Our Methodology
TechTrading combines highly predictive trading
systems with a trade structuring process that utilizes probability
analysis with an attention to risk management, with the goal of consistent
profits, regardless of market conditions. We have repeatedly seen that markets can defy fundamentals, and perform completely
opposite to what would be expected,
especially given governmental policies of intervention which tend to
temporarily distort prices.
In our opinion, now, more
than ever, an investor needs to utilize a systematic approach and
carefully manage risk
to thrive in such an environment.
TechTrading's systematic approach:
TechTrading's systematic approach:
Step 1: Determine market direction and trade entry points using trading system algorithms.
We start with proprietary system algorithms that have consistently proven themselves in a
wide cross-section of markets, over a long period of time. We use these systems to predict the short
and intermediate-term direction of markets, and to determine when to
enter trades based upon measurements of pull-backs (finding lowest risk
entry-points.) No timing system can possibly give 100% correct signals,
so it is necessary to structure trades that will give us a margin of error on this prediction.
Step 2: Establish a margin of error by structuring trades.
Typical investment 'advisors' invest as if they are flipping coins, making
"heads I win, tails I lose bets" (i.e. they buy a stock and their
customer profits if it
rises, or loses if the stock falls in price.)
Tech Trading does not flip coins or throw darts. We take structured positions (combinations of options and futures) to:
1) Profit when the market goes in the same direction of our system's prediction.
2) Profit when the market goes sideways.
3) Profit when the market goes in the opposite direction by an amount less than our threshold level.
The goal is to structure our trades to give us a range of prices where the trade will be profitable. This is not achievable by simple stock picking. All investments involve an element of risk, there is risk of loss in trading futures and options and such an investment is not suitable for all investors.
In addition, we determine the size of the position to trade based upon:
1) measurement of the downside risk of the trade,
2) the positions correlation to other positions currently held in the portfolio, and
3) fixed-fractional money management (position size is based upon account size, and will increase
as the account size grows and decrease if the account size is reduced.)
Tech Trading does not flip coins or throw darts. We take structured positions (combinations of options and futures) to:
1) Profit when the market goes in the same direction of our system's prediction.
2) Profit when the market goes sideways.
3) Profit when the market goes in the opposite direction by an amount less than our threshold level.
The goal is to structure our trades to give us a range of prices where the trade will be profitable. This is not achievable by simple stock picking. All investments involve an element of risk, there is risk of loss in trading futures and options and such an investment is not suitable for all investors.
In addition, we determine the size of the position to trade based upon:
1) measurement of the downside risk of the trade,
2) the positions correlation to other positions currently held in the portfolio, and
3) fixed-fractional money management (position size is based upon account size, and will increase
as the account size grows and decrease if the account size is reduced.)
Step 3: Defend -- Manage our positions based upon market developments.
The final facet of our methodology is
Defend. Not only must we defend our trading capital, but we also must
defend our profits. With a trading plan in place, conditions may
still call for adjustments to be made to that plan. We monitor developments
in the economy, the market's reaction to news, and reactions in other
correlated markets. Based on this information, we may make
adjustments to our positions by:
1) Increasing or decreasing the position size in one or more legs of our structured positions
(which alters the risk/reward ratio of the trade), or by
2) Exiting the position.
1) Increasing or decreasing the position size in one or more legs of our structured positions
(which alters the risk/reward ratio of the trade), or by
2) Exiting the position.
INVESTORS SHOULD BE AWARE THAT PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THERE IS SUBSTANTIAL RISK OF LOSS IN TRADING FUTURES AND OPTIONS AND SUCH AN INVESTMENT IS NOT SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN COMMODITY FUTURES, AND OPTIONS CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT ASPECTS OF THE FUTURES AND OPTIONS MARKETS. YOU SHOULD THEREFORE CAREFULLY STUDY THE DISCLOSURE DOCUMENT BEFORE YOU INVEST, INCLUDING THE DESCRIPTION OF THE PRINCIPAL RISK FACTORS AND FEES OF THIS INVESTMENT.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT ASPECTS OF THE FUTURES AND OPTIONS MARKETS. YOU SHOULD THEREFORE CAREFULLY STUDY THE DISCLOSURE DOCUMENT BEFORE YOU INVEST, INCLUDING THE DESCRIPTION OF THE PRINCIPAL RISK FACTORS AND FEES OF THIS INVESTMENT.
