SPEAKER: Carl Capolingua, Trader, Educator, Australian Stock Report

LOCATION: Sydney

DATE: October 2013

ASX INVESTMENT VIDEOS

Trading plans and trading rules

DISCLAIMER: The views, opinions or recommendations of the presenters are solely their own and

do not in any way reflect the views, opinions, recommendations, of ASX Limited ABN 98 008 624 691

and its related bodies corporate (“ASX”). Information and material presented at the seminar is for

educational purposes only and does not constitute financial product advice. Investors should obtain

independent advice from an Australian financial services licensee before making investment

decisions. No responsibility is accepted by ASX for any loss or damage arising in any way (including

due to negligence) from anyone acting or refraining from acting as a result of this information or

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© Copyright 2013 ASX Operations Pty Limited ABN 42 004 523 782. All rights reserved 2013.

• A trading plan is a set of rules…

• Clear cut, precise definitions

• Methodology, Money Management

• Systems, processes, documentation

• If you fail to plan…you are planning to fail…

• All successful businesses have a plan

• Random In vs. Random Out

• Accountability

• Objectives

• Trading Style

• Universe

• Methodology (Entry & Exit)

• Capital Management

• Process & Documentation

• The study of how price changes over time

• Displayed on a chart also know as 'charting'

• Open, high, low, close, volume, time

• No consideration of 'fundamentals'

• Technical analysis can be used to:

Define specific rules for entering the market

Define specific rules for exiting the market

Define specific rules for managing a portfolio

• Filters

Measurable, explicitly defined observed events

Multiple filters can be used/required

Filters can/usually in place for extended time

• Signal

Measurable, explicitly defined observed events

Typically one signal per setup

Filters + Signal = Setup

Commonwealth Bank (CBA)

Filter = Up

EMA 1 crosses above EMA 2

<< Enter long trade

• Even more important than entry setups

• Designed to extract maximum profit

• Explicit set of rules determining exit

• Used in conjunction with a stop loss

Qantas (QAN) EMA 1 crosses below EMA 2

<< Exit long trade

• Chart of benchmark index used

• Set of rules applied to determine:

Portfolio bias (long-short exposure)

Portfolio exposure (Value at Risk - $VaR)

Move to neutral bias, 40% invested,

60% cash/bonds

Move to max long bias, 100% invested

The content of the following presentation does not constitute a recommendation nor does it take into account your investment objectives, financial situation or particular needs. Before making an investing decision based on this general advice you should consider whether it is appropriate in light of your financial circumstances or seek further advice on its appropriateness. Before acquiring or using any of Australian Stock Report's products, you should obtain and consider our Financial Services Guide. Australian Stock Report Ltd (ACN 106 863 978) is licensed as an Australian Financial Services Licensee pursuant to section 913B of the Corporations Act 2001. AFS License 301682. This presentation remains the property of Australian Stock Report Ltd at all times and should not be copied or redistributed without prior consent.

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