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Tutorial Step #4 . . . Tighten-up the Stops . . . Up another notch for WW . . .

FYI . . . We have ceased publishing . . . The January 28, 2007 tutorial you see in these pages is our final . . . Thanks for your patronage -- It has been fun . . . May all your trades be profitable -- Sincerely, RWG

Tutorial Date: Sunday, Jan 28, 2007 - Final Edition!!!
Valid until Market Close: Friday, Feb 2, 2007

Tutorial Step #4 - Lesson Plan:

Philosophy:

This part is really fun - the opportunity to reduce the Risk Corridor and/or lock-in profits. As we hold a position over time and the paper profits begin to build, we periodically adjust the Sell-Stops and Cover-Stops by assessing more recent price resistance points.

Objective:

Reduce the risk of incurring losses - Reduce the risk of allowing profits to slip away. Initially, a stock's Sell-stop or Cover-stop is set off of recent Hilltops or Valley-bottoms. Ultimately, we strive to adjust the Sell-stop or Cover-stop to a level corresponding with the 30 week moving average (30wk).

Key Indicators:

Hilltops and Valley-bottoms (as introduced in Step #3), and

A 30 week Moving Average of the weekly closing price of the stock

Editorial Notes: As you read through this Step, it will help you to know:

"This Past Friday" means Friday, Jan 26, 2007

"Friday Before Last" means Friday, Jan 19, 2007

Process:

a) Calculate the 30 week Moving Averages:

We have already updated our stock data histories for each stock in our Universe as part of the process back in Tutorial Step #2 - Process part a). Since the Universe includes the stocks in our Portfolio, our Portfolio stock histories are also up to date.

For each Stock in our Portfolio, we calculate the 30 week Moving Average (30wk) as of This Past Friday.

b) Assess and adjust the Sell-stops of the Long Positions of our Portfolio:

For each Long Position in our Portfolio:

1. If the closing price of the stock as of This Past Friday is above last week's Sell-stop, and last week's Sell-stop was determined off of a previously confirmed Valley-bottom, and we have confirmation of a new, higher, more recent Valley-bottom, we adjust the Sell-stop to the lesser of:

• the level of the newly confirmed Valley-bottom, rounded down to the nearest whole dollar, or
  
• the level of This Week's 30wk, rounded down to the nearest whole dollar

2. If the closing price of the stock as of This Past Friday is above last week's Sell-stop, and last week's Sell-stop was determined off of the 30wk, and the 30wk as of This Past Friday has moved upward to a level which is one full dollar or more greater than last week's Sell-stop, we adjust the Sell-stop to the level of This Week's 30wk, rounded down to the nearest whole dollar.

If neither of the above conditions exist, we leave the Sell-stop alone - no adjustment.

c) Assess and adjust the Cover-stops of the Short Positions of our Portfolio:

For each Short Position in our Portfolio:

1. If the closing price of the stock as of This Past Friday is below last week's Cover-stop, and last week's Cover-stop was determined off of a previously confirmed Hilltop, and we have confirmation of a new, lower, more recent Hilltop, we adjust the Cover-stop to the greater of:

• the level of the newly confirmed Hilltop, rounded up to the nearest whole dollar, or
  
• the level of This Week's 30wk, rounded up to the nearest whole dollar

2. If the closing price of the stock as of This Past Friday is below last week's Cover-stop, and last week's Cover-stop was determined off of the 30wk, and the 30wk as of This Past Friday has moved downward to a level which is one full dollar or more less than last week's Cover-stop, we adjust the Cover-stop to the level of This Week's 30wk, rounded up to the nearest whole dollar.

If neither of the above conditions exist, we leave the Cover-stop alone - no adjustment.

This Week's Determinations:

Sell-stop and Cover-stop adjustments to our Portfolio:

For the week ended This Past Friday:

Sell-stop adjustments:	WW
Cover-stop adjustments:	none

Applicability:

This is the only step in the entire process where we adjust the Stop levels for the stocks in our Portfolio.

Additional Help with this Step:

FAQs About Step #4

Books about Step #4

Secrets of Profiting in Bull and Bear Markets: Learn more about various ways of using Sell-stops and Cover-stops as a risk reduction methodology including some alternate more aggressive strategies

Tools to assist with Step #4

UniverseManager provides an automated environment to plot and adjust Sell- and Cover-stop levels for your own portfolio

Next Step of the Tutorial:

Professor Profit's Portfolio