How To Catch the Big Market Trends
Without Picking Tops & Bottoms,
Know Exactly When To Cut Losers
& When To Take Profits!

Best of all... There’s No Guess Work or Endless Hours Looking At Charts, I’ll give you the exact rules to trade this 100% Mechanical Trading System that could very well change your life!

In fact, I’ll give you the computer code that will instantly calculate all the results I’m about to show you. So before you dismiss this letter, know that I can, and will, back up every word I say, Mathematically!

• No guessing or uncertainty - Mechanical Trading Systems provide confidence which is essential to profitable trading.
• Never miss a big move again - All it takes is diligently placing the system generated orders and you'll never miss the Big Movers again.
• Only takes a few minutes a day - Whether you are in a trade or managing a position, updating the orders is painless.
• Trades in the direction of the trend - This simple strategy of limiting trades depending on market direction is priceless!

Lessons of a Commodity Broker

In 1996 I landed a job as a commodity broker.  I was obsessed with the markets and wanted nothing more than to trade full time. Becoming a broker got me one step closer to my dream. I could follow the markets in real time and watch my positions like a hawk. I could also use my days developing my trading skills and testing new trading systems.

To make things even better, I would be working closely with fellow traders and brokers who held my same interest, Trading, what could be better?

Well, what I soon learned as a broker is this... almost ALL of the traders lost money, and did so very quickly.  It was absolutely astonishing at how fast traders would come and go.  I even had one client wipe his account out in just one day!

What became apparent to me over time was why so many traders lost their money. They were taught to!

I know this sounds absurd, but after observing the same patterns over and over again by so many different traders, it’s undisputable that they were taught to lose.

What I mean is they were taught to lose because of the commonly held belief that in order to make money trading or investing, you must buy low and sell high.  More directly though, most of the traders that I dealt with were being influenced by “market gurus” who insisted that the money was made trading the market turns.

In other words, the "guru wisdom" said to sell market rallies when the momentum slowed or started turning negative and buy market sell-offs when momentum slowed or turned positive. Any number of technical indicators can be used to throw your money away with this flawed strategy... it's amazing that so many of these indicators exist.

The obvious problem with this strategy is this, when markets start moving in a direction with any force, the move can last months or it may last years. Trading against the major trend each time the market takes a breather and momentum turns is a recipe for disaster. The losses will be larger than your winners which will grind your account to nothing in no time.

If you have been trading for a while you have probably tried to trade the turns as well.  In fact, you may still be spinning your wheels with this flawed strategy.  I’ve seen too many good people lose their money trading this way, don’t YOU be one of them any longer!!

Looking back on it now, becoming a commodity broker was the best career choice I could have made, but not for the reasons I initially thought.  It’s what I learned about the winning trader’s behaviors that forever changed the way I trade, and this is what I want to teach you.

System Trading

Thank God for computers and back-testing software! In case you don't know what back-testing software is, in short, it's a traders best friend... but more specifically, it's a program that allows you to test trading ideas on historical data to see if a set of rules is profitable or not.

I spent literally hundreds, OK - more like thousands of hours programming trading systems in the 1990's. The combinations of trading rules is endless; the only way to see if your ideas work is to test them.

Sadly, after all those years of work, my findings can be summarized in just a few bullet points...

• Short term trading is the most difficult - Volatility break-out strategies work on only a few markets, i.e. S&P, NASDAQ, DOW Futures and Bonds. The profitable strategies trade infrequently and the draw-downs can last a long time. Profits are small relative to losses
• Swing trading is the easiest emotionally - but financially devastating! Winning streaks can last a long time but a hand full of losses will take all your profits plus some. This buy low sell high strategy is the perfect storm for getting caught on the wrong side of limit-moves (when futures markets move the max allowed amount in a day).
• Trend trading is the most difficult emotionally - but the most profitable! This type of trading is just the opposite of Swing Trading, the system buys high and sells higher in up trends and sells low and buys lower in downtrends. Winning trades are larger than losing trades. The number of Losing trades almost ALWAYS outnumbers the winning trades which is exactly what keeps the uninformed away from this winning strategy.

I have programmed and traded many variations of all these strategies. I spent the first few years exclusively on short-term and swing trading because of their popularity. It wasn't until I realized what the winning traders were doing until I started concentrating on trend following strategies.

Trading With the Trend

The first thing I realized about profitable traders is they trade with the trend. They also trade infrequently in each market compared to the losing traders. I don't mean that they weren't trading, instead, they would take a position and treat it like an investment. They would just hang on to the position until it was clear the market had turned. As the market turned against them they would exit the position and then wait patiently for the market to develop another trend and then jump on board.

As I started putting these things together a broker friend of mine came to me with a system he wanted to test. He recalled to me a conversation he once had with a profitable trend trader.

The trader explained how he determined the trend and then entered trades in the direction of the trend. When I questioned him about the details of the system he couldn't recall the specifics well enough for me to program.

He did recall very clearly one detail though, he remembered exactly how to calculate the trend direction. I immediately programmed it as a function that could be applied to the other systems I was following at the time.

I actually didn't fully understand the significance of mechanically calculating the trend direction before entering a position. It was immediately apparent, however, that trading with the trend improved the results of ALL my favorite systems I was following at the time.

Putting the Pieces Together

It took me some time to put everything together. I can't tell you it hit me like a lightning bolt, it was more like all the pieces of a puzzle slowly coming together to unlock the truth to profitable trading. All those days and late nights of testing trading systems was finally paying off. I had developed a sense of what works and what doesn't so thinking through the best way to capture developing trends was just a matter of time.

Once I had all the pieces arranged in my head, I sat down to write the code. I knew exactly what I wanted the system to do so it only took about 20 minutes to write the entire trading system.

The logic behind Trend Weaver is to do exactly what profitable Trend Traders do, catch every trend and ride it until the end. It does this by waiting for a trend to develop, enter a trade in the direction of the trend and hold the position until the trend starts to turn.

Here's a few examples of the Trend Weaver in action...

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Diversification

The objective of a systems trader is to capture as much net profit as possible with the least amount of draw-down. The perfect trading system would have a flat equity curve that slopped at a 45 degree angle from left to right.

This would mean that every trade was profitable from day one with no positions going negative at any point. Obviously this is not possible, however, a good trading system should have an equity curve that is as close to this as possible.

By trading multiple markets simultaneously with the same system you can greatly increase the performance and tradability of a trading system. The equity curve will be much flatter and the slope more stable. The goal is to have at least one market performing well at all times which will offset other markets that are performing poorly.

The great thing about commodities is that each sector has it's own set of fundamentals and cycles which makes them highly uncorrelated with one another. This is much less true with stocks where the entire market can sell off at the same time. This is known as market risk so it can't be eliminated by simply buying more stocks.

Most of us have our retirement accounts tide up in stocks so the best use of our risk capital is to invest in something other than stocks. Using a mechanical trading system to trade multiple commodities is perhaps the best way to diversify our aggregate savings.

Combining a diverse mix of markets to trade that matches your account size should be given considerable thought. Trade too few commodities and the equity curve may be too erratic. Trade too many markets and you may run out of margin money. Following are some sample commodity mixes for various account sizes.

Small Portfolio

- 20 year test period: Jan 1987 to Dec 2006
- $75 deducted for each round turn for slippage and commission
- 1 contract traded per commodity
- Commodities: miNY Crude, Eurodollar, E-mini Yen, Lean Hogs & Rough Rice

Note: The mini yen traded on Globex is thinly traded. For best fills trade currencies on FOREX.

The Underwater Equity chart shows when the draw-downs occurred and the magnitude of each. The draw-down spikes range from $6,000 to $8,000 with a maximum of $9,000 in 1987.

The start trade draw-down calculates the maximum expected draw-down in percentages. It does this by looking at all possible starting points over the test period (20 years for this portfolio) and then calculates the probability of achieving a specific draw-down when you start out trading the system. For the Small portfolio you should expect to see draw-downs equivalent to these...

50% of a $1,800 draw-down or less at any given starting point
75% of a $3,100 draw-down or less at any given starting point
90% of a $4,600 draw-down or less at any given starting point

 

Medium Portfolio

- 20 year test period: Jan 1987 to Dec 2006
- $75 deducted for each round turn
- 1 contract traded per commodity
- Commodities: Cotton, Crude oil, Eurodollar, Gold, Japanese Yen, Lean Hogs, Palladium, Rough Rice, Soybeans & T-Note 10 yr

This chart shows when the draw-downs occurred and the magnitude of each. The draw-down spikes range from $10,000 to $20,000 with a maximum of $23,000 in 2006.

The start trade draw-down calculates the maximum expected draw-down in percentages. It does this by looking at all possible starting points over the test period (20 years for this portfolio) and then calculates the probability of achieving a specific draw-down when you start out trading the system. For the Medium portfolio you should expect to see draw-downs equivalent to these...

50% of a $3,000 draw-down or less at any given starting point
75% of a $7,500 draw-down or less at any given starting point
90% of a $11,000 draw-down or less at any given starting point

 

Large Portfolio

- 20 year test period: Jan 1987 to Dec 2006
- $75 deducted for each round turn
- 1 contract traded per commodity
- Commodities: British Pound, Coffee, Crude oil, Cotton, Dollar Index, Eurodollar, T-Note 5 yr, Gold, Heating Oil, Japanese Yen, Lumber, Lean Hogs, Natural Gas, Nikkei Index, Palladium, Rough Rice, Soybeans, Swiss Franc, T-Note 10yr and 30 yr T-Bond

This chart shows when the draw-down occurred and the magnitude of each. The draw-down spikes range from $30,000 to $50,000 with a maximum of $50,000 in 2006.

The start trade draw-down calculates the maximum expected draw-down in percentages. It does this by looking at all possible starting points over the test period (20 years for this portfolio) and then calculates the probability of achieving a specific draw-down when you start out trading the system. For the Large portfolio you should expect to see draw-down equivalent to these...

50% of a $8,000 draw-down or less at any given starting point
75% of a $18,000 draw-down or less at any given starting point
90% of a $25,000 draw-down or less at any given starting point

 

Position sizing

The results above are to demonstrate the benefits of diversification by trading multiple markets. However, most of us would not trade just 1 contract per market for 20 years straight. More likely we would reinvest our profits as we go. Calculating how many contracts to trade for each market, known as position sizing, would need to be given considerable thought.

Position sizing algorithms allow us to vary the risk we want to take while normalizing the amount risked on each market. For example, a system needs to take larger positions in slower moving markets when compared to fast moving markets. In markets that are moving fast, smaller positions should be taken.

The goal is to balance each market so that a 1% move in corn will have the same impact on the portfolio as a 1% move in crude oil. By giving a balanced position size to all markets in the portfolio we can further reduce risk while increasing returns.

Now let's look at what happens when we combine the benefits of diversification and position sizing together.

Position Sizing on Small Account

20 year test period
$75 deducted for each round turn
Markets: miNY Crude, E-mini Yen, Lean Hogs & Rough Rice

Position Sizing on Medium Account

20 year test period
$75 deducted for each round turn
Markets: Cotton, Crude oil, Gold, Japanese Yen, Lean Hogs, Palladium, Rough Rice, Soybeans & T-Note 10 yr

Position Sizing on Large Account

20 year test period
$75 deducted for each round turn
Markets: British Pound, Coffee, Crude oil, Cotton, Dollar Index, T-Note 5 yr, Gold, Heating Oil, Japanese Yen, Lumber, Lean Hogs, Natural Gas, Nikkei Index, Palladium, Rough Rice, Soybeans, Swiss Franc, T-Note 10yr and 30 yr T-Bond

Notice how the amount risked on each trade is reduced as more markets are added. The Compounded Annual Growth rate also increases as more markets are added to the portfolio. The large portfolio produces a huge 75.57% CAGR risking only 4% per trade.

The leason to portfolio management is this: It's more important to add markets than it is to add contracts. It's ok to start out with a small account with 3 or 4 markets in the portfolio, just add more markets as the account grows rather than trying to add more contracts!

Trade with Trend Weaver

I'll make this real easy, if your trading system doesn't keep up with the Trend Weaver, get a copy today for less than the amount you'll risk on your next trade. Only $247 for the complete trading system, all rules are fully explained. The following files will be emailed to you shortly after you order...

Complete instructions describing how the Trend Weaver works

Traders Studio code

TradeStation code, TS 4.0 ELA, TS 2000i ELS and TS 8 (in text file)

All code and rules are completely revealed!

 

 

 

CFTC REQUIRED RISK DISCLOSURE STATEMENT:

NOTICE: "HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.

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