Monday, July 11, 2011

Trading Algo: 15% Profit in 2 Weeks

In the name of Allah, most gracious, most merciful

Market action over the past two days signifies the importance of the "Trading Algorithm." Trading is not a simple game, it’s a strategic war where one needs to be on the lookout all the time. In order to be a successful trader, one needs to cut short the losing trade and let the winner run. If a trade decision is accurate it would result in mammoth profit, whereas if it is incorrect, it could substantially reduce profitability. However, this is a very tricky task because it is almost impossible to be certain about the outcome of a trade decision.

Keeping this important trading attribute in mind, UST conceived, devised, optimized and incorporated the Trading Algorithm, as an integral part of its trading mechanism. Trading Algorithm is the most critical part of Understand, Survive and Thrive’s arsenal of fighting the shrewd and fast-paced equity market. In short, Trading Algorithm is like the one stop shop of stock trading, as it deals with trend identification, position taking, profit targets, risk managements, profit taking and disciplined observation.

Specific benefits and working details of the Trading Algorithm will be discussed in a future working paper published by the Understand, Survive and Thrive. In short, the parameters are especially optimized after comprehensive statistical Monte-Carlo simulation. But today I will discuss the most recent example of this algorithm’s achievement.

This model allowed UST to go long on June 24, 2011 at 1274 (SP500) - TNA (3X small caps ETF). At the same time, it allowed UST to pre-define the trading risk of 2% (This percentage varies depending on the market structure). Secondly, it allowed to raise stops to price sensitive levels ensuring stability and hedging against losses. Finally, it allowed us to exit the market with a 15+% profit, even with the market's recent sharp decline. These buy and sell signals were sent to some of the people who requested subscription information.

Now the model is suggesting that one should wait before going long again. We have already discussed the upcoming turn dates, and will further analyze the market based on the latest market decline.   

Overall, this is a rational approach to market analysis, as it combines analysis with actual trading positions and a guerilla approach. Although there are many different black box methods available in the market, including the Inflection Point Model (UST) – which has a success rate of 90%, rational trading methodology is critical for successful trading. 

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