Stocks vs. Utilities in Tech Crash 2000

S&Ps

Utilities ETF

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S&Ps

Dollar Tree (Discount Store)

Discount stores vs. Market (2008)

Nearly 100% in one year

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DLTR = Over 500% in 4 years!(125% average annualised)

S&P 500 = 16.7% in 4 years

Discount stores vs. Market until 2012

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How do we know what stage of the economic cycle we are in?

Step 1 Identify Best Performing Sectors – list of best 10

Step 2 Cross check these with sector performance chart to gauge the point in the economic cycle.

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Stock market cycleEconomic Cycle

Stock Market is a leading indicator of economy

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Sector PerformanceSector Performancewww.marketwatch.com/tools/industrywww.marketwatch.com/tools/industry

SELECT PERIOD

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NOW MAKE A NOTE OF THE 10 BEST

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Also compare to 1 month

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Sector Performance Sector Performance www.smartmoney.com/sectortrackerwww.smartmoney.com/sectortracker

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Sector Performance Sector Performance www.sectorspdr.com/marketmapwww.sectorspdr.com/marketmap

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Which shares should I invest in?Which shares should I invest in?

Auto Parts, Automobiles, Broadcast Media, Building Materials, Entertainment, Hardware & Tools, Homebuilding, Hotel / Motel, Household Furn / Appl, Leisure Time, Manufactured Housing, Publishing, Restaurants, Retail, Shoes, Textiles, Toys.

Consumer Cyclicals

Insurance Brokers, Investment Bank / Brokerage, Insurance, Banks, Personal Loans, Savings & Loans, Financial.

FinancialsLate Contraction

Beverages, Cosmetics, Distributors, Foods, Health Care, Hospital Management, Household Products, House-wares, Medical Products & Supplies, Retail, Tobacco.

Consumer Staples

Electric Companies, Natural Gas, Miscellaneous.UtilitiesEarly Contraction

Beverages, Cosmetics, Distributors, Foods, Health Care, Hospital Management, Household Products, House-wares, Medical Products & Supplies, Retail, Tobacco.

Consumer Staples

Aluminium, Chemicals, Containers, Gold Mining, Metals, Paper, Steel.

Basic Materials

Oil & Gas Drilling, Oil, Oil Well Equipment & Services.EnergyLate Expansion

Aerospace, Electrical Equip, Engineering & Construction, Heavy Duty Trucks & Parts, Machine Tools, Machinery, Manufacturing, Pollution Control.

Capital GoodsMiddle Expansion

Airlines, Railroads, Truckers, Transportation.Transportation

Communication Equipment, Computer Software & Services, Computer Systems, Electronics, Office Equipment & Supplies, Photography / Imaging,Telecommunications.

Technology

Aerospace, Electrical Equip, Engineering & Construction, Heavy Duty Trucks & Parts, Machine Tools, Machinery, Manufacturing, Pollution Control, Packaging.

Capital GoodsEarly Expansion

INDUSTRIES IN EACH SECTORSECTORS (S&P 500)CYCLE

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Interest rates low means it is cheap to borrow. Companies doing well are Financials: Banks, Property Companies etc. (Stage 5). As Financials picks up, associated companies pick up: Auto industry, transport, travel, housing etc.

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An example from September 2007An example from September 2007

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An example from September 2007An example from September 2007

Gold Mining Index

Gold

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An example from September 2007An example from September 2007Coal

Specialty Chemicals

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Auto Parts, Automobiles, Broadcast Media, Building Materials, Entertainment, Hardware & Tools, Homebuilding, Hotel / Motel, Household Furn / Appl, Leisure Time, Manufactured Housing, Publishing, Restaurants, Retail, Shoes, Textiles, Toys.

Consumer Cyclicals

Insurance Brokers, Investment Bank / Brokerage, Insurance, Banks, Personal Loans, Savings & Loans, Financial.

FinancialsLate Contraction

Beverages, Cosmetics, Distributors, Foods, Health Care, Hospital Management, Household Products, House-wares, Medical Products & Supplies, Retail, Tobacco.

Consumer Staples

Electric Companies, Natural Gas, Miscellaneous.UtilitiesEarly Contraction

Beverages, Cosmetics, Distributors, Foods, Health Care, Hospital Management, Household Products, House-wares, Medical Products & Supplies, Retail, Tobacco.

Consumer Staples

Aluminium, Chemicals, Containers, Gold Mining, Metals, Paper, Steel.

Basic Materials

Oil & Gas Drilling, Oil, Oil Well Equipment & Services.EnergyLate Expansion

Aerospace, Electrical Equip, Engineering & Construction, Heavy Duty Trucks & Parts, Machine Tools, Machinery, Manufacturing, Pollution Control.

Capital GoodsMiddle Expansion

Airlines, Railroads, Truckers, Transportation.Transportation

Communication Equipment, Computer Software & Services, Computer Systems, Electronics, Office Equipment & Supplies, Photography / Imaging,Telecommunications.

Technology

Aerospace, Electrical Equip, Engineering & Construction, Heavy Duty Trucks & Parts, Machine Tools, Machinery, Manufacturing, Pollution Control, Packaging.

Capital GoodsEarly Expansion

INDUSTRIES IN EACH SECTORSECTORS (S&P 500)CYCLE

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An example from September 2007An example from September 2007

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1) Pay attention to the bigger market indexes.

2) E.g. S&P 500, Dow 30, Nasdaq, FTSE, Dax etc.

3) Remember: A rising tide raises all the boats (and vice versa).

4) Therefore if the market indexes start rising, they will most likely push the price of the majority of stocks up as well.

The Markets vs. Stocks

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A Rising Tide Raises All the Boats

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Useful Tip to check Relative Strengthwww.leadingtrader.com/relativestrength

Set to 3Months(63 tradingDays)Type the

Symbolshere

We will use this later to check the relative strength of our individual stocks against the major markets.

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1) Investing Golden Rules & Psychology

2) Understanding the big picture

3) Choosing Quality companies

4) When to buy and when to sell

5) Take Action!

The 5 steps to Stock Investing Success

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We choose We choose QualityQuality Stocks… Stocks…

Mercedes Other cheap car

We want the Mercedes, but we want to We want the Mercedes, but we want to BUYBUY it it in a Mercedes in a Mercedes salesale……

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Choosing Quality Companies

Fundamental Criteria What do we want?PEG RATIO <=1

CURRENT RATIO >=1

EPS GROWTH >=20%

5 YEAR EARNINGS GROWTH >=5%

NET INCOME (REVENUE) >=$50 Million

NET INCOME GROWTH >=20%

DIVIDEND YIELD >=1

NET INCOME MARGIN >=5%

P/E RATIO <=20

Optional additional criteria:

>= Greater than or equal to <= Less than or equal to

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EPS: Earnings Per ShareEPS: Earnings Per Share

• EPS is a measurement of a company’s profit.

• It is the most essential measurement in deciding a company’s share price.

E.g. If Company ABC Inc. has made a profit of $1,000,000 – has paid$100,000 in dividends – and it has 300,000 shares outstanding.Therefore it’s EPS is = $3.

(1,000,000 – 100,000) ÷ 300,000 = 3

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EPS: Earnings Per ShareEPS: Earnings Per Share

• EPS by itself will not tell you which company is better quality.

• However, we can use EPS combined with other figures to create Ratios that will tell us which is a better company.

• For Example:

1) Price / Earnings = P/E Ratio2) P/E Ratio / Growth = PEG Ratio3) EPS Growth per year in %

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Tip: Yahoo Finance ( finance.yahoo.com ) ---> Type in symbol/name ---> Key Statistics

Type in the Symbol here

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Click on “Key Statistics”

EPS: Earnings Per ShareEPS: Earnings Per Share

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EPS

EPS: Earnings Per ShareEPS: Earnings Per Share

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Pick stocks with a Pick stocks with a PEGPEG ratio of ratio of LESS than 2LESS than 2..

PEG Ratio is the P/E (price/earnings) PEG Ratio is the P/E (price/earnings) divided by the growth.divided by the growth.

For example, if a company’s share For example, if a company’s share priceprice is is $30, its $30, its earningsearnings (EPS) is $3 and its (EPS) is $3 and its expected expected growthgrowth is 10% then its is 10% then its PEG is = 1PEG is = 1..

PEG: Finding Undervalued StocksPEG: Finding Undervalued Stocks

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The smart money (e.g. mutual funds and hedge funds) will The smart money (e.g. mutual funds and hedge funds) will notnot pay pay twice growthtwice growth (PEG > 2) for a stock. (PEG > 2) for a stock.

If PEG is over 2, it is considered If PEG is over 2, it is considered overvaluedovervalued and expensive. and expensive. If PEG is below 2 (ideally below 1) is If PEG is below 2 (ideally below 1) is undervaluedundervalued and and worth buying.worth buying.

PEG: Finding Undervalued StocksPEG: Finding Undervalued Stocks

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Current ratio must be > 1Current ratio must be > 1

Current ratio is a measure of Current ratio is a measure of liquidityliquidity. . Current assets ÷ current liabilities.Current assets ÷ current liabilities.

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Dividend YieldDividend Yield• A dividend is a distribution of a portion of the companies profits in cash to its shareholders.

• The dividend can be increased or decreased according to how a company performs.

Dividend Yield is =

Annual Dividends (per share) ÷ Current stock Price

For example: if company ABC pays out $1 per share in dividends annually, and its stock price is $15, then its dividend yield is 0.066 – or 6.7%.

Dividend yield is a measure of a company’s stability and investment productivity.

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Screening for Screening for TOP QUALITYTOP QUALITY Companies Companiesin seconds…in seconds…

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Screening for Quality CompaniesScreening for Quality Companieswww.nasdaq.com/reference/StockScreener.stmwww.nasdaq.com/reference/StockScreener.stm

www.leadingtrader.com/stockscreenerwww.leadingtrader.com/stockscreener

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As an option, you can also add Dividend Yield >=1.

However, be warned that this will reduce the size of your list of companies significantly.

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92 companiesMatches ourSelection criteria

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Warning:Warning:

Do not add too many criterias to your Do not add too many criterias to your stock screening. stock screening.

Otherwise this will reduce the size of your list of quality Otherwise this will reduce the size of your list of quality companies and will exclude some good quality companies and will exclude some good quality companies as well.companies as well.

You want to have ideally a list of approx. 50 – 100 You want to have ideally a list of approx. 50 – 100 companies.companies.

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Other Screeners: ReutersOther Screeners: Reutershttp://stockscreener.us.reuters.com/Stock/US/Index?quickscreen=gaarphttp://stockscreener.us.reuters.com/Stock/US/Index?quickscreen=gaarp

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Best Stock Screener is the Nasdaq screener.Best Stock Screener is the Nasdaq screener.www.leadingtrader.com/stockscreenerwww.leadingtrader.com/stockscreener

Click“RunScreen”

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Results Page after clicking “Run Screen”:Results Page after clicking “Run Screen”:

Click“Export”to exportResultson to aspreadsheet

We have a list of 92 companies matching our criteria.

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Click “Save”and thenClick “open”to open the file

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You should then have a list of between 50 – 100 companies.

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You should then have a list of between 50 – 100 companies.

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You should then have a list of between 50 – 100 companies.

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Great Tool:

Using Relative Strength

We want to know how a strong a stock is relative to something else – such as similar stocks in the same industry, the industry itself or the bigger market.

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Other indexes:$HUI – Gold Bugs Index – Gold Mining Stocks$XAU – Gold and Silver Index$NDX – Nasdaq – for technology stocks$WTIC – Crude Oil

Industry Indexes and Symbols

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Relative Strength of industries:www.leadingtrader.com/industrystrength

Set to 3Months(63 tradingDays)

Type theSymbolshere

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Comparing relative strength of Financial stocks:

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Comparing relative strength of Tech stocks:

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Comparing relative strength of Gold stocks:

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Tip: Yahoo Finance ( finance.yahoo.com ) ---> Type in symbol/name ---> Competitors

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Facebook stock’s PEG back in July 2012

Facebook’s PEG was GREATER than 2 (PEG > 2). Overvalued and expensive.Compared to GOOG and MSFT.

$28 $576 $29

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Gold Mining Stocks – PEG Ratio comparison

Goldcorp (GG) has the lowest PEG relative to its major competitors. It is therefore undervalued and cheaper relative to the other Gold mining stocks. Also note the PEG of Barrick Gold (ABX) at 52.82!

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1) Investing Golden Rules & Psychology

2) Understanding the big picture

3) Choosing Quality companies

4) When to buy and when to sell

5) Take Action!

The 5 steps to Stock Investing Success

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Basic to Advanced Entry/Exit Strategies

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Keep Your Analysis Simple!

The best investing methods are the simple ones.

Warning:

• Over-analysis such as piling on indicators, lines and different charting tools will NOT make your investing any easier or better.

• It is the opposite – it will complicate your decision making to the point that you won’t be able to make a decision.

So… keep everything SIMPLE.

Important Point to Remember:

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£50,000 £25,000

It’s Time to It’s Time to BUYBUY our Quality Stock (Mercedes) our Quality Stock (Mercedes)in a market correction (Mercedes Sale) in a market correction (Mercedes Sale)

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It’s Time to It’s Time to BUYBUY our Quality Stock (Mercedes) our Quality Stock (Mercedes)in a market correction (Mercedes Sale) in a market correction (Mercedes Sale)

BUY

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Reversals

Using Chart patterns - REVERSALS

1

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Important Reversal Patterns

DOUBLE

BOTTOM

HEAD &

SHOULDERS

CUP

1

Generally most reliable

Stack the odds in our favour

Generally most reliable

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Trending up, Trending down or Oscillating?

TRENDING UP

TRENDING DOWN

OSCILLATING

(Trending) (REVERSION TO THE MEAN)

1

Trending / Oscillating Markets

LeadingTrader.com

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TRENDING UP(higher lows)

TRENDING DOWN(lower highs)

2

1 1

2

Trend Lines = General Direction

Peaks

Bottoms

Join major peaks or bottoms

“Bottoms up!”

1-2

“Tops Down!”

LeadingTrader.com

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Quick Test – Which is the strongest trendline

A B

Bigger or Deeper bottoms & longer swings

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Quick Test – Which is the strongest trendline

A B

More bounces or touches of the line

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TrendsTrends

LeadingTrader.com

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We want to see a series of higher highand higher lows for an UP trend.

LeadingTrader.com

Lower lowsshow a down trend.

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Trend line break: could mean a trend Reversal (as shown)or a temporary pause before trend resumes again.

LeadingTrader.com

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Strategy #1 – Trendline Ambush

BIDU - Baidu

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Strategy #1 – Trendline Ambush

BIDU re-tests theTrendline support3 times. Either of theseis a buy opportunity.

BIDU - Baidu

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Strategy #1 – Trendline Ambush

BIDU - Baidu

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Strategy #1 – Trendline Ambush

When trendline Breaks, thiscould mean either a trend reversalor we need to redraw the trendline.

BIDU - Baidu

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Strategy #1 – Trendline Ambush

We redraw the trendline after the market has broken the trendline, made a new low and stock has resumedits original trend (upwards). The trend still remains to the Upside.

BIDU - Baidu

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Strategy #1 – Trendline Ambush

Retest of the“New” Trendline

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Strategy #1 – Trendline Ambush

Verizon - VZ

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Strategy #1 – Trendline Ambush

Verizon - VZ

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Strategy #1 – Trendline Ambush

Verizon - VZ

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Strategy #1 – Trendline Ambush

BUY(with 10% sell stop below)

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Hammer Candlestick (or Doji)At Support is a Strong Bullish reversal signal

Strategy #1 – Trendline Ambush

Verizon - VZ

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NO! - This is NOT a bullish

Reversal signal.YES - This hammer is a

Bullish reversal signal. Forms atend of a downtrend (ideally near support).

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Buying at support trendlineWith Doji candle

Google (GOOG)

Strategy #1 – Trendline Ambush

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Google (GOOG)

BUY(with 10% sell stop below)

Strategy #1 – Trendline Ambush

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Strategy #1 – Trendline Ambush

FTSE – UK 100

FTSE 100 holdsIts trendline. Great Buy point.

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Strategy #1 – Trendline Ambush

German DAX

Notice the “falseBreak” of the trendline

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Trendlines on ChartsTrendlines on ChartsLeadingTrader.com/etx

LeadingTrader.com

Trendlines

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• We buy at trendline and/or Moving Average (200 MA) support levels.

• This gives us the best chance to buy a good quality stock at VALUE or below market value.

• A market sell off when everyone is afraid to buy is the best time to buy.

• But we still need to look at the charts to identify when to buy.

Just to be clear…

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Strategy #2: 200 MA Ambush

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Moving Average (MA): 200 MAMoving Average (MA): 200 MALeadingTrader.com/etx

LeadingTrader.com

Simple Moving Average (setting 200)

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Dow 30 – November 22nd 1963

Strategy #2: 200 MA Ambush

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Strategy #2: 200 MA Ambush

Legal & General Group

As an option, you can use theMomentum indicator for confirmation.Wait for Momentum to go above zero.

Momentum can also be used for trendline ambush strategy.Disadvantage of using momentum is a slightly later entry (butit can put the odds a bit further in your favour).

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LeadingTrader.com/etx

Using MomentumUsing Momentum

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Strategy #2: 200 MA Ambush

Google (GOOG)

Trendline and 200 MA mergeand form a strong support.

Momentum goes above zero.

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Strategy #3: 200 / 300 Scale In

Pirelli & C.

Alternative method: Buy a small amount(half) at the 200 MA (green line) and then add moreat the 300 MA (purple line), and the final remainder when momentum goes above zero.

Momentum goes above zero

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Strategy #3: 200 / 300 Scale In

Apple (AAPL)

Scaling in to AAPL at the 200 MAand the 300 MA (also notice momentum).

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Tip: You can also compare the impact of Insider Transactions (buying or selling by Company’s executives/directors) on the stock.

Always double check with the chart to see if there is a buy signal.

Apple (AAPL) Insider Transactions on Yahoo Finance

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LeadingTrader.com/etx

Using Average True Range (ATR) for Stop-lossUsing Average True Range (ATR) for Stop-loss

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Aviva

Using Average True Range (ATR) for Stop-lossUsing Average True Range (ATR) for Stop-loss

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Average True Range (ATR)(setting 14)

Rule For Stop-Loss: 2 x ATRRule For Stop-Loss: 2 x ATR

For example: For example: if ATR is equal to 50 cents (or pence), then use a if ATR is equal to 50 cents (or pence), then use a stop-loss 100 cents (or pence) away from your stop-loss 100 cents (or pence) away from your entry.entry.

Why? Why?

Because (ATR x 2) = (50 x 2) = 100 cents/penceBecause (ATR x 2) = (50 x 2) = 100 cents/pence

LeadingTrader.com

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Aviva

ATR on Aviva at time of entry is7 pence. So we will use a stop of 14pence (7 x 2 = 14).

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Google (GOOG)

ATR on Google at time of buying was$12. So we will use a $24 stop(12 x 2 = 24).

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Aviva

Using the “X-Zone” to get a cleaner and earlier entryUsing the “X-Zone” to get a cleaner and earlier entry

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DAILY chart

Zoom in to a 4 hour or 60 min chartand enter on a long Squeeze.

4 hour

The X Zone

This gives a more precise and slightly earlier entry.

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4 hour

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Amazon

DAILY chart

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4 hour

Enter on a squeezeon the 4hr or 60 minchart

Amazon

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4 hour

Daily chart

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Deere & Co.

We Buy at trendlinesupport.

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Deere & Co. (DE)

Using the X Zone for extra Precision: Scale in (buy) half at the the trendline or 200 MA, and then buy theremaining half when a squeeze fires on the 60 min or 4 hour charts.

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Exit StrategiesExit Strategies

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• Always have prepared an EXIT strategy.

• There is no point entering the market if you do not know when to get out.

• The reason why 90% of traders/investors lose money is because they do not have an exit strategy.

Important

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• Using Fundamentals: If PEG goes above 2.

• My preferred and favourite exit method:

1. Use a trailing stop 20% below price

2. Using technicals (charts): Exit based on a close BELOW the weekly 8 EMA (exponential moving average).

Basic to Advanced Exit Methods

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Fundamental exits

Cosider selling some shares ifPEG goes above 2

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Exit on a 20% Trailing Stop

Move your stoploss (sell-stop) higheras the stock moves higher, but keep it20% below the price.

(The only exception to this is whenyou initially buy the stock, where yoursell stop is 10% below price).

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Exit on a 20% Trailing Stop

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EXIT based on close BELOW the Weekly 8 EMA (T-line)

SELL

SELL

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NOTE: We do NOT trail on the 8 EMA,but we wait for a CLOSE below the weekly 8 EMA as an exit (sell) signal.

You can however keep trailing your sell stop20% below the price.

SELL

EXIT based on close BELOW the Weekly 8 EMA (T-line)

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SELL

EXIT based on close BELOW the Weekly 8 EMA (T-line)

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Take Action:Trade execution and my stock selection.

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1. Shares / stocks

2. CFDs

3. Spreadbetting

4. Options

5. ETFs of industries

You STILL get paid dividends with CFDs and spread betting (not just shares).

Different Methods of Investing:

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My preferred broker and platform:

ETX Capital:

www.LeadingTrader.com/etx

Benefits: Leverage, user-friendly, flexible, have stocks from many countries worldwide, None or Very low commissions, and very safe.

Brokers / Trading Platforms:

Others:

Tradestation (for US residents), Scottrade (for US residents), Optionsxpress (for US/Canada residents)

Full list of my recommended brokers: www.leadingtrader.com/tradingtools

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Types of trading order

BUY SELL

Stop

Market

Limit Stop

Market

Limit

Order Price is ABOVE current Market Price

Right Now!

Order Price is BELOW the current market price.

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Leadingtrader.com/etx

With some brokers,they have made iteasier by not requiringyou to choose stop/limitfor ENTRIES.

1 CFD = 1 share

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Leadingtrader.com/etx

Select the country’s shares you wish to buy, or type the name in to the search box.

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1. Caterpillar (CAT)

2. Silver Wheaton (SLW)

3. Yamana Gold (AUY)

4. Mylan Inc (MYL)

My stock selection:

Please note: these are NOT share tips or recommendations to buy any stocks.It is purely for information and educational purposes, and relates to what I ambuying personally. Traders should make sure their risk is contained and limited.

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Caterpillar (CAT)

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Silver Wheaton (SLW)

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Yamana Gold (AUY)

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Mylan Inc. (MYL)

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Give up mindset of Give up mindset of confirmation of confirmation of confirmation. confirmation. Make a decision!Make a decision!

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What do you need to do What do you need to do to achieve your wealth to achieve your wealth

goals?goals?

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Take actionTake action and Get Started Now! and Get Started Now!

1. Select Industry doing well in theright stage of the economic cycle.

2. Select Quality Stocks in those industries.

3. Identify when to buy them andwhen to sell them.

4. Remember to keep it simple!

5. Take Action towards your goals.

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Special Online Weekend Event on:Special Online Weekend Event on: Sat/Sun 16 Sat/Sun 16thth / 17 / 17thth February FebruaryMaster Class on StocksMaster Class on Stocks

Includes on-demand link and CD Recording

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Includes on-demand link and CD Recording

What you will learn:What you will learn:

• Learn how to effectively Learn how to effectively hedgehedge your investments your investments• Achieve a Achieve a perfectly balanced portfolioperfectly balanced portfolio• The The Top 7 RulesTop 7 Rules for the Worst Quality Companies for the Worst Quality Companies • The The 3 Best Strategies3 Best Strategies to Short Stocks to Short Stocks• Make Money As The Worst Quality Stocks FallMake Money As The Worst Quality Stocks Fall• Market Correlations and your investments.Market Correlations and your investments.• Advanced Advanced Risk ManagementRisk Management..• Advanced Technical analysis.Advanced Technical analysis.• Review of stock picksReview of stock picks for 6 months for 6 months• Take Your Investing to the Next LevelTake Your Investing to the Next Level

Special Online Event on Sat/Sun 16Special Online Event on Sat/Sun 16thth / 17 / 17thth February February

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Early Bird Discount Today Only:Early Bird Discount Today Only:

Special Online Event on 16Special Online Event on 16thth / 17 / 17thth February FebruaryMaster Class on StocksMaster Class on Stocks

Go to: www.LeadingTrader.com/mc

• Learn how to effectively hedge your investmentsLearn how to effectively hedge your investments• Achieve a perfectly balanced portfolioAchieve a perfectly balanced portfolio• The Top 7 Rules for the Worst Quality Companies The Top 7 Rules for the Worst Quality Companies • The 3 Best Strategies to Short StocksThe 3 Best Strategies to Short Stocks• Make Money As The Worst Quality Stocks FallMake Money As The Worst Quality Stocks Fall• Market Correlations and your investments.Market Correlations and your investments.• Advanced Risk ManagementAdvanced Risk Management• Advanced Technical analysisAdvanced Technical analysis• Review of stock picks for 6 monthsReview of stock picks for 6 months• Take Your Investing to the Next LevelTake Your Investing to the Next Level

Includes on-demand link and

CD Recording

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