New
Tracked Advisory Service: Gibbons' Trading
(Oct. 10, 1999) To
welcome you to our new tracked advisory service, we asked Michael
Gibbons of Gibbons' Trading to share with us some information about Gibbons'
Trading. The following is an excerpt from our new Gibbons'
Trading page:
1.
How Trades are Determined
Four
years ago we discovered partially by accident, a close relative of the proverbial
"Holy Grail" of trading. I can assure you that is not hype or some kind of highly
inflated claim. Our past trading record with this method as well as my monitored
record with CTCR, will support what I claim to be true. The most difficult thing
is to believe it ourselves-but the efficacy of it is undeniable.
I
have been trading for thirty-two years and about four years ago, a discovery so
incredible and yet so simple, unlocked the mystery of market behavior forever.
No more would we ever ask is the market trend up or down? We now could spend five
seconds looking at data and tell you with 84% confidence what the most likely
thing any market would do next.
It all began when I was looking at my computer monitor with a SuperCharts drawn
graph and decided to place a popular trading indicator on top of the price data.
What I saw literally floored me. It was not the indicator that was important-it
was the scale it created on the chart. After many long hours of study, I determined
this single parameter told me what the most likely thing any market would do next.
Has anyone ever seen this before? I certainly had not and I doubt few others have
either. It is far too simple and thus has probably evaded most traders.
Be clear that we are not promoters of the typical kind of trading wares sold to
a gullible public. Our methods are not for sale in any form and we do not offer
seminars, write books, sell trading systems or provide individual consultations.
We do provide buy and sell signals for various stocks, stock indexes and futures
based on our proprietary research that historically are correct 84% of the time
on the first entry. 16% of the time the first entry is "false" and that is why
we use stops for the 16% that do not work. These failures become winners later
on.
I just completed
work on a new indicator that tells me when to expect a major move. These moves
tend to be very rapid and highly profitable. Gold is the recent example of "knowing"
before the fact that there would most likely be a huge directional up move. The
energy markets gave the same signal for a huge down move over the past several
weeks. As I write this, the cattle complex is setting up for a major down move
sometime in the near future.
The
trend is the basis of all profit and hence the only way to profit significantly
is to be in alignment with the long term trends. Our trades last about 6.5 months
historically, so we are capitalizing on what many would call long term trends.
We do not forecast
per se but rather use a form of pattern recognition (based on the parameter) to
determine the market trend. Where the price is relative to the parameter gives
us all the information we need to be very successful traders.
We
look at about one year of data to identify the current trend and employ a moving
average to enter and exit trades. Our initital entry is "counter-trend" in nature-and
more often than not, turns into a new trend in the opposite direction from the
prior move. Please note that we do not attempt to make the amateur's mistake of
"calling" tops or bottoms. We wait for some reversal of trend prior to taking
a market position as directed by the moving average.
This
method works on all markets and on all time frames. We decided to provide the
longer term signals as it is extremely easy to trade and requires little or no
time for anyone to follow. Discipline is 90% of the game and the fewer variables
involved, the easier it is to be disciplined and follow the method.
We
spent a good amount of time making this nearly 100% mechanical. Our Money Management
Program is an integral part of what we do. We tell our clients the exact number
of futures contracts to buy or sell based on our work. The number of contracts
is weighted based on directional dollar movement in all markets overall. We recommend
that you capitalize your account at least 300% above minimum margin requirements.
We have occasional drawdowns, and while not great, they become more of a non-event
when there is plently of reserve in the trading account.
A
highly volatile market may not afford proper risk/reward so there may be a few
times a year we may not take a trade due to excessive volatility. This situation
is rare but is factored into our trading. Call it common sense.
We
use a trailing stop once a position is profitable and allows for trends that can
last over a year in length. Our methods allow us to capture significant directional
moves while avoiding giving back the majority of open trade profit.
Find
out more on Gibbons' Trading! 
