1. Strategy Concept

2. How Our Strategy is Developed? Point by Point Description

Strategy Concept

Most people are somewhat familiar with the two traditional approaches to trading markets: Fundamental and technical analysis. Fundamentalists are concerned with the economy, both macro and micro, and focus on performance metrics of companies and indices. Technicians consider issues such as overbought and oversold, trend lines, support and resistance, just to name a few. While there have been and still are very successful traders utilizing both techniques, with the advent of very low cost computing and significantly increased internet band width, other forms of trading are emerging.

High Frequency Trading (HFT) has been increasing significantly over the past few years. Using a strategy of taking advantage of a small price difference in ask and bid price, large orders are executed in milliseconds. The advent of HFT is disruptive at times to the more traditional fundamental and technical trading.

One of the newest approaches to trading is the broad field of quantitative finance. Generally speaking, quantitative finance involves using mathematical formulas and statistics of observed market prices and moves, to develop trading systems. Quantitative researchers are not trying to determine “why” a financial market moves in  a particular fashion but “where” and  “when” will the market move.

Our trading system has been under development for over 10 years. While we understand and appreciate fundamental and technical analyses, we have always sought mathematical-based trading systems. Our current fixed quantitative logic system is a result of testing literally thousands of mathematical and statistical possibilities. Our team was supplemented with PhD mathematicians who succeeded in the difficult task of programming our algorithms so we could back test many years of data, for a variety of markets and market conditions. We addressed the only three market conditions that exist: the market is going up, the market is going down, or the market is consolidating.

The outcome of our research and testing is a fixed mathematical and statistical system that trades pre-determined fixed intervals. The system is very complex in terms of the number of algorithms needed to completely address a market, but easy to implement. Our view of trading is that it’s better to spend an inordinate amount of time developing a reliable system that is easy to implement vs. a somewhat simpler designed system, but one with much more subjectivity in implementation.

For any given market move, in any market based on its history of actual movement, we implement a series of fixed interval trades, with predetermined profit and stop loss parameters. There, therefore, is no subjectivity to trading. When our algorithm indicates a trade, it’s always initiated. No questions. No guessing.

It’s not our intent to fully explain our strategy. It is out intent, however, for you to understand the basics of our approach, how it differs from most fundamental and technical approaches, and why we believe quantitative financial modeling, like our system, is the future of trading all financial markets.

How is Our Strategy Developed? Point by Point Description.

We apply four top class diversified strategies based on historically verified fixed quantitative logic to counter all possible complicated behaviors of market in short and long term. Only new advanced grid strategy is being described here but this system is not that sort of system which usually traders adopt lacking important elements like timing, percentage, change in price move, change in volatility, change in volume and their inter relationship in grid context. Its name is grid strategy but it is much more than the grid approach.Further details can be seen below.

  1. Making fixed intervals of the market by allocating certain price, quantity, percentage and timing.
  2. Check initial statistics of intervals to decide what sort of price pattern is needed.
  3. Decide what should be size of intervals? Either 10, 20, 30 pips per interval or higher.
  4. Consider all those factors which decide size of the intervals.
  5. Note time series and sequence in which intervals were detected.
  6. Decide the sequence of different buy/sell combinations of intervals.
  7. Record the results by applying different sequences of buy/sell combinations?
  8. Match most appropriate sequence of buy/sell combinations with fixed intervals.
  9. Get the initial stage results.
  10. Apply the mathematical and statistical probability formulas to determine best  buy/sell combinations from all diversified combinations.
  11. Decide on the final combinations based on 10 years of historical statistics, study and testing.
  12. Apply many refined filters .
  13. Obtain final results of refined strategy and further calculate risk areas.
  14. Measure risk/reward comparison of the strategy based on absolute and average timing.
  15. Understand the worst and best possibilities of trading system in last 10-15 years of history in fixed pre-defined logic and its management to maximize profits and minimize risk.
  16. Apply money management system and see if strategy results are enhanced or not.
  17. Calculate rewards of the trading system before applying money management and after applying money management.
  18. Final decision to select money management based on historical facts of risk, reward and timing
  19. Set disciplined rules which are free from subjectivity and have a 100% systematic approach based of historically verified data with documented records.
  20. Realize the importance of discipline. Without discipline, even the best trading strategy will fail in the long run. Using a historically verified trading system with fixed logic with documented results AND utilizing discipline to follow it brings reliable and lasting success without confusion and uncertainties in any financial market condition.