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Released On: March 8 2010
Dear Fellow Trader,
It's great when you know your work is being appreciated!
Comments and accolades like this are what make our day:
"Thank You , I love your charting system, it is the best bar none! Please keep the charting system available to us little guys."
Frank
FZAMORA33@aol.com
That's the plan. But we have been at pains to point out that, in the future, there may be limits placed on the number of people who have access to our work.
It's all to do with 'Wall Street types' who are keen to access our work. It's been outlined and discussed in previous editions of the ALERTS Newsletter.
Long-story-short. If your subscription is current and up to date that means you are 'in'. But if you're not 'in' then you may well find yourself 'out'.
Get it? Got it? Good!
This week we're going to discuss the US Unemployment Rate. Why? Because it's vitally important and not just inside the U.S.
The US Labor Department came out with its monthly Unemployment Rate and it stood unchanged at 9.7%.
It's interesting to note that last month the Labor Department announced a 20,000 job loss and that was considered bad news.
For this past month the US economy lost 35,000 jobs and that was considered good news. I wish these 'pundits' and 'experts' would make up their mind and decide what is good news and bad news.
To inject some sense into the issue, take a look at the latest curvilinear envelope chart for the Unemployment Rate:
Enlarge here
Notice that the rate is now projected to top out and head down.
I suspect the forecast is accurate and that jobs will start to be added to the economy in the near future. That certainly qualifies as good news.
Now examine the Sigma Bands™ chart for the Unemployment Rate which is shown below:
Enlarge here
Notice that the momentum in the Rate is still projected to top out and start heading downward.
I suspect the Unemployment Rate picture will start to definitely improve in the future.
I had actually forecast this a few months ago.
Again, if you've been following my ALERTS Newsletters you will know this too.
And by the way, if you are curious as to why the 'Wall Street types' are so keen to get access to our work (I hesitate to use the words "get hold of") this may give you a hint:
The TRM software does a number of things and has a number of benefits that other software does not have.
Technical Analysis:
Almost all software that tries to 'predict' movements in markets falls flat on its face and for obvious reasons.
First, the software is based on the idea of buying low and selling high. The buy low, sell high approach is based on some buy and sell signal that may works in simulations of the real market world, but has no real mathematical support to back it up.
Consequently, all such software likes to be promoted as profitable signals that work in a certain percentage of situations.
There is no reason to expect such signals to be reliable in the future. This is why the SEC and CFTC will not allow such promises in a company's advertisements. There is no mathematical basis for believing such signals will be reliable in the future.
Trade Risk Management works in a very different way.
It calculates and presents real probabilities based on the 'bell shaped curve'.The bell shaped curve, also known as the gaussian density, is very easy to estimate since it only needs one or two parameters. Usually only one since it is assumed to be of zero average.
The TRM Sigma Bands™ get their name from the one parameter that is needed to estimate, the standard deviations of the Gaussian density, namely, sigma.
The Sigma Bands™ show this estimate as it varies with time. It is based on 'cyclical analysis' and needs what is called the "Random Walk" model to be accurate and effective. The Random Walk is the generally accepted model for price behavior in stocks, futures and currencies. Once again, we need the Random Walk model to be able to make sure that we have both a Gaussian density and accurate estimates of the variation in standard deviations for prices over time.
Once we have accurate standard deviations we can then spot opportunities when placing a buy or sell order in a particular market.
Sigma Band analysis attempts give us a high probability of a successful trade.
TRM is not interested in trying to identify every buy or sell signal. We are only interested in trading opportunities where there is a high probability of making money.
Portfolio Analysis:
There is an old saying that one 'needs money to make money'.
This is definitely true in Portfolio Analysis. With Portfolio Analysis one does not need to try predicting the markets. All one needs is the proper mix of stocks to buy or sell. TRM helps solve this problem.
Portfolio Analysis requires a selection of stocks, etc along with an estimate of the rate of return on each investment and a variance (away with the rate of return) associated with each investment.
With TRM you do not need cross variances, also known as covariance's.
Furthermore, the covariance matrix is always diagonal and you can mix stocks, futures and currencies all together. In fact, because the covariance matrix is diagonal you may even be able to solve for the mix of securities and get an analytical solution.
Think about that for a moment. Even the great Harry Markowitz could never do that.
Also, its very easy to compute the expected rate of return and variance for each portfolio selection.
These numbers are easily read off the Sigma Band chart. So there is no debating the values of the expected rates of returns and variances.
Furthermore, these numbers don't last forever. They are easily read when it matters and then go away. So the portfolio of potential investments is dynamic and varies in time.
Standard portfolio analysis requires a computation of expected rates of return and variances that could be in effect for months and never change.
This is not the case with TRM's approach. So TRM gives one the ability to apply Portfolio Analysis in 'real time' and to change the portfolio when necessary.
Don't forget, if you are 'in' with TRM you are giving yourself the best opportunity to make money in the markets.
Think on that.
Bye for now.
James
Maggio
Trade Risk Management
DISCLAIMER:
Trade Risk Management endeavors to ensure accuracy
and reliability of the information provided but does not accept
any liability whatsoever, whether in tort or contract or otherwise,
for any loss or damage arising from the use of the TRM trading
system or trading Alerts. Commodity Futures Trading Commission.
Trading has large potential rewards, but also large potential
risk. You must be aware of the risks and be willing to accept
them in order to invest in the futures and options markets. Don't
trade with money you can't afford to lose. This is neither a solicitation
nor an offer to Buy/Sell futures or options. The past performance
of any trading system or methodology is not necessarily indicative
of future results. |
