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com Pty Ltd since 1996

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Offices and staff in Darwin, Singapore, Beijing, Kuala Lumpur. Ph +61 8 89270061 Fax + 61 8 89270125
Box 40043 Casuarina NT Australia 0811 www.guppytraders.com. Email: gtssupport@guppytraders.com

The Asia & China Internet Trading Weekly with Independent Analysis
Weekly for Wednesday August 27, 2008 Based on Mondays Close 19 pages
Edited by Daryl Guppy with contributions from A Gibbs, Suniel and P Rak
Guppy Trading Essentials Chart pak, Metastock , Ezy Charts & SuperCharts. Data from JustData, Paritech, CMC
Markets, Almax & theNextView

Stocks mentioned in this issue:

Singapore
TRI-M
UOB
Malaysia
KLCI Index

Note.
icons
heading,
material.

The

more

computer

appearing after a section

the more advanced the

CONTENTS
Selecting Stops pg1
Readers Questions Building Useful Timing
Indicators pg4
The 123 Pattern pg8
Chart Briefs UOB LTH (UOBH), Singapore pg10
CNBC Gone For Gold pg12
Metal Briefs Copper pg14
Index Briefs KLCI, Malaysia pg15
Newsletter Notes pg16
Portfolio Case Studies Money Management pg18

SELECTING STOPS
By Daryl Guppy
TRADING METHODS
EYEBALLING
Good trades leap off the chart. They are clear
trend trading opportunities, or clear trend breakout
opportunities. Specialist trades, such as parabolic
trends, are most easily seen when we look at the
chart.
Eyeballing makes use of the ability to use
experience and summarise a chart in the blink of an
eye. This experience comes from looking at many
charts every day. At first this appears to be a time
consuming process, but with practice, it is a fast and
efficient way to find clear simple, profitable trading
opportunities.
We train ourselves to apply this technique by
looking closely at the chart every time we have cause
to look at a stock for any reason. In time you will learn
to recognise clear trends, and clear chart patterns.
This is an important trading skill.
Eyeballing remains one of the quickest and
most effective ways to find profitable trading
opportunities.

August 27, 2008

Stay or run? Its the essential

question in a bear market. In a bull market
a price pullback is an opportunity to join a
trend at a temporary point of weakness. In
a bear market, the temporary weakness
can rapidly turn into an extended fall. Bear
markets make traders flinch when it comes
to applying trading discipline. The case
study in TRI-M is an example of this
dilemma.
This is a long side trade that
appears in the context of a bear market.
This is a strong rising trend. They can be
found, but they require more careful
management in a bear market. The key
feature of every trade is trading discipline
because this is the underpinning of risk
management.

The trade uses two stop loss signals. The first is a price volatility based count back line. In
current volatile markets, this signal is sometimes too tight. It remains an excellent measure of price
volatility but it is not always the best measure of trend behaviour. A close below the CBL line is a
warning signal of increased price volatility and potential trend weakness. This warning developed
when TRI-M re-commenced trading.
Note that the CBL should be calculated from the new high at $1.05. However the CBL is
correctly calculated from the previous high at $1.02. When calculated from $1.02 the stop loss is
located at $0.96. When the CBL is calculated from the high at $1.05 the stop loss is lowered to
$0.93. In this situation the higher value of the CBL calculation is used as the stop loss.
The second management method uses the TVL line. This trend volatility line uses the
trending information from the GMMA to develop a stop loss solution that is related to the volatility
of the trend. The TVL stop has not been triggered in this case study trade.
Nervous traders exit using the CBL price volatility signal. We remain with the trade. We use
the TVL as the confirming exit signal. We look for evidence of the stability of the trend as this is a
more reliable guide than price volatility in the current market. A move below the TVL line is a
confirmation exit signal.
This is not necessarily the most profitable trading solution. Our objective in these examples
is to show readers the consequences of the consistent application of trading plans and risk
management. The original trade plan notes are reprinted below.

August 27, 2008

TVL MANAGEMENT
The CBL stop loss is lifted to $0.96. A move below this level is an alert exit signal. This
developed during the week. The TVL line is used as the confirmation stop loss. The value of the
TVL line is not adjusted.
With the rising trend candidate, TRI-M, we can apply a TVL (Trend Volatility Line) analysis.
The TVL intersected the lower edge of the long term GMMA so a new TVL position is calculated.
The width of the volatility is measured with the pink line projected upwards. From the upper level,
the new TVL is set at $0.94.
TVL analysis is applied to the previous trend and shows previous compatibility with TVL
management. As the trend develops we can use the TVL to manage the trade. The initial trade
management uses the CBL line.
We have shown the
minimum
target
price
necessary to achieve a 1:3
risk/reward
ratio.
This
calculation
method
is
discussed in the RRR article in
this issue.
The risk and
reward ratio is calculated at
the minimum of 1:3. This trade
is added to the case study portfolio at $1.00 for a total cost of $20,000 with a position size of
20,000. The stop loss is at $0.96 and this puts $800 at risk. This is 0.8% of total trading capital.
SEARCH METHODS
Several weeks ago, we detailed the steps we use to complete a visual trawl through all
Singapore stocks. A visual trawl means quickly looking at each chart and building up a list of
potential trading opportunities. We find currently trading stocks by running a search using just the
DEADDAYS formula covered in previous newsletters. Then we save the list as a temporary
favourites list. Finally we open this list and flip through each chart using the forward button.
We look for these features in the initial visual search for trade opportunities.
Price is above the long term GMMA
The long term GMMA is moving upwards
Price has moved above a downtrend line
The trend is confirmed with the count back line.
As the list is constructed, certain stocks appear much more stronger that others. These are
noted as the visual scan progresses.
Once the final candidate is selected, the intention is to reduce the list by selecting stocks
that have the highest level of compatibility with our preferred trading method. In these case studies,
we want to apply the HCC trade management. Initially this uses the count back line to manage the
risk, and then shifts to using the GMMA TVL (Trend Volatility Line) to manage the developing
trade. We select for an entry point close to the CBL stop loss level.
The first step is to apply GMMA analysis to each chart. The next step is to apply CBL
analysis. Then we apply RRR analysis to help with final trade selection.

To read more of Daryls articles, please click on this link

http://www.cnbc.com/id/23103686/site/14081545/
August 27, 2008

READERS QUESTIONS
INDICATORS

BUILDING

USEFUL

TIMING

By Andrew Gibbs
RELATED TOPICS
TIME IN THE MARKET
Trading objectives should be matched with
time in the market. The greater the time exposure weeks or months - the greater the risk of the market
moving in an unpleasant direction. Open positions
held for a long time must offer better returns for the
risk associated with the time in the market.
Trades offering smaller returns should be
closed when they have spent weeks failing to reach
your profits. Matching time in the market against
risk and with potential reward is a judgment call, but
unlike a safe, but low paying CMA account, the
market carries risk.
High risk markets are best traded for a
short time span with maximum, usually leveraged,
returns.
Risk management also means time
management.

This article will focus on how to build

some useful timing indicators using some of
the theories discussed in previous weeks that
we can apply to daily charts for swing trading
purposes. The time frame we are trying to
trade is the next 5-30 days.
The professional technical analyst
tends to be a chart reader, as opposed to a
system developer, however it is easy to
combine the two and in fact you need to know
the odds behind what youre looking at on the
screen to be able to trade successfully. This
article takes the setups from a trading system
and converts them into show-me studies on
the chart to give us a visual reference.

The indicator you are about to learn about is designed to identify the end of a trend. You
will often hear that you should never try to pick the low of a move or the high of a move? What if it
was actually possible to do this on occasion? Lets have a look at the chart below.
The stock is CBA and the green arrows on the chart represent an oversold condition on the
Gibbs Value Index (You can use an RSI or Stochastic for a similar result). You can clearly see that
in most of the examples shown below whenever this indicator (in blue on the chart below) goes
below 20 it is generally followed by a rally in the near future. This is a leading indicator, we buy on
the bar following the green arrow. You will also notice that whilst this indicator is good, it is not
perfect. You can never avoid all of the minefields.

August 27, 2008

Rather than just taking my word for it I have put together 3 tables that show the result for
buying the stock on the open after an oversold condition has been met and exiting after 7 days, 17
days and finally 30 days. This tells us whether or not we are actually looking at something with a
positive expectancy.

The numbers above show Buying 35 of the top 50 ASX stocks and exiting after being in the
trade for 7 days. You can see we have a small positive expectancy. Below are the results for being
in the trade for 17 days.

And finally the next table shows the results for being in the trade for 30 days.
August 27, 2008

The tables clearly show a positive expectancy across multiple time frames, however on the
whole, holding for 30 days improved the average trade and % accuracy, along with the profit factor.
You will also notice that on the CBA chart I also had a second data stream underneath the
price chart. This represents Crude Oil. You will remember some weeks ago that I suggested crude
oil going lower is positive for stocks and vice versa. The suggestion then to make the show me
study better, is to only show an oversold condition when crude oil is in short term down trend. This
makes sense as we now have two conditions that should support the stock price. The results
below show buying the 35 selected ASX stocks on the following days opening price if we have an
oversold condition and when crude oil is trading lower than where it was 30 days ago.

The results above are quite good. We improve our average trade and increase our winning
percentage. The show me indicator is shown on CBA below.
August 27, 2008

A quick analysis above shows that we have sidestepped the higher risk trades and now
have a pretty solid signal. I would however like another crack at making the signal better again. In
fact we still have a lot of things we can do to improve both the indicator and the system.
Next week I consider the additional filters that can be applied to improve the results.
If you would like to subscribe to my FREE weekly newsletter please e-mail me at
Andrew.gibbs777@gmail.com with your full name and e-mail address.

August 27, 2008

THE 123 PATTERN

By Suniel
SUBJECT SUMMARY
USING CHART PATTERNS
Patterns
by themselves
do not
necessarily lead to consistent outcomes. The
development of chart patterns alerts the trader
that a range of outcomes is more likely than at
other times. As price moves towards a wellestablished resistance level, the trader pays
more attention to the stock, ready to place a buy
order if prices move a few ticks above the level.
He cannot buy until others have bought because
he wants to follow the action, not create it. When
prices retreat into the body of the support and
resistance band, or other chart pattern, the trader
shifts his attention elsewhere. Chart patterns
signal the probability of action.

The 123 pattern is a reversal chart

pattern which occurs very frequently and has a
very high success ratio.
123s occur only at the end of trends and
swings. They are an indication of a change in
trend. They can also be found within a trading
range, and they take place when the directional
momentum of a trend is diminishing.
Let us first look at the above illustrated
typical 123 formation forming at the end of a
downtrend. Price will make a swing low (point 1),
retrace upwards to a swing high (point 2), where
a downward correction begins. Price would then
form another swing low (point 3), which is
higher than the previous low (point 1).

From this higher swing low (point 3) price then resumes the
upward movement, thus confirming the change in the trend. A long
trade is then entered when price breaks the previous high formed at
point 2.
This may sound complicated, but the concept is very simple
and easy to use. Since this is all that the pattern consists of, it is very
easy to spot for a confirmation of the change in trend.
If we look at the fundamental reason for the forming of this
pattern, we can see why it works so well. The unfolding of the pattern
step wise, would be as follows
An indication of the change in trend is seen, when price
retraces the original down move. This can be confirmed with a simple trend line.
Failure to make a new low.
Price rallying again from here, creating an anticipation of a reversal.
Breach of the previous high, confirming the reversal. At this point, everybody is going
long creating the extra momentum for the upwards trend. This is because traders, who
had anticipated the downtrend to continue, would have placed their stops above point 2
of this pattern. And when these stops are hit, these breakout traders will tend to cover
their positions by going long, driving the price up with thrust.
Once this pattern has been spotted, let us define some very simple rules for managing the
trade.

The entry should be taken only on the break of the point 2 the previous high (or low
as the case maybe)
The stops to be placed beneath the low of point 1. Aggressive traders may even place
the stops below the higher low at point 3, but it is always better to give price enough
room to move without hitting the stops.
While this pattern does not give any projected target, a minimum target can be
estimated by a simple thumb rule. Calculate the distance from the point 1 to point 2 in
the formation. Add this to the low of point 3, and this should be the minimum distance
that price will travel to.
The setup of the entire pattern from point 1 to 3 could take place in 3 bars or as long as
20 bars. But the rules of pattern remain the same. A point to keep in mind here is that
the more number of bars involved in the setup, bigger should be the move. This is not a
fixed rule, but more often not, this concept is followed by the price.
Allow the pattern to prove itself before entering a trade. If point 3 forms below the point
1, the pattern is negated. Similarly price has to break the high of point 2 for
confirmation. There will be times when price will consolidate within the area of points 2
& 3, without giving any indications of the direction. At such times it is better to stay out,
till price action confirms a direction.

August 27, 2008

Now let us look at some examples of the setup.

In this example we can see that price is initially in an uptrend. Price then moves down and
a simple trend line break will give us the indication of a change of trend. It is here that we label the
swing high as point.1 of the formation.
In this new downtrend, we then have a swing low from where price retraces up again in the
direction of the previous uptrend. We label this as point.2 of the formation.
Now at this point, even though we have the two initial points of the formation, we are not
sure if this is a retracement of the uptrend, or a reversal to the downtrend. The confirmation comes
when price makes a swing high, which is lower than the high of point1 (the point.3). This tells us
that price does not have the momentum to break the previous high, thus indicating a change of
trend.
If you notice, we mentioned that it only indicates a change of trend. This could just be a
consolidation where price could be pausing before resuming the uptrend again. This is where we
wait for the confirmation. As soon as price breaks the low of point.2, we enter the trade.

August 27, 2008

As per our conditions, we place our stops above the point.1 of the formation, and estimate
the minimum distance that price should go to. As we can see, price easily surpasses the minimum
distance, giving a good short trade.
Here we have a 123 formation for an uptrend also, giving us a better understanding of the
pattern. The rules remain the same as above, and we can see the effectiveness of the pattern.

CHART BRIEFS - UOB LTH (UOBH), SINGAPORE

By Petra Rak
INDICATOR REVISION
CUP AND HANDLE
This is a bullish chart pattern. Prices trend
upwards slowly, then pause to consolidate over
several days. The next up trend is projected by taking
the distance from the bottom of the cup to the brim, or
alternatively, from one edge of the cup to the other.
Often these give targets within a few cents of each
other and this is quite an accurate method. The cup
and handle pattern provides confirmation of a safe
entry as trends pause. This pattern should not be
confused with sharp declines and rallies. The cup and
handle pattern develops over weeks rather than days.
There are some day trading applications of this
pattern, but they are not as reliable.

The daily chart of UOBH shows the

collapse of a bullish cup and handle pattern
into a likely consolidation. Overall, the chart
shows that UOBH is in an overall long-term
uptrend, coming up from the lows in early
2008 around 15.25. However the chart also
shows that while the general upward
movement is there, it appears that the stock
is more controlled by support and
resistance levels than by the overall upward
trendline (hence the trendline is not drawn
on the chart).

The most recent development shows a reversal from a medium-term downtrend which
bottomed out gradually above a support at 18.40. The reversal was also gradual, resulting in a cup
and the start of a handle pattern under a lip resistance at 20.10.
However, though the handle started to develop, over the last three days the pattern broke
down and prices are currently well on their way back to the 18.40 support. This has invalidated the
cup and handle pattern and suggests that the consolidation between 18.40 and 20.10 is now the
dominant feature in the stock, until a breakout in either direction develops. The failure of the bullish
pattern is another example of the current tendency in the markets for unreliable and volatile
breakouts, and considerable general uncertainty.
UP CONDITIONS
The failure of a relatively high probability bullish pattern, such as a cup and handle,
increases the probability of a consolidation phase. The GMMAs confirm this as the moving average
groups which had recently completed a bullish crossover and were turning upwards are now once
again converged, and trending broadly sideways consistent with consolidation and uncertainty. The
narrow long-term group also indicates very little support in the event of a retreat.
A rebound from 18.40 is likely to result in a return to the 20.10 resistance, with the potential
for an ongoing breakout above this resistance. This is also consistent with the overall (though
reasonably poorly defined) uptrend in this stock.
Hence, opportunities in this stock are most likely to come from short to medium-term
uptrends which commence on rebound from a support and have a likely target at the closest
overhead resistance, with the potential for a continuation to the next resistance. This is consistent
with the strong support/resistance control evident in this stock. At this point, it is necessary to
recognise that the separation of these support and resistance levels is not especially wide, for
instance around 8% from 18.40 to 20.10, and another similar separation to the 21.70 level which
capped the previous medium-term uptrend.
Any trades based on a support rebound should be accompanied with a very tight stop loss,
necessary in the current uncertain environment. Trades can be managed with reference to
support/resistance levels, any developing short to medium-term trendline and appropriate stop
losses (initially on a close below the nearest support, shifting to the trailing CBL stop loss).

August 27, 2008

10

DOWN CONDITIONS
Failure of the 18.40 support will signal a likely medium-term downtrend back to previous
downtrend lows around 17.10. Failure of this level will signal a more severe downtrend with likely
downside supports at 16.30 and 15.25, while rebounds from these levels may signal a developing
reversal.

August 27, 2008

11

CNBC GONE FOR GOLD

By Daryl Guppy
Many years ago I worked underground mining for gold.
Since then I have found it much easier, and more profitable, to
mine for gold in the financial market. The glitter of gold remains
attractive and the weekly NYMEX gold chart shows a mother lode
of opportunity. Just like physical gold in the rock face, the gold
chart shows high grade values and areas where value is less
profitable. The plunge from $990 to $780 has traders worried that
this mother lode may be played out because gold price has hit the
same volatility skids that have plagued equity markets in 2008.
The essential difference is that between the volatility of price and the volatility of the trend.
In strong trend we accept price volatility because it does not threaten the stability of the trend. The
most important feature is the volatility of the trend. When price volatility plunges below a measure
of trend volatility then we have a strong endof-trend signal.
The GMMA is used to understand the behaviour of investors and traders. The investors
provide trend stability. The changes in the relationship in the long term GMMA group of averages
indicate changes in the volatility of the trend. This trend volatility is measured with a GMMA Trend
Volatility Line (TVL). A close below the TVL is a confirming signal of significant trend weakness.
This is a leading indicator.
SUBJECT SUMMARY
CHART NOTES
Each
week
we
provide CNBC-OnLine with
analysis of a selected chart,
index or commodity.
We
reprint this analysis for
newsletter readers.

The TVL analysis

applied to the gold chart
shows the move below
$860 is a significant
change in the up trend.
The focus shifts to defining
the potential downside for
the new trend. This is no
longer a long-side trading
opportunity.
This trend change
signal means we revisit
the structure of this
market. This has not just
been a fast trend rise. The
market has been defined
by
strong
horizontal
support and resistance
levels. These are created
when
price
moves
sideways within the trading
channel defined by the
sloping trend lines. During
2007 June gold moved
below the lower up trend
line and developed a
horizontal support level
near $650.00. During late
2007 gold developed a
new horizontal support
level or trading band, near
$785 to $840. Current
price activity falls within
this trading band.
August 27, 2008

12

There is a strong probability gold will develop another sideways pattern similar to the
sideways pattern in 2007 June. In this condition, gold will use the $785 to $840 level as a trading
band. This pattern of support suggests gold can fall to this level and move sideways. Optimists
draw a long term trend line starting in July 2005 and touching the lows in June 2007. This trend line
provides support in the $785 to $840 region.
The plunge in recent weeks has exhausted the nuggets of opportunity found in March
through July. The move below the TVL line confirms a significant trend change. This is unsafe and
shifting ground. The key uptrend continuation signal is a move above $840. The warning signs of
further rotten ground is a fall below support near $785, or a fall below the value of the long term
trend line.
A fall below the TVL line at $860 is a signal for a change in the long term uptrend. The
strongest support level is between $650 and $700. A sustained fall below support at $780 has a
long term downside target near $650 to $700.
The strong trend in gold has its own characteristics and traders must understand this
behaviour. The trend is influenced by American dollar weakness, but this is not the most important
feature of the trend. Traders watch for the price behaviour within the horizontal support areas. Its
time to hang onto your hard hats and trade the volatility of price behaviour rather than the trend
behaviour. Capture the nuggets while waiting for the line of lode to reveal itself again with a move
above the TVL line.

NEW GUPPY TRADING DVD

Thieves,
highwaymen,
robbers,
bandits,
pickpockets. Throughout history there have always been
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has earned. As long as there have been thieves there
have been ways to defend against them. The market is
no different. Volatility is the new thief, and Daryl
Guppys new GMMA Trend Volatility Management DVD is
the security system breakthrough.
By using trend volatility instead of price volatility
to determine stop loss levels, traders are able to avoid
falling victim to the volatility sleight of hand and being
shaken out of the market, losing hard earned profits.
Learn how to apply the Trend Volatility Line
(GMMA TVL) and the Hope, Confidence Certainty (HCC)
method to manage trend risk. Learn how to improve
entry techniques and develop profitable multi-day trades
in volatile markets.

We are giving newsletter subscribers an exclusive advance opportunity to get a copy of

Daryl Guppys new trend volatility DVD at a 23% discount, bringing the cost of this security
system down from $110.00 to $85.00 a saving of $25.00! The DVD is due for release at the
end of August. Newsletter subscribers get this exclusive offer and FREE shipping for a limited
time if you pre-order now. With over two hours running time complete with animations and
graphics, this sets a new standard for trading DVDs. You wont fall asleep watching this one.

Register your no-obligation pre-order at

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August 27, 2008

13

METAL BRIEFS COPPER

By Daryl Guppy
SUBJECT SUMMARY
METAL NOTES
Each week we provide
Reuters newswires with analysis of
metal trading on the London Metals
Exchange. Metal price behaviour is
a guide to economic strength based
on commodity demand. We reprint
this analysis for newsletter readers.

August 27, 2008

The price retreat from trading band resistance

between 7800 and 7900 has weak support near 7600. A
move below 7600 signals downtrend continuation with
targets below 7400. A rebound from 7600 finds strong
resistance near 7900.

14

INDEX BRIEFS KLCI, MALAYSIA

By Daryl Guppy
SUBJECT SUMMARY
INDEX NOTES
Each week we carry index
analysis
notes
for
regional
markets. These are the markets in
Singapore, Malaysia, Hong Kong,
Shanghai, Thailand, Taiwan and
Korea. Each market is covered
once every six weeks, or more
often if there are significant
market
developments.
The
objective of the notes is to provide
an
analytical,
technical
background to assist readers in
making
better
trading
and
investment decisions.

We looked at KLCI for CNBC a few weeks ago. We

suggested the key feature was the dominant head and
shoulder pattern and the neckline. The index needed to move
above the value of the neckline to start the process of
invalidating the head and shoulder pattern. This has not
developed. The index has retreated from the neck line.
Additionally it has fallen below the support level near 1100.
This confirms the bear hug and the downside targets.
The dominant feature is the bearish long term head
and shoulder pattern. The pattern is useful in two ways. First
it confirms the bearish nature of the market and this directs
our attention to downside support levels. Second, the pattern
is used to establish potential downside target levels. This
market is particularly compatible with head and shoulder
patterns. They occur often and they display a high level of
reliability in this market.
This is not a freefall market. There is a long term support consolidation trading band
between 930 and 970. A market collapse has a high probability of pausing in this consolidation
area. This is the high probability outcome and traders will look for evidence of trend rebound
patterns developing in this region.

August 27, 2008

15

The neckline, or base of the head and shoulder pattern uses the extreme low in August
2007 and the low in March 2008. These extremes in the low, and the spike nature of the high that
creates the head suggests we need to apply pattern projection targets with some caution. It doesnt
alter the bearish nature of the pattern message, but it adjusts the way targets are set.
A straight forward application of the pattern target measurement sets a downside target
near 780. This target is not an historical support level. Support is located near 800 so this is the
higher probability downside target. This is an extreme technical target.
The high probability outcome is a retreat to consolidation support between 930 and 970
followed by the development of a trend rebound pattern. There remains the potential for a sharp
temporary fall towards the head and shoulder target near 800. The sudden temporary falls in
March and August 2007 and again in March 2008 show how it is possible for this behaviour to
develop. This is consistent with the character of the Malaysian market.

NEWSLETTER NOTES
WHO WRITES THE NEWSLETTER?
The newsletter is written by five groups of people. They are united by their interests in the market,
their genuine trading experience and their willingness to share their experiences and ideas. They know that
by exposing their ideas to the scrutiny of other traders that they will improve their own trading results. One of
the benefits of writing for the newsletter is the way it forces you to more carefully define your trading plan.
The five groups of writers are:
Daryl Guppy. The notional case study portfolio is drawn from these articles. This also includes
the analysis approaches I use in trading current markets.
Regular columnists. These writers include Petra Rak, Gavin Hewitt, A Gibbs, John Atkinson,
Suniel, J Mitchell and S McCarthy. They are all private traders active in the market and their
analysis and research reflects their experience.
High profile writers and authors. We bring you the most recent work completed by authors like
Alan Hull, Louise Bedford, Martin Pring and others. These are knowledgeable and respected
traders.
Freelance writers. These are ordinary traders just like you. They struggle with the same problems
and develop their individual solutions. Often they write on just a single trading approach or issue.
Their knowledge gained from hard experience in the markets helps us all to become better
traders. Trading is a lonely business and sharing experience makes the task easier.
Readers. Many of the ideas for articles come from readers. The Readers Questions section is a
regular response to questions sent in by readers. Many articles are also commissioned on the
basis of questions and issues raised by readers. Your support helps to write the newsletter you
read and make it relevant.
In selecting articles we prefer those that are consistent with the approaches discussed by Daryl
Guppy in his books and workshops. However we still discuss other trading approaches, such as Gann,
Fibonacci etc. The objective is to provide readers with a traders perspective on these techniques so they
can made a better decision about how appropriate these techniques may be for their own trading.

CHINA AND CMC

CMC markets include many Hong Kong Listed Red Chip CFDs. These are stocks that are jointly
listed in China and Hong Kong. This provides one way for foreigners to trade the growth of China markets. It
could cost traders thousands of dollars to learn how to trade the Chinese market. We provide a short-cut on
the learning curve with an English language version of our trade advisory weekly.
Each issue covers around 20 to 30 stocks each week, but does not include some of the fundamental
commentary included in the Chinese language edition. Red-K-Line includes Shanghai or Shenzhen Index
analysis every week which is not included in the Chinese language edition.

Red-K-Line is essential reading for traders interested in understanding how China trading is
different from trading in Western financial markets.
Red-K-Line teaches you which strategies work in Chinese markets.
Red-K-Line is essential for expats who are interested in trading the China market.

August 27, 2008

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Red-K-Line is essential reading for those who want to be ready to participate in China
market trading when the market opens

With a real-time success record of 72%, Red-K-Line is the most successful China market trading
weekly publication available in English.
Full newsletter details are available on www.guppytraders.com/RKLChina
chinaorders@guppytraders.com for a free sample copy of Red-K-Line, English version.

Email

V3 GTE
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Jason Mitchells JICD% Indicator. First released in our newsletters, this indicator gives a
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bias with this tool.

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The GTE Charting program and Toolbox is designed to work with a variety of data formats. The
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WHICH GUPPY BOOK?

Many people have asked this question. So, here is a summary guide:
Want to co-ordinate your trading?
The 36 Strategies of the
Chinese For Financial Traders Beginner to experienced
Want to know more about trading?
Share Trading
Beginner to experienced
Want to know more about charts?
Chart Trading
Beginner to experienced
Want to know more about tactics?
Trading Tactics
Beginner to experienced
Want to improve your trading results?
Better Trading
Experienced to professional
Want to master simple but powerful techniques? Trend Trading
Beginner to experienced
Want to understand short term trading?
Snapshot Trading
Experienced to professional
Want to survive difficult markets?
Bear Trading
Beginner to experienced

August 27, 2008

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PORTFOLIO CASE STUDIES MONEY MANAGEMENT

Starting cash position $100,000 - no brokerage or slippage 2% of risk = $2,000
NOTE Entered date is the newsletter date which contains the case study discussion.
Close is Monday close prior to publication

Security/Counter/Stock

Tri-M Singapore

Price

Qty

Pur Value

1.00

trend trade

20000
Newsletter date

Close

20000

Cur Val
0.95

6/08/2008 Open Profit

19,000
-

Percentage

1,000
-5.00

NOTE: The case study portfolio is reset to a nominal $100,000 in trading capital in April
2007
Profit since April 1, 2008 , $5,236 or 5.2% return on trade equity.
SUMMARY MONEY MANAGEMENT
Profit April 1, 2007/March 31, 2007 = 63% return on trade equity.
Profit April 1, 2006/March 31, 2007 = 70.8% return on trade equity.
Profit April 1, 2005/March 31, 2006 = 59% return on trade equity.
Profit April 1, 2004/March 31, 2005 = 38.8% return on trade equity.
Profit July 1, 2000/December, 2000 = 32.2% return on trade equity. (6 months only)
Profit July,1999/ June, 2000 = 69.9% return on trade equity.
Profit July,1998/ June, 1999 = 54% return on trade equity.
Profit July 1997/ June, 1998 = 66% return on trade equity.
From 1997 to December 2000 we ran a Singapore/Malaysian section in the Australian edition of the newsletter.
The results above are from the case study trades for that period.

Direct investing in the stock market can result in financial loss. Historical results are no guarantee of
future returns. Results reflect absolute trading stop loss discipline. Case study trades are monitored and
managed in real time and management reports are delivered every week in the newsletter. Except where
noted, all case study trades and notional examples using reasonably attainable entry and exit points.
Unlike an actual performance record, simulated results do not represent actual trading. Also, since the
trades have not actually been executed, the results may have over or under compensated for impact, if
any, of certain market factors, such as lack of liquidity. No representation is being made that any account
will or is likely to achieve profits or losses similar to those shown. Full trade summaries, with charts, are
provided every six months.
DISCLAIMER AND COPYRIGHT
Guppytraders.com (ACN 089 941 560) Pty Ltd is not a licensed investment advisor. This publication, which is generally
available to the public, falls under the Financial Media Advice provisions. The information provided is for educational
purposes only and does not constitute financial product advice. These analysis notes are based on our experience of
applying technical analysis to the market and are designed to be used as a tutorial showing how technical analysis can
be applied to a chart example based on recent trading data. This newsletter is a tool to assist you in your personal
judgment. It is not designed to replace your Licensed Financial Consultant or your Stockbroker. It has been prepared
without regard to any particular person's investment objectives, financial situation and particular needs because readers
come from diverse backgrounds, with diverse objectives and financial situations. This information is of a general nature
only so you should seek independent advice from your broker or other investment advisors as appropriate before taking
any action. The decision to trade and the method of trading is for the reader alone to decide. The author and publisher
expressly disclaim all and any liability to any person, whether the purchase of this publication or not, in respect of
anything and of the consequences of any thing done or omitted to be done by any such person in reliance, whether
whole or partial, upon the whole or any part of the contents of this publication. Neither Guppytraders.com Pty Limited nor
its officers, employees and agents, will be liable for any loss or damage incurred by any person directly or indirectly as a
result of reliance on the information contained in this publication. The information contained in this newsletter is copyright
and for the sole use of trial and prepaid readers. It cannot be circulated to other readers without the permission of the
publisher. Each issue now incorporates fingerprint protection that enables us to track the original source of pirate copies.
If we find the that you are redistributing the newsletter then, at our discretion, we will reduce the length of your paid
subscription by the value of the multiple copies we believe you are circulating. Share with nine friends, and we cut your

August 27, 2008

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subscription period by 90%. Contributed material reflects the personal opinion of the authors and are not necessarily
those of the publisher. Articles accurately reflect the personal views of the authors. Stocks held by the authors are
marked* and are not to be taken as a trading recommendation. This is not a newsletter of stock tips. Case study trades
are notional and analysed in real time on a weekly basis. Guppytraders.com does not receive any commission or benefit
from the trading activities undertaken by readers, or any benefit or fee from any of the stocks reviewed in the newsletter.
Guppytraders.com is an independent international financial education organization and research is supported by
subscription fees. Please note that In the interest of timely publication of newsletter, this document may be incompletely
proofed.
OFFICES; Head Office, 22 Hibernia Crescent, Brinkin, Darwin, Australia, Penthouse Level, Suntec Tower Three, 8
Temasek Boulevard, Singapore, Room B105-A17, No.14, Chaoyangmen Nandajie, Chaoyang District, Beijing, China,
Level 36, Menara Citibank, 165 Jalan Ampang, Kuala Lumpur, Malaysia.

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