Sunday, June 8, 2014

Into to Trade Options Matrix (TOM)

As most of the readers of the blog know that the UST team developed an IPM turn model in 2011. This resulted in amazing market timing performance, as evident from the white paper and special report published in the Research & Timing section

As for the trading purposes, UST developed a trading algorithm in 2011. An upgrade of the trading algorithm and its fusion with Inflection Point Model is know as the IPM Trade Matrix. IPM Trade matrix has returned more than 46% in the first 5 months, and has seen at least 3 significant enhancements. Based on prior experience, these enhancements will amplify future results (by the grace of God).

Over the last few months, we have been discussing the possibility of a new model to trade options. As you know options are very risk. But greater the risk, bigger the rewards. So the concept is as follows: 

Risk in options trading stems from three aspects: Timing, Volatility & Price Direction.

If one can handle these three aspects effectively, it could result in significant gains. From our research we realized that we have the necessary tools to address each of these aspects, which should then result in successful options trading, which could result in significant gains! For example:

Timing & Price Direction: Inflection Point Model has a 95% success rate at accurately timing the market turns along with direction
Volatility & Price Direction: IPM Trade matrix is very good at deciphering trend and price movement.

Therefore, a combination of these two measures can be very helpful in options trading. As a result, we have divided IPM trade matrix into two components:

  1. Trade Equity Matrix (TEM): Used to trade 3X ETFs
  2. Trade Options Matrix (TOM): Used for trading of options on 3X ETF
TOM is a work in progress and is being improved every single day. It is a very aggressive trade mechanism and has a potential of significant loss. Therefore, only 10% of portfolio is used for this purposes. And each trade does not involve 100% of capital because of risks. We will continue to enhance this mechanism and will keep sharing the updates on this model, as time goes on.

Hypothetical results show that if effective managed, this tool could multiple portfolio 10X or 1000% gain in a year. 

Next trade will be a TOM trade. It is not an equity trade. Or one can do an equity trade, but should not expect significant profit because its going to be quick. 

Trade Options Matrix 2014 Trade (TOM)
TRADE - 1: 

According to IPM Trade Matrix, we have recently received multiple sell signals. These signals in conjunction with the next IPM turn window suggest that we are at a top. Elliott wave pattern also suggests that same. We will discuss all of the market developments in details in the next few posts. Therefore, Trade Options Matrix will enter a short on decline below 1942 (SP500) 2590 (GDOW). 

Profit objective will be 1-2% decline.

IPM Trade Matrix 2014 Trades (TEM)

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) = -18.1%
TRADE - 8: (Short - 4/23/14 to 4/28/14) +11%
TRADE - 9: (Short - 4/30/14 to 5/12/14) +0.3%
TRADE - 10: (Long - 5/16/14 to 5/31/14) = +7.4% 

When: IPM Model Bottom window - Date info e-mailed to subscribers
Next IPM Turn Window: Top
Trigger: SP500 = 1876, GDOW = 2535
Supporting Indicators: 8/4 Test negated. Uptrend reinstated.  

Profit Target 1: 1930
Profit Target 2: -

Stop: SP500 = 1862, DJIA = 16342, GDOW = 2513
Trailing Stops: SP500 = 1912, GDOW = 2561
Typical IPM Trade Matrix Risk: -
Actual IPM Trade Matrix Risk: 0% (Entry = 1879 , Exit = 1904 , Risk = 0% )
Risk Reason: Ending diagonal pattern.

Applicable Rule: 
  1. Sell (1/2) at profit objective 1 to minimize draw-down
  2. No Trade in opposite direction
  3. Do not go long or short without trigger to prevent losses by market moving against you.  
  4. Observe stop-losses to minimize draw-downs
  5. If stops are hit ==> Wait on the sidelines for new opportunity near IPM Turn window

Note: IPM Trade Matrix Trades will be posted in the first half of 2014. This is an experiment to understand and enhance the capabilities of this Matrix.

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