MARKET REACTIVITY SYSTEM 2.1
The Market Reactivity System is a powerful tool for trading commodity futures and stocks. It goes beyond the typical use of price behavior alone. Market Reactivity incorporates changes in trading volume and volatility to give a more complete indication of market behavior in the short term; and it is used in conjunction with the underlying intermediate and longer-term trends of the price. The system has been proven over many years of experience; and has proven to be robust and adaptable to changing market conditions. The system has been taken to a whole new level in recent years. The trading results are truly impressive.
Computer Generated Trade Signals
A significant improvement to the methodology was made in 2009 which allowed accommodation of less regularity in the underlying cycles and greater market volatility. The insights incorporated not only improved performance, but also provided the basis for automating the trade signals. Initial back-testing at that time looked at 10 commodities, and demonstrated its tremendous potential. Further work and refinement have continued. The system uses a unique method for unraveling the underlying structure of the price series to the present interval, and using that structure to anticipate upcoming changes in trend.
Automated Optimization and Back-Testing
The many formulas used in the system necessarily include a number of empirically determined factors; numerical constants determined by studying performance on a number of markets. The incorporation of logic for computer generated trade signals allows automated optimization studies looking at thousands of cases, for many price series, to determine values given the best combination of profit and minimal draw-down.
Key features of the system allow it to determine timely entry and exit points, and optimal points for adding to a position in a continuing trend. Real-time experience has continued to accumulate; along with optimizations and back-testing studies. Trade results have been remarkably positive, with minimal draw-down.
Shown below are computed profits from trading 12 different commodities in real time for the 18-month period ending February 28, 2013.
This period includes both very choppy and sideways markets, as well as a few strong trends. Extensive back testing, as well as actual trading for the past few years, has shown that the computer generated trades, coupled with the systems unique risk protection, can provide outstanding trading profits.* Check out the details of the trades for each of the individual commodities.
To learn more, explore the links on the left. An excellent way to get a first-hand look at actual (EOD) trades generated; as well as the info needed to make the trades, is to sign up for a trial subscription the E-Alert trade alert service. Get two months for the price of one - chances are you'll want to continue.
*This data results from applying the trade system to actual data in real time, and trading each trade signal for each commodity at the midpoint price on the days indicated by the software. It assumes 1 contract per trade for all commodities; except ED are traded in blocks of 30, and ES, LH, BO and SB_ are traded 2 contracts each. Stop-loss trades were applied as in actual trading where indicated. It assumes an account size sufficient to trade the 12 commodities consistent with sound money management.