Earnings Participation Rules: Risk Management Guidelines for Non-professional and Professional Users

Important Notice:

These guidelines are suggested based on proven results and industry expertise spanning more than three decades. While following these rules can help mitigate risk and enhance decision-making during earnings reports, it is ultimately up to the user to make their own decisions. Intuitive Code provides these guidelines to assist users in managing their positions, but users are responsible for calculating their own risks, making final decisions, and ensuring compliance with their personal trading strategies.

Earnings Rules for Non-professional Users

Non-professional users are limited in their ability to participate in earnings reports to ensure risk is minimized. The following rule applies:

• IF a user holds non-professional status,
• THEN no position is allowed during Earnings Reports (ER).

This rule ensures that non-professional users avoid the volatility associated with earnings announcements, helping them manage risk more effectively.

Earnings Rules for Professional Users

For professional users, participation in earnings events is allowed but contingent upon a calculated metric called PADSL (Profit Adjusted Dynamic Stop Loss). This metric determines whether sufficient accumulated profit has been realized to justify holding a position during an earnings event, given the potential risks.

Stock Categories and Corresponding Rules:

The rules vary based on the stock category, with definitions as follows:

• Premium Stocks: Stocks included in the QMI AI solution by Intuitive Code. These are typically blue-chip or high-performing stocks.
• Standard Stocks: Stocks found in solutions like Oracle AI, representing a middle-tier of risk and reward.
• Highly Speculative Stocks: MEME stocks or those that demonstrate erratic historical patterns, lack strong fundamentals, struggle with earnings, or fail Intuitive Code's Fraud Detection AI tools.

For Premium Stocks:

• IF PADSL is less than USD 150 per share of accumulated net profit,
• THEN no position is allowed during Earnings Reports (ER).

To minimize risk, users must have significant net accumulated profit before participating in ER for premium stocks. If the user's PADSL falls below this threshold, it is recommended to close the position or reduce exposure before earnings.

For Standard Stocks:

• IF PADSL is less than USD 50 per share of accumulated net profit,
• THEN no position is allowed during Earnings Reports (ER).

The lower threshold for standard stocks reflects the moderate level of risk and opportunity these stocks typically present. Maintaining this rule helps professionals balance the potential for earnings surprises with the need to protect profits.

For Highly Speculative Stocks:

• IF PADSL is less than 100% net accumulated profit,
• THEN no position is allowed during Earnings Reports (ER).

Highly speculative stocks are prone to extreme volatility, especially around earnings reports. As such, only users who have doubled their net accumulated profit on a speculative stock should consider holding through an earnings event.

Additional Considerations:

1. Flexibility with Position Size:
   In certain cases where a user’s PADSL is close to the threshold, a partial position may be allowed. For example, if the PADSL is just under USD 150 for Premium stocks, the user may reduce their position size to 50% of its original value and still participate in the earnings event. This allows users some flexibility while still mitigating risk.
2. User Responsibility for PADSL Calculation and Monitoring:
   While Intuitive Code provides tools and guidance, it is the user’s responsibility to calculate and monitor their own PADSL. Users should regularly track their accumulated profits and ensure they meet the required thresholds before participating in earnings events. Failing to do so could lead to unintentional breaches of these rules and unnecessary exposure to earnings volatility.
3. Automated Alerts and Monitoring:
   Intuitive Code’s AI systems can assist by providing automated alerts if your PADSL is approaching the threshold, but the ultimate responsibility lies with the user. If a user’s PADSL falls below the required level, the system may notify the user to close or reduce their position before earnings, but it does not enforce the action automatically.
4. Portfolio Exposure Limitations:
   To further manage risk, Intuitive Code may introduce a cap on total portfolio exposure to certain stock categories during earnings. For instance, if your portfolio has more than 20% exposure to Premium stocks, the system may restrict earnings participation even if PADSL criteria are met, helping users avoid over-concentration risk.

By following these earnings rules, both non-professional and professional users can protect themselves from the potential downsides of earnings volatility while still positioning themselves to profit from well-calculated opportunities.