The Systemtrade suite of systems looks to exploit short term moves lasting from 1-2 days. Our systems utilize a similar logic across all of the markets we trade.  The logic of our systems utilizes a combination of short term trading patterns and seasonality to position itself in anticipation of a short term move.  The 30 different subsystems/techniques used across our range of systems includes a combination of the setups explained below:

Overnight Gaps – An overnight gap is where the market opens significantly above or below the closing price of the previous day. We often look to combine an overnight gap with a volatility breakout during specific periods in the month to determine whether or not a trade should be taken. Our systems also take into consideration the size of an overnight when determining a new position.

Continuation Patterns – A continuation pattern occurs when the market is pulling back from its main trend. Our systems often look to enter on a chart pattern in the direction of the main trend, but during a short term pull-back.  A simple example of a continuation pattern would be a market which is making either higher highs or lower lows. The system would generally seek to enter a market making higher highs during a counter-trend and vice versa.

Range Expansions – Most long volatility systems operate using a range breakout logic which brackets the market when it enters a lower volatility consolidation pattern, and the Systemtrade systems include this logic as well – looking to identify periods where the market has been quiet for a specific period, in hopes of anticipating when and where the market is getting set for some short term explosive moves.

Seasonality – This is one of the main parameters which sets our systems apart from many other trading systems. The system uses seasonal analysis such as going long on the first trading day of the month and the Monday before options expiry. In addition, a seasonality filter is applied across all other trading parameters, requiring that they occur in the same direction as the current favorable seasonal period in order to trigger a trade.

Oversold – another component which sets our systems apart. Most trading systems either look for a breakout from a move higher or lower, or fade the move in hopes of prices reverting to the mean. Our system have components which do both, and the oversold component looks for opportunities when the market overextends itself, putting in orders to fade the crowd and to trade a snap back in the opposite direction.

Reversals – Similar to the oversold component, the reversal logic within Strategic looks to identify periods where the market has over-extended itself on a specific day, in anticipation of a move in the opposite direction on the following day. We often utilize regression analysis and look for regression to the mean when looking for reversal trades.

Volatility Entries – this parameter is in stark contrast to the preceding two, but they somehow co-exist in the System-trade logic.  This logic looks for trade entries x% above and below the opening price of each time period throughout the day, looking to get in line with a big move in one direction or the other once the market has moved significantly outside of the normal “noise” level. In fact our systems look for setups based upon the higher time frame, which are then micro-traded using volatility breakout logic.

Exits – no model would be complete without considering the exits, and our trading system exits are again based on the market moving x% above or below the opening price of the time period immediately following a proprietary amount of time the system has been in the existing position.  The system also incorporates several other exits which trail the stop and exit the trade early should the market reverse against the original position.