Yes but your strategy is not really safe just because you keep your position small and promise only 10% return. That's the problem and that's what people need to understand. When there is extremely large volatility, you don't know how much the price is going to move against the position and for how long. By keeping the position open hoping for a reversal, you are exposing the position and the account to extreme risks even though the position is small because you are not effectively controlling the risk. A small position multiplied by large and prolonged negative price move is still equal to large potential losses. You are banking on the fact that , but what if it lasts for years with the peak of volatility being extremely high before it reverses? The financial crisis of 2008 took 10 years to reverse with the market prices dropping 300% in a few months. Are you going to see your position dropping 300% and keep the position open for 10 years?? How can you predict and guarantee that the financial crisis of 2008 will never happen again?
And at the same time you are sacrificing returns when the market's volatility by keeping the position small and taking profit as soon as you made some. So let's see you are only earning small returns when the market is going in your direction and yet huge potential losses when the market goes against you. Reminding anybody of somebody we love? Small turns when sailing the boat in smooth waters but totally capsize when a "rogue wave" hits?
I think you should fully inform your potential investors of the huge potential risk of losses that can result in your strategy and also do a risk tolerance suitability assessment of all of your potential clients. And I would also suggest no playing with retirement money!!
Good luck!
Hello JSOP
You said. “Are you going to see your position dropping 300% and keep the position open for 10 years??”
We do not know where you have seen that the VXX took 10 years to reverse after 2008, but that is not true. It only took less than 2 years to be below, and you can start opening new positions once the peak is done and the Contango comes again, that is what we have been doing the last 7 years. 22 years with other markets and systems and we are still here.
First, the VXX ETN did not exist in 2008, so all the data that we all manage are extrapolations, and the numbers differ from one source to another in the % that went up. So nobody really knows what could happen. We are realistic with probabilities, neither optimist nor pessimist. We just make risk managing/control, money management, etc. If you are expecting a cataclysm or a nuclear world war, then we all have nothing to care about, because not just our money is going to disappear, we all too.
Second, no one knows if a meltdown like 2008 is going to happen again and what would do it to volatility. Some people that we have been talking and reading think it would be possible that the volatility never spikes as in 2008 thanks to the popularity of volatility and its products and also the PPT. Of course, it is just an opinion.
You said. “How can you predict and guarantee that the financial crisis of 2008 will never happen again? “
How can you predict that something like 2008 or 2002 will ever happen again? Some people think that the markets will collapse in 2019-20, others think that they will continue rising to the sky. That is the problem, they are just opinions and each one has one. Even between us, we think differently about what could happen in the future. We work day by day knowing what did happen in the past. Our strategy is prepared to manage what could have happened in 2008 or 2002.
We do not play with others money, just our own. We are sure that our client’s money is always better in their own accounts. Some clients are covering our positions with options, others are using our data to enter in other ETNs, others are doubling, others just use a small portion of their money in our strategy to diversify. Each client has its own point of view and risk tolerance, but that recommendation is out of our scope.
All trading systems have risks (life is a risk) you have to manage them. What we offer and show in our website is the performance in real time of an automated and robust strategy and not the idea of something or the results based in impossible trades (shorting at the peak and buying at the bottom). The data comes from our Multicharts program. What could happen in the future no one knows, not just for our strategy, but all strategies that you can think. Even Warren Buffet with the secure Value Investment lost in 2008-9 around 50%.
People like James Cordier existed before and will exist in the future, we have known and seen a lot of them, the difference is that this one put a video explaining what happened and apologizing.
We are just advertising our strategy, some people may like it and others not. Is up to you to use it, we believe in freedom!
If you want to know more, follow us in our webpage, Twitter or Facebook, and you will find out what happens in the next years…
Good luck to you too. Thank you for your time and commentaries and have a nice and profitable trading 2019!
Regards
