Tuesday, April 15, 2014

IPM Trade Matrix Analysis & Enhancements

IPM Trade Matrix 2014 Trades

TRADE - 1: (Long) = +2.6%
TRADE - 2: (Short) = +9.3%
TRADE - 3: (Long) - Non IPM Trade Matrix trade -0.2%
TRADE - 4: (Short - 1/31/14 to 2/5/14) +7.25% 
TRADE - 5: (Long - 2/11/14 to 2/22/14) = +9.8%
TRADE - 6: (Long - 2/22/14 to 3/07/14) = +11.7%

TRADE - 7: Long (3/18/14 to 4/11/14)
Long TNA at 82.1 ==> Exit at 67.3 ==> -18% (Loss due to Weekly Inflection Influence Window - Model has been updated to catch these scenarios in future)

Losses were governed by the Weekly IPM Window influencing the daily turn dates. As mentioned on the blog and in the research papers, this happens twice every three year. This influence is the cause of 5% inaccuracy in the IPM model. This inaccuracy has been highlighted in the white paper and IPM handbook.

As mentioned in the last update, this loss has enabled us to build two fail safes into the trade matrix, along with improving the forecasting ability of the IPM model to forecast WIIW (Weekly Inflection Influence Window) events. These two updates will hopefully resolve this issue and improve the model for future application. 

Over here I would like to really appreciate the UST team, who decided to solve the root-cause of the problem, rather than just living with fail-safes. Addressing the root-cause will make the IPM Trade Matrix more robust and profitable. Above all, I would like to thank Almighty for guiding us in the algorithmic world.

Finally, you might have noticed that the one thing that differentiates Understand, Survive and Thrive from other blogs or websites is the fact we share real-time trade information, don't hide losses and don't boast winners. Winning and losing is part of stock market. Most important things is that one should keep on learning from his/her experiences. We have learned over the past 5 years, developed a model and implemented it for real-time trading. And we will keep on improving this model, with every passing day. Above all, we adhere to the principle of stock market being a probability game. On March 18, it was stated that:

"As we start IPM Trade Matrix - Trade 7, Trade Matrix has been up 6-0 over the last 2.5 months by the grace of almighty God. As most of you statistical wizards know, probability will catch up to the model at some point in time i.e. model will have a losing trade. And as we have more positive trades in a row, probability of a losing trade increases."

The above statement clearly shows that we never claimed 100% success because no model can be 100% successful. And if someone claims 100% success, he is not telling the full story. I hope that our latest update, will improve our accuracy rating from 95%. 

In short, at Understand, Survive and Thrive, you will get the true picture based on statistical analysis rather than imaginary claims. 


  1. You can't predict the Black Swan event, so no fault on your part. Stuff happens. I am into the TNA position also, which I had been into (along with TZA) for some time. I will hold my position for a while longer and see what happens. Wish I cut my losses earlier, though.

  2. Yup, agree that no wrong in your post, recent market seems trading sideway, i m not holding any position rigit now, but tend to be bearish even for tdy 100+ pts rising

  3. I see 5 successful trades out of 7...somewhere closer to 71% a ways to go in order to be 95% successful. Since 2 have already been unsuccessful, that leaves you having to hit 33 out of your next 33 trades in order to be 95% (38/40) successful. :)

  4. Thanks for the comments guys. As for the last comment, I have two points:

    1- One of the trades out of 7 was not an IPM Trade Matrix trade (as mentioned in the summary box above). Therefore, we can say that 5 out of 6 trades were correct.

    2- 95% accuracy is governed by the Inflection Point Model's turn date record. Data for the last 3 years is analyzed and presented in the IPM handbook. As subscribers know, current IPM turn window was supposed to mark a market top. And market is currently rising into the IPM turn window. So IPM timing is again accurate. The only difference is that the market might make a lower high. This scenario is similar to the Sept 2012 & May 2011 scenario, where market made a lower high during the IPM turn window.

    In theory, IPM Trade Matrix's accuracy should be aligned with the Inflection Point Model's accuracy. We will have a better understanding as time goes on and trades are completed. In case IPM Trade Matrix is not very accurate in the long run, there is no point in using IPM Trade Matrix ;)


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