Insight Trader v18.1

Insight Trading Pty Ltd

ACN 009 946 932www.insighttrader.com.au

02 4751 2932

New features implemented in Insight Trader version 18

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Disclaimer• This presentation refers to certain securities and portfolios of

securities only to illustrate the philosophy behind certain developments in Insight Trader software

• This in no way constitutes a recommendation to buy or sell any of the securities mentioned that may or may not be suitable for your personal circumstances

• Past price performance is not necessarily any guide to future price direction

• Before investing in any security you should seek the advice of an appropriately licenced financial advisor

• Neither Insight Trading Pty Ltd nor any of its officers, servants, agents, independent contractors or otherwise are licenced financial advisors

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Warning• The performances, over a very limited time period, of the two

portfolios of stocks used in this presentation have influenced the development of new tools in the Insight Trader software that may assist in stock selection

• These tools are simplifications of the actual methods used in the Experimental Portfolio and have not themselves been tested in practice

• Stock selection is only one component of a whole strategy that ultimately determines portfolio performance where amongst other things management of any holdings is critical

• Overall performance of a strategy cannot be properly assessed until it has been demonstrated over at least one but preferably more bull-bear cycles

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In creating a presentation on incremental changes to disparate parts of a software package

it is difficult to produce a coherent continuous and interesting narrative. Instead such a

presentation will of necessity be piecemeal. Nevertheless I will try my best to maintain your

interest.

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Two main themes mark this upgrade

1. Two new proprietary indicators Velocity and Behaviour – global throughout the program – that are targeted towards improving your returns

2. The incorporation of important portfolio information into the charting display

In addition we have introduced a large number of other miscellaneous features designed to expand speed up and simplify your analysis.

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First let us look at the interface changes

There are changes to the 3 toolbars

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Four new main toolbar buttons

Risk Calculator

Arrange charts by Velocity

Arrange charts by behaviour

Show Portfolio trades andother info on charts

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Two new Portfolio toolbar buttons

Generate/Update Equity curve

Convert Commsec Today file

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3 new Floating Toolbar buttons

VelocityBehaviour

LRGR

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And on the indicator menu “I”

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THE NEW INDICATORS

Part I

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Why Velocity? Why Behaviour?

• Velocity was on the drawing board for several years

• The performance of our Experimental Portfolio encouraged us to bring it forward

• It has been designed as a simplified and rapid way to emulate the analysis behind the Experimental Portfolio although it is not exactly the same

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What are they?

• Velocity is a single value measuring the rate of price increase based on the compounding rate of price growth from three different time frames

• Behaviour assesses a type of statistical volatility that is not captured by traditional measures such as ATR or Bollinger and acts so that the smoother the price change over time compared with the rate at which it is rising or falling the closer this indicator approaches 100%

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Velocity

• Velocity is expressed in terms of percent per annum compounding (%pa cpd) and can range from minus 100 %pa cpd to plus several thousand %pa cpd.

• If for example a security displayed a Velocity of 100%pa cpd what this means in practical terms is that if it continued to exhibit the same Velocity over two years then at the end of the first year it would have doubled while over two years it would have quadrupled in value.

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The Experimental Portfolio

In October 2012 we set aside $100,000 to create a new real portfolio (The Experimental Portfolio) to test the performance of a new trading strategy against that used in our existing long standing portfolio (Main Portfolio)This comparison was maintained until the end of March 2014 – a little over 17 months

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The Experimental Portfolio

This is the portfolio as it stood at 16/3/2014

And these are the relative performancesCurrently standing at over 70% the cumulative outperformance of the Experimental Portfolio over the 17 months is noteworthy

OCT NOV DEC2012

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC2013

JAN FEB MAR2014

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80D @ D 081012-280314%CumPfGrth D @ D 081012-280314%CumPfGrth

Experimental Portfolio

Main Portfolio

PERCENTAGE CUMULATIVE PORTFOLIO GROWTH

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This was of particular interest to us

• And it stimulated us to ask what would be the absolute upper limit of performance that one could possibly expect to achieve in a buy and hold portfolio composed of financially respectable stocks over the same period

• With the benefit of complete hindsight we cherry-picked the 12 best performed stocks we could find and notionally invested in a hypothetical portfolio, on 2 June 2012, $8.3K in each for a total of $100K

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The Hindsight Portfolio

This is the Hindsight portfolio as it stood as of 16/3/2014

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And these are 2 portfolios compared with the All Ords accumulation index

So even the Experimental is only 30% of the way to achieving the “theoretical maximum” return

OCT NOV DEC2012

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC2013

JAN FEB MAR2014

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240D @ D 081012-280314%CumPfGrth D @ D 081012-280314%CumPfGrth D @ D 081012-280314XAOA

Hindsight Portfolio

Experimental Portfolio

All Ords Accumulation Index

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So what special attributes characterise the 12 Hindsight Stocks

1. They are financially strong (Stock Doctor rated)– 6 are Star Stocks (almost a quarter of all stars)– 3 are rated Strong and 1 Satisfactory– 2 are Early Warning

2. They all have high rates of price growth3. Their growth is smooth and steady without

wild erratic swings (ie low swing volatility)

There are a total of only 26 star stocks in the Stock Doctor universeand we unknowingly chose a quarter of them for this portfolio

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How do we find such stocks

For:• Financial Health – Can use Stock Doctor or instead

scan with Insight Trader with appropriate fundamental criteria

• Price Growth Rate – Can use Velocity

• Smooth and steady growth – Can use Behaviour

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Let us look at one of the stocks

J A S O N D2012

J F M A M J J A S O N D2013

J F M2014

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100

Behaviour

Behaviour = 76 %-100

700

Velocity

Compression day Velocity = 203 % pa cpd4

5678910

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30

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5060

W @ D 020712-140314 CAJ - CAPITOL HEALTH LTD > -1.9% -1 to 51.5 (H-10%) (L+56%) (H-S=44%)(C-S=38%) Ex Div 240314 .4c (100%)

CAJ has spent over a year with a Velocity of between 100-700% pa compoundingThe Behaviour Index has been above 90% for most of that time

Velocity = 100%pa cpd

Behaviour = 80%

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Most of the 12 Hindsight Stocks

• Have spent around 12 months growing with a Velocity between 100-300% pa compounding

• Simultaneously they have exhibited values of Behaviour Index of between 80-100% for a similar period

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Velocity and Behaviour values are also immediately accessible on the F12 databox

J F M A M J J A S O N D2012

J F M A M J J A S O N D2013

J F M2014

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16MVol = 1,930,90050

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8090100

120

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160180200

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500W @ D 040112-170314 GEM - G8 EDUCATION LTD > +5.7% +23 to 429 (H-0%) (L+53%) (H-S=36%)(C-S=36%) Ex Div 191213 3.5c (100%)

Filter reports are ordered on Velocity so that the fastest rising stocks are at the top of the list

and seen first

And a column for Ranking Number has been introduced into the reference

lists to allow the position in a list to be assessed for any particular stock

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Filter list is ordered on VelocityVelocity BehaviourRanking

column

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Velocity & Behaviour are also implemented as Systems Functions

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INTEGRATION OF PORTFOLIO DATA INTO THE CHARTING FUNCTION

Part II

Important Portfolio data is now incorporated into the charts

But we need to first look at the changes in the Portfolio Manager itself

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Portfolio changes

• Risk calculator has been extended to incorporate:– New risk management scheme for existing units– Risk posed by illiquid stocks– Limit posed by remaining available cash

• Can toggle a stock’s daily change between % or $• Daily change in whole portfolio displayed at top• The portfolio summary has four new columns

– (i) Velocity (ii) Behaviour– (iii) % of Daily t’over (iv) max addnl purchase possible

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Changes to Portfolio Summary

Daily change in pfolio

How much more can I buy

Percent of daily turnoverBehaviour

Velocity

Toggle button to display between daily % change / $ change

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New Scheme for Risk ManagementThree methods are now available that differ in the way they treat the contribution to the total risk arising from existing units. These risk contributions are as follows:Method:

1. Colin Nicholson’s scheme as outlined in his booksRisk=current price – sell stop price

2. Colin Nicholson’s scheme predating his booksRisk=MAXIMUM(averagepricepaid – stopprice,0)

3. An amalgamation of 1 and 2Risk=MAXIMUM(averagepricepaid,currentprice) - stopprice

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New Scheme for Risk Management

• In addition we assign a risk to the total portfolio from all possible positions, say 16%

• This is then multiplied by the % parcel size, say 6%

• To give a risk for that 6% parcel of 6% x 16%=0.96%

This scales the risk according to parcel size

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Method 3 addresses several issues

• In certain scenarios in Method 1 you could lose over twice as much as you had bargained on

• For certain scenarios using Method 1 in order to get your full complement in successive purchases your stop had to move closer and closer to the buy price

• In Method 2 if the average price paid for existing units is below the stop the maximum allowable purchase remains fixed no matter how many extra parcels are purchased until the average price paid rises above the stop

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This is the new Risk Calculator

Set total risk from all positionsSet liquidity risk as % of turnover

If box ticked then position limited by:

Risk to total capitalTotal maximum position sizeAverage daily turnoverRemaining cash available

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Now we are in a position to see how this portfolio information is integrated into the

charting function

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Load a Portfolio, chart a stock and then toggle this toolbar button

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Portfolio data displays on chartsToggle the button again and …….

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Portfolio data is removedToggle the button again and …….

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Portfolio data displays on charts

Buy flags

Buy flag

Sell flags

How much do I currently ownHow much capital profit have I madeHow much more can I buy

Average buy pricefor all open positions

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MISCELLANEOUS ENHANCEMENTS

Part III

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Miscellaneous 1

• Soft stop implemented• AutoEnvelope• Ctrl F2 accesses FT.COM fundamentals website• Extended fundamental information can be

imported from other programs and websites for display, scanning and analysis

• Run profitability tests in batches for a number of systems for list of securities with single click

• Get data button

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Soft Stop

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Soft Stop

• A soft stop has been implemented by placing a slash after the figure for the hard stop and entering the value of the soft stop optionally followed by an “h” “l” or “c”. The letter will override the global setting for whether stops activate on the high low or close eg:

32/43c

• The other two stops can similarly be overridden

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Soft Stop on High Low or Close

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Alex Elder’s AutoEnvelope

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AutoEnvelope

• You can set the Moving Average Envelope function to operate automatically to completely enclose at least say 95% of the bars

• You can alter the number specifying the maximum percentages of the bars say 5% that can extend out of the envelope by calling up the 'Default Parameters for Indicators' dialog box and entering say '5' in the 'Band' field for 'MA Envelope'. This will ensure that no more than 5% of bars extend out of the envelope

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AutoEnvelopeThe envelope will automatically adjust to just enclose say 95% of the bars displayed

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Financial Times Website

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Accessing the FT.COM website

From the currently active chart simply pressing Ctrl F2 will take you immediately to the Financial Times website page displaying extensive fundamental data on that particular stock

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Financial Timeswebsite - Ctrl F2

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Extended fundamental informationusing CSV files

Obtain data from other programs and websites in the form of CSV files to

supplement or replace existing fundamental data for searching and display

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Expand Fundamentals with CSV files

Display data (egfrom Stock Doctor CSV files)

Searchable data (egfrom Commsec CSV)

Database Manager(can be overriddenby CSV files)

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Run profitability tests in batches

Run profitability tests in batches for a number of systems for list of securities

with single click

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Run batch of Systems for list of codes

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Get Data Button

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“Get Data” button on Reference List

The Get Data button on any Reference List dialog allows Fundamental and Technical data for all companies in the list to be retrieved and tabulated

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The “Get data” button

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Data RetrievedAnd it is automatically ordered on velocity

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Miscellaneous 2• Extend alarm lines across chart with ~ key• Zoom submenu provides preset time ranges• Quickly list files for all available portfolio Equity curves• Refresh all charts on screen - press ENTER• Reverse F12/Ctrl F12• Export to Excel selected columns from Filter list• Kill all Today files• Reset all EMF files• How far is my stop away display• Quickly access HILITE.LST• F12 turnover shows “today” “this wk” “this mth”• More lists of standard ASX codes

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Extend alarm lines across chart with the ~ key

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Press the ~ key (unshifted)

J F M A M J J A S O N D2010

J F M A M J J A S O N D2011

J F M A M J J A S O N D2012

J F M A M J J A S O N D2013

J F M A M J J A S O N D2014

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18MVol = 13,439,500120

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600W @ D 040110-210314 TPM - TPG TELECOM LTD > -1.4% -8 to 555 (H-5%) (L+38%) (H-S=32%)(C-S=29%) Ex Div 091013 4c (100%)

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Alarm lines extend

J F M A M J J A S O N D2010

J F M A M J J A S O N D2011

J F M A M J J A S O N D2012

J F M A M J J A S O N D2013

J F M A M J J A S O N D2014

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18MVol = 13,439,500120

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160

180

200

300

400

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600W @ D 040110-210314 TPM - TPG TELECOM LTD > -1.4% -8 to 555 (H-5%) (L+38%) (H-S=32%)(C-S=29%) Ex Div 091013 4c (100%)

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Zoom submenu

Provides preset time ranges

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Zoom submenu

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List all available Portfolio Equity curves

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Quickly list all available Equity curves

You can quickly access a list of all available files of portfolio equity curves by simply pressing a button on the Load new security dialog

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List Available Pfolio Equity Curves

Refreshing all Charts on Screen

Previously you would have had to reload a saved chart arrangement or individually and

manually update each chart on the screen eg to display new data

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Now just hit ENTERTo refresh all charts on screen

For example:• To update to new data on all charts (eg after a

Datacapture or an intraday update)• To extend/reduce alarm lines on active chart

to all charts• To hide/reveal detailed data and alarms• To display or remove portfolio information on

all charts in the arrangement

Reverse F12/Ctrl F12 to simplify access to most used function

If you access the extended Ctrl F12 data box more frequently than the shorter F12 data box then reverse them to save finger

movements

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You can reverse F12 / Ctrl + F12F12 Ctrl+F12

By ticking here

To produce

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Export selected columns from Filter list to Excel

This happens automatically whenever you print the filter list

If you do not require a printed report then back out before the final printing process

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Specify Columns to be exported from FILTER list to Excel

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Then access the Filter List and choose Print and then back out of the dialog

Ctrl+

This creates the file HiliteLV.CSV in the folder WINIT\WORKING\EXPORT

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Kill all Today files

Cleans out all old Today files including today’s

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Click here to Kill All Today Files

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Reset all EMF files

Deletes all EMF files in the WORKING/EMF folder

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Click here to Reset All EMF Files

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How far away is my stop

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In the caption bar of any chart you will see figures giving you the percentage distance that your stop is away from:

– The recent peak– The last price

How far away is my stop

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How far away is my stop

How far is my stop fromthe recent peak

How far is my stop fromthe last price

Rapid Access to HILITE.LST

Saves having to wade through several menus and dialog boxes to

access the tabulated list

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Shift + Lightbulb

Shft +

For narrow list

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Ctrl + LightbulbCtrl + For extended Filter List

F12 Turnover figure explicitly specifies today, this week or this month

This avoids confusion when the compression of the file in question is

not daily

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Turnover Today, This Wk, This Mth

@D @W @M

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New Standard Lists of ASX codes

Updated weekly by Database Manager

Top 100Top 200Top 500Codes of all Small Ords stocksCodes of subindices of ASXCodes of sector indices of ASX

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Miscellaneous Portfolio• Benchmark your portfolio both against a fixed target growth

rate and also against the cumulative growth of a benchmark index eg XAO Accumulation Index

• Additional report on Portfolio Statistics• Checkboxes facilitate reconciliations in Account Transactions• Import your own transaction list from Commsec into PM• Autofill Paydate with T+3 in Security Transaction dialog• Export to Excel columns from Portfolio Summary• Export to Excel columns from Account Transactions• Resized Portfolio Summary columns stick within & between

sessions• Display all sold securities – only for date range

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Benchmark your portfolio

Benchmark your portfolio both against a fixed target growth rate and also against the

cumulative growth of a benchmark index eg XAO Accumulation Index

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Set Performance benchmarks

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Toggle between Growth Ratesand Cumulative Growth Benchmarks

Portfolio growth

Portfolio Growth Rate

Securities Growth

Securities Growth Rate

Cumulative percent period growth for:

Portfolio

Target

Securities

Benchmark Index eg All Ords Accum

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New Report on Important Portfolio Statistics

Standard portfolio performance statistics for trades both closed within the period plus those still open or

just only those closed. The final seven values require a portfolio equity curve to have been recently

generated.

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Portfolio Statistics Report

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Checkboxes to facilitate account reconciliations

Tick boxes where transactions have been processed so they will be added to the Balance column to enable easy reconciliations with bank statements

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Tick the processed transactions

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Import transaction lists

Import your own transaction list from Commsec into the Portfolio Manager

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Import Commsec transactionsOnly Buy transactions are imported as personal decisions need to be made

as to which parcels are to be sold whenever there is a Sell transaction

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Autofill Paydate with T+3in Security Transaction dialog

So that the date of the financial transaction in your bank account correctly occurs 3 business days later than the

security transaction on the exchange

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Autofill Paydate field for T+3

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Autofill Payment Date with T+3Set transaction date

Payment date filledautomatically with adate 3 business dayslater

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Export selected columns from Portfolio Summary to Excel

This happens automatically whenever you print the relevant report

If you do not require a printed report then back out before the final printing process

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Specify the Summary Columns to exportGo through the same process to specify the Account columns to export

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Then Access the Printer preview but back out before the printing process

This creates the file PfolioSummaryLV.CSV in the folder WINIT\WORKING\EXPORT

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Export selected columns from Account Transactions dialog list to Excel

This happens automatically whenever you print the relevant report

If you do not require a printed report then back out before the final printing process

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It is the same process for Exporting the Account Transactions to Excel

This creates the file AccountLV.CSV in the folder WINIT\WORKING\EXPORT

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Adjusted column widths in Portfolio Summary sticky

within and between sessions

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Adjust column widths and the changes will stick within and between sessions

Adjust column separators to suit

Portfolio “Display all sold securities” now shows only those sold in the current

displayed Date Range

Previously all securities sold within the total history of the portfolio were

displayed

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“Display all sold securities” now showsonly in date range - not in all history

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Those are the main changes inInsight Trader v18.1

See Help / Recent Enhancements for further details on all features mentioned

Questions