Commodity
Futures Trading
MARKET
REACTIVITY SYSTEM
HOW WELL DOES THIS WORK? For an arbitrarily selected 90-day period, Al took five different commodities representing cross section of markets; and using the same time period for all five (not selecting a time where each one was the most profitable) he stepped through a trade-by-trade process as directed by the system. The detailed description of the unfolding of these trades is given in Chapter 5 of Advanced Cycle Trading; so you can follow for yourself as the indicators guide the making of the trades. The resulting gains for the five commodities, translated here for trading just one contract per signal, are:
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Net Profit
|
|
$12,697
|
|
$4,818
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$14,124
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$2,529
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$4,800
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The system provided excellent results in 1998 as shown in the overall profits chart on the Home page. Shown below is the contribution to that account made by trades in lean hog contracts. One of the interesting points made here is that the ratio of number of wins to losses is not the important measure of a trading system. It is the size of the average winning trade vs the average losing trade.
This series of trades had
an equal number of winning and losing trades. Using the risk management
built into the sytem, the four losses were kept very small.
Another example is the excellent results in the wheat market.
The results are quite compelling*.
The true potential of this system is appreciated when you realize that
it can be applied to commodities or stocks, and that it is independent
of price/time interval; i.e., it can be applied to weekly, daily, or intra-day
data series.
NOW
YOU CAN USE THESE POWERFUL TOOLS WITH SOFTWARE THAT YOU PROBABLY ALREADY
HAVE!
The Market Reactivity software
is available for use in
Omega Research SUPERCHARTS
or TRADESTATION,
or in spreadsheet format for LOTUS
1-2-3 or EXCEL.
(Click
on software name for ordering information)
*Note that
results achieved in simulated trading do not necessarily represent actual
results that could be achieved.