We use large amounts of historical futures data to back-test algorithmic trading systems. These algorithms are optimized to yield high win-ratios, that is, the ratio of winning trades to total trades. This BLOG follows algorithms for Stock Market Indices, Metals, Energy, Foods, Currencies, and other Commodities. In turn, we apply these algorithmic systems to ETFs. The ETFs allow traders to invest in many different investment media in the dollar amounts of their choosing. Go to the Page "ETF Symbols" for further information.
Our philosophy is to develop systems that cut losses, while let winning trades run. We do this using dynamic stop losses and profit targets. We also go long and short. "There is a time to be long, a time to be out, and possibly a time to be short." This philosophy has been born out in the last decade in the stock markets and real estate markets.
By in large we haven't put a limit on the number of futures trades we follow in the BLOG. However, we avoid blatant contagion risk. Also, futures are highly leveraged and risky by their very nature. Always consult an investment advisor before making any actual investments.
For the ETFs, we limit our portfolio to 5 positions of 20% each. As stated above, we seek to cut losses while letting winning trades run. So, an examples of this would be as follows:
1) A position losses 2% (this is a typical initial stop), and the effect on the portfolio is 20% x 2% = .4%
2) A position gains 5%, and the effect on the portfolio is 20% x 5% = 1%
In this way, the ETF portfolio total return does not change very much over a short period of time. However, it is these little increments that make a difference in accumulating gains. Always consult an investment advisor before making any actual investments.
