How much capital is required to trade with SPA3?
The answer to this question partially depends on you and the results you expect to achieve but we would recommend a minimum capital injection of $50,000 to $80,000. We would recommend this for any investment approach that trades with an average hold period of 6 to 8 weeks (we called this medium term trading). Of course, if you are starting out on your trading journey and have a larger capital base available, it would be recommended to start small whilst you learn to trade.

The most important reson for this is minimum brokerage rates. The smaller your starting capital the larger the brokerage cost will be as a percentage of each trade. As brokers offer different brokerage rates, you must determine your initial capital relative to your costs per trade. This is regardless of using our products or not.

For example, whether trading with SPA3 or not, $15,000 of capital would result in around a maximum of 5 open trades which means that brokerage at $29 is approx 1% of the position. Another 1% to exit the trade equals 2% entry and exit fees. Considering that SPA3 averages around 3% profit per trade, 2% of the average profit would be consumed by brokerage, ie. 60% of the profit. We recommend that position sizes and hence capital should be increased to achieve an average brokerage of <0.35% per transaction, or 0.7% per trade. Any medium term approach would battle to achieve any better than 3% - 3.5% average return per trade net or all profit and loss trades. The longer the average hold period the higher the average profit will be.

Also, our monthly maintenance service fee costs $814 per annum. So if you traded with, say,  $15000 starting capital and achieved a return of 20% you would receive revenue of $3000. Subtracting our yearly costs of $814 brings your total profit to $2186 (excluding tax and the upfront package price).

This means that SPA3, or any medium term active investment approach, should be traded with a minimum capital of $50,000 - $80,000, but comes into its own at portfolio values > $100,000. If you trade with the minimum capital amount, we would highly recommend trading SPA3's risk profile 1 (you can talk about this in further detail with a Share Wealth Systems consultant).

Why SPA3?
These are some of the reasons why:
it has a researched demonstrated statistical edge with a positive mathematical expectation;
it trades stocks outside the ASX300 thereby providing the investor with access to growth stocks in a strictly risk managed process that provides huge opportunity to outperform the market indices;
it turns over trading capital around 5 to 6 times per annum allowing compounding of profits;
it has strict exit mechanisms that endeavour to cut loss trades and allow medium-term profit trades to run;
it is an agile, nifty and street-smart trading philosophy allowing investors to move in and out of the market as overall market risk changes;
it reduces market exposure during high risk markets and maximises exposure during low risk markets through sophisticated market timing, risk and money management rules.

What do you recommend for an experienced trader?
Traders with experience should consider either SPA3 or SPA3CFD. SPA3CFD is for investors looking for leveraged SPA3 type returns. With the possibility of greater returns also comes increased risk.

Does SPA3 prescribe to technical or fundamental analysis?
Through our research and trading experience we have found that the mechanical trading of our methodologies using objective, clinical and back-tested technical analysis signals provides consistent returns that are considerably greater than the market indices and managed funds. SPA3 makes no use of fundamental analysis but it is a simple task for the user to establish their own fundamental watch list of stocks using Intelledgence, or other, and the use SPA3 on that list, if so desired.

Is there any subjectivity involved in SPA3 or is it entirely objective?
Totally objective, we wouldn't have it any other way! Subjective classical technical analysis, announcements, news and reports are ignored. These are termed as 'noise' and don't influence our objective, structured and 'robot like' actions.

The single common message from authors that have had extensive trading experience is that "to be successful in the markets you must achieve objectivity and consistency." You will find this message in books by Mark Douglas, Martin Pring, John Murphy, Stan Weinstein, Tom De Mark, Jack Schwager (and the majority of his Market Wizards), Larry Williams, Larry Conners, Welles Wilders, Joe Krutsinger, Jake Bernstein, Jeff Cooper, etc. Our methodologies help you achieve objectivity and consistency.

How do I choose between the Long-term and Medium-term solutions?
The decision whether to acquire Intelledgence, SPA3 or SPA3CFD should be based on more factors than just potential returns. Medium term trading with SPA3 will demand more time than the more passive share investment with Intelledgence. You may also find SPA3 more psychologically challenging.

SPA3 should provide better returns than Intelledgence over the long term due to the effect of compounding.

However, SPA3 will require 10-15 minutes a day of effort, whereas, Intelledgence will require between 30 minutes to an hour a month to manage an ongoing portfolio.

SPA3 suits portfolios greater than $50,00 - $80,000 (comes into its own when >$100,000) however Intelledgence can be used for portfolios from as little as $10,000 to much, much more than SPA3.

Can drawdown be avoided with SPA3?
Mental strength is required to continue trading your method through the tough times of drawdown. Drawdown is reality. Those that get disheartened and withdraw become spectators when it gets tough are still spectators when the market rebounds. And nobody knows when the market will rebound when it has retraced. The market rewards those that stay in the game.

Due to the leverage nature of SPA3CFD it must be said that drawdown will be steeper than with SPA3. The maximum recorded drawdown in the SPA3 Portfolio - Risk Profile 1 is far less than that for the SPA3CFD portfolio.

The SPA3 Portfolio - Risk Portfolio 1 helps reduce drawdown in a portfolio. In a SPA3 high market risk period SPA3 customers immediately cease entering new positions in the market, thereby going 100% into cash if the market continues to fall, only entering new positions into a portfolio once the market signals a Low Market Risk period again.

The other point is that you need to stay the course, follow your rules, grow your mental toughness, remain consistent and objective, keep your discipline, re-enter with new trades as the loss trades are weeded out with exit signals. All this will be just words to spectators on the sideline. It is only the players that will have a true understanding. The next time you are faced with a similar situation you will recognise the situation and will handle it better, and the time after that... even better.
Your best achievements and deepest learning will always be the times when the market has tested you with a string of losses.

What products do you recommend for a novice with very little trading and computer experience?
Novices should consider our Long Term (Intelledgence) or Medium Term (SPA3) solutions with training. SPA3 can be traded with a far smaller starting capital (around $10,000 - $20,000) with the explicit purpose of acquiring skills. Capital can then be increased at a later time.

How much detail do you provide about the indicators, settings, rules, etc found in your methodologies?
The logic, rules, settings and tools are fully disclosed in thorough detail in our trading documentation.

Due to the high intellectual property value of the SIROC indicator (the main momentum based indicator used in both SPA3 and SPACFD) we have made a business decision to not disclose this intellectual property (IP).

In helping investors make money in the stock market, it is our preference, although not imperative that our customers understand the logic behind the signals and rules.

SPA3 can be as simple or as detailed as you choose. The signals and rules are provided in our detailed documentation are displayed on charts and the SPA3 processes are taught through online video training or one-on-one using webinar technology.

The following material is covered in the SPA3 ‘Reference’ manual:
Buy, sell, pyramiding, lightening signals and rules and other components which make up the trading system;
Indicators used and why they are used (eg. SIROC, Relative Strength Comparison (RSC), ATRVE, Exponential Moving Average, Volatility Stop, etc);
Volatility, signal type and market capitalisation parameters in determining individual stock risk levels;
The components in your customised SPA3 Trading Plan and risk profile;
SPA3 risk management for market and sector risk;
Liquidity risk and how to customise SPA3 to trade stocks that trade fluidly according to the capital that you commit to the methodology;
Money management rules and how and why position sizes are calculated the way they are;
How many open positions to have at any given time and why;
Risk profile explanations for all capital sizes;
The researched edge itself including drawdowns, profit to loss ratios, profit ratios, expectancy and other statistics of importance;
Market risk strategies;
Regular processes, routines and mindset;
What to do in the event of a takeover, new listing, going on holiday etc..

If this sounds 'over the top' to the uninitiated you should accept that these tools and rules are imbedded into the SPA3 system. If you are not the analytical type we would suggest learning and implementing the processes taught throughout our online education centre.

What are the primary indicators used with SPA3?
The main technical indicators central to SPA3 are the (SIROC) Smoothed Indexed Rate of Change, (RSC) Relative Strength Comparison, ATRVE, which stands for Average True Range Volatility Exponential, and VSL, which stands for Volatility Stop Loss. Moving average crossovers on these indicators are also utilised as are mechanical overbought and oversold zones on the SIROC. Exit signals deploy a Profit Stop, Time Stop and momentum exits.

How does SPA3 determine the risk level of a given stock?
SPA3 uses a Matrix which includes the ATRVE (volatility indicator), market capitalisation and 'type' of entry signal to determine the stock risk level of a stock as either low, medium or high.

So for example, a high risk stock would tend to have high volatility, low market capitalisation (eg. penny dreadful) and a 'volatility' entry signal. All of these parameters are defined precisely.

What broker do you recommend for SPA3?
Share Wealth Systems has an affiliation with Saxo Capital Markets for SPA3. Although we recommend them, it is not imperative to use them. We recommend that you choose a broker that has a low commission cost. (competitive brokerage rate cost structure) and quick execution ability. Brokers that fall into this category tend to be online discount brokers. As a rule, paying > $35 or 0.3% per transaction is too expensive for equities trading, especially medium term trading.

The general rule is to find a broker that allows you to execute quickly and effectively at the lowest possible cost. In implementing the SPA3 edge you will be opening and closing trades frequently as you act on the signals and do not need a full broking service that gives you advice as to when to buy, hold or sell.

What is the maximum amount of capital that one can trade with SPA3?
Capital amounts up to AUD$850,000 can be traded in a single SPA3 portfolio in the ASX market depending on the status of the market. During bear markets this 'upper limit' figure will decrease because liquidity in the market decreases. If you have more capital than this you will be require to mange more than one SPA3 portfolio.

Users should be aware that as your capital grows, the number of positions to be managed will obviously increase demanding more of your time. Once a portfolio reaches this upper limit, it is suggested that a second portfolio be established. The SPA3 tools allow our clients to manage multiple portfolios.

Why are investing solutions like SPA3 so important?
Putting the SPA3 methodology aside, investing with a decision support system that emanates from the market removes your discretion, gut feel and hunches. Rather, you invest with a set of rigorous and structured rules and processes that are researched to give you an edge.

The key is to have a Trading System with a positive expectancy and integrated Risk Management, Money and Portfolio Management for that Trading System. This is precisely what SPA3 offers.

To be successful over the long haul we suggest you either design or acquire a methodology for the term you are trading. The reality is that developing a working methodology is not an easy task. Most traders do not have a solution and those that think they do, do not have one that works - one of the main reasons why most people fail to succeed in the market.

Developing a methodology requires unique qualities. Assuming that one did have the computer programming experience, trading background, tools and time to research, test and develop a methodology (a task only achievable by a very small number of people), the reality is that the chances of a successful outcome are low, especially in a time frame that you would like.

With SPA3, are there liquidity issues with the same users buying and selling the same stocks at the same time?
No. There are two main factors as to why. Firstly, everyone starts their portfolio at a different time with different amounts of capital which means that all users will have different stocks and numbers of stocks in their portfolios and different signals will emerge day to day. This means that there will be instances, for example, when you need to buy a stock and have available capital and another user doesn't. There are also many different opportunities which surface week after week.

Secondly, the majority of stocks that generate SPA3 signals provide sufficient liquidity to not be affected by more than one trader executing. In reality, SPA3 private traders take up a very small percentage of market depth on any given stock.

Lastly, the SPA3 system has a 'built-in' liquidity risk parameter option that allows the user to specify exactly how much trading volume must be present for any given signal. Once this is set the user only trades stocks that meet their customised liquidity risk setting. This ensures that liquidity risk is managed and that the user is protected at all times.

How important is brokerage in a portfolio?
It is very important to understand the impact of brokerage and GST costs on a portfolio. Most vendors don't tell you this because they don't have the research tools, know how or credibility to quote otherwise. Beware of vendors that:
put together 'hypothetical' portfolios and quote returns that sound unrealistic
exclude brokerage from their 'sample' portfolio returns and trade lists
quote portfolio returns using trade lists and suggest you reduce the overall profit by a brokerage amount. It isn't that simple and lacks credibility.

Why? This is because the trading costs reduce the available investment capital and therefore the position size of the next trade. The compounding effects of reduced position sizes linked to the frequency of trading is increased further with shorter-term methodologies.

The table shown above illustrates the situation using a portfolio with $150,000 starting capital. The portfolio without brokerage yielded a profit of $240,523 over 7 years whereas the portfolio with brokerage yielded a profit of $171,191. This overstates total profit by 29% or nearly $70,000 even though the total brokerage difference was only $29,696.

Unlike Share Wealth Systems, it is a common industry practice to quote profits without brokerage. Be careful as even by taking a total profit figure (eg. $240,523) and subtracting a hypothetical total brokerage amount by multiplying the total number of transactions by brokerage (eg. 1432 x $19.95 = $28,568.40) you are not observing realistic statistics.

So in other words it is unrealistic to derive total profit by subtracting $28,568.40 from $240,523 to reach $211,954.60 total profit. Total profit of $171,191, however, realistically incorporates brokerage, reducing position sizes including lower profits through the effect of the loss of compounding of money that you don't have working for you in the market. Share Wealth Systems will always quote portfolio returns net of trading costs for all of our methodologies.

Remember that the shorter the time frame that trades are open the greater the impact brokerage will have on returns. Our example above uses an approach where trades are open for an average of 8 weeks. If trades are open, on average, for less than 8 weeks then the affect on returns excluding brokerage compared to including brokerage could wipe out most if not all profits over a large sample of trades!!

If I stop temporarily are there any costs to start up again?
For SPA3 and SPA3CFD there is a $187 reinstating fee which applies upon commencing the Share Wealth Systems service at a later date.

What if I go on a holiday and have open SPA3 positions?
SPA3 encompasses a trading system which gives technical signals determined by share price activity. If you go on a holiday with open SPA3 positions then there is no way of knowing beforehand whether or not your portfolio will require action while you are away.

The only surest way to be covered while you go on a holiday are to sell all your positions before you leave or take a laptop with you.

Some customers set automatic stop loss triggers with their brokers to protect themselves and keep some positions open. Whatever you decide just make sure that if you leave positions open that you are prepared for the unexpected as anything can happen while you are away.

It should be said that these issues need to be addressed by anyone active in the market regardless of their approach to trading.

With SPA3, what time do I buy and sell intra-day? Does it matter?
As SPA3 is a medium term methodology, the signals are mainly based on weekly data and some signals include daily data. Therefore, it really doesn't matter which time during the day that you execute your trades.

The key is to pick a time in the trading day that works for you and consistently act at this time. Whatever time you choose, it should be written into your trading plan and strictly adhered to with discipline. Importantly you need to execute at some time during the trading, after the entry signal.

Why is it so important to put capital at risk and complete trades?
The only way to make money in the market is to put capital at risk in the market. Blindly putting money into the market is NOT a solution. Sound and researched entry, exit, risk and money management rules MUST be in place and they must be followed. It would be very difficult to grow your capital base to meet your financial goals and objectives by leaving it in the bank.

Spectators don't achieve their financial objectives. 100% of trades that you do not take will NOT make you a profit. You have to be on the field of play and be prepared to get tackled. Wanting to kick goals but not wanting to get tackled is not an option that is available in life - being in the market but not having a loss trade is also not a choice that is available in life. Loss trades put profit trades into context. Without losing there would not be a definition for winning - winning would have no context or perspective.

In tough times many active investors lick their wounds from giving back some of their profits to the market or having been put into the red. Some will withdraw temporarily to become spectators, some will sell everything and head for the hills to join the ranks of the permanent spectators and others will continue to learn about the markets and risk capital to grow their capital. It is your choice.

Remember that the price action on the charts will tell you what is happening. Analyse it objectively and do not filter it with noise, your hopes and expectations or with your fears.

Let the markets do what they will do without worrying about it - just follow your Plan to deal with the situation.

What are the minimum software requirements to run the SPA3 software?
Global Portfolio System (GPS) and SPA3 are Microsoft Windows based applications requiring a minimum of Windows XP to operate. The software runs on both 32-bit and 64-bit systems, as well as Virtual Machines running Windows on Mac OS.