Dear visitor,

on this web site you will find a lot of information about our promising approach to market timing. Our primary goal, both in our trading and in our newsletter publishing is consistent profits. Therefore the main objective of our market timing systems is to generalize and to detect market trends or market changes respectively.

What are the mechanics of your market timing approach? Each week we scan the international bond and stock markets to generate entries and exits. Based on the current and historical market conditions our trading systems will generate a BUY- or a CASH-signal. These signals are based on proprietary quantitative models. Once a trading signal has been issued, it remains in effect until a new signal invalidates it. When our model issues a BUY-signal, it means it is time to buy the underlying market. When the trading signal becomes a CASH-signal, it is time to sell (but not short selling) the underlying market and to move the money in cash until a clear direction is determined by our system.

How many times a year will your trading systems switch a signal? It varies. In a typical year, only 2-6 signals per trading system will be issued.

Do your timing models ever make partial moves (e.g. 50% Long)? No, the moves of our trading models are always 100% (= either 100% LONG or 100% CASH)

Do you guarantee results better than buy-and-hold? No. No investment strategy can guarantee results better than buy-and-hold, nor guarantee an investment against loss in declining markets.

How do I get notified about signal changes of your timing models? Our timing models are run on a weekly basis (every weekend) and if a new signal is generated, we send out an email to all active subscribers of our email newsletter. That way, you don’t have to check our website every week.

Are your trading systems optimized? During the development of our trading systems it was not our objective to find the parameter values which generated the maximum profit on historical data (=back testing), because there is a tradeoff between the maximum profit and the robustness of a trading system. Generally, the less a system has been optimized, the more robust it will be in the future, because every optimization includes the risk of equity curve fitting. The robustness of a trading system is determined by the ability to generate trading results in the future close to the results of the back test.

So our objective was to design robust and stable market timing models. Therefore we searched for a certain range of parameter values, within which the profits and other criteria’s (e.g. drawdowns) would be acceptable. These parameter values are settled in the centre of the flattest parameter space. So a minor market shift will not result in dramatic and negative equity shifts.

But does market timing work? Market timing is not a crystal ball and it certainly will not make you a successful trader or market timer. Even if your trading models are well constructed, they have been and will be incorrect in many cases, because markets are social systems and are not physical systems, where input A and input B always gives you output C. There is no holy grail and no perfection — only percentages of perfection.

So most of you are familiar with the concept of buying stocks and bonds and prefer a Buy and Hold-approach.

We think that buying and holding works for many people, because of the long term positive bias of stock markets. But sometimes this concept gets dangerous:

- Emotions (fear and greed) will undermine the required discipline

- A Buy and Hold-strategy can under perform for long periods of time

(e.g. US stock market: 1929-1954 (no inflation-adjustment); Japanese stock market: 1989-?)

- The financial markets are mirroring the battle between fear and greed and therefore they are NOT following a random walk.

So we decided:

- To discipline our self by using a computerized and unbiased approach for investing

- To time the market in order to avoid long periods of under-performance

- To use sophisticated computer-based models in order to discover trends in the fat-tailed distributions of the returns of financial markets.

So the key to successful market timing is to use a 100% mechanical trading system that completely removes emotions and subjectivity from the investing process. Objectively applying the rules and strategies of your trading system most times will keep you out of trouble.

But you also must have a money management system and the trader’s self discipline.

So a computerized trading system is the way to go? Also market timing is sometimes very dangerous. Many trading systems and strategies are not rigorously tested and are over-optimized and curve-fitted to historical data.

But there are investment strategies which work across various financial markets and market types (bull market, bear market, sideways market. ).

We think that we have developed an unique and promising approach to market timing.

So if you are looking for a reliable and trading system, this website is for you.

But we are NOT a get rich quick-scheme and we do not offer any bogus magic-mumbo jumbo-holy grail-dreamland-master of the universe-system. So what is the concept of your investment strategy and how do you do it? Our market timing models are proprietary computer-based systems that detect changes in the direction of stock and bond markets. Each market-timing model consists of different subsystems. These subsystems incorporate mainly pattern-recognition techniques based on the prices of the underlying markets (e.g. US stocks trading system -> S&P500 Index) and on some inter market indicators, such as: interest rates, commodities prices, etc. The main emphasis during system development has been on robust patterns, which should work in different market phases (back tests to 1871) and on their edge against random investment-strategies. The trading models are 100% mechanical and are based on mathematical algorithms. The formulas are proprietary and are therefore not disclosed.

Do you rate Central Europe (Bond) Markets at all? Currently, Hungarian and Polish Bonds have great yields. Any views on those country securities?

At the moment we do not issue market timing signals for Central European bond markets because of missing benchmark indices and trading instruments.

Currently we are tracking these bond markets:

- US bond market (tracked by TimerTrac.com)

- German bond market (tracked by TimerTrac.com)

- UK bond market (tracked by TimerTrac.com)

- Japanese bond market (currently not tracked by TimerTrac.com)

- Australian bond market (currently not tracked by TimerTrac.com)

- Swiss bond market (currently not tracked by TimerTrac.com)

- Canadian bond market (currently not tracked by TimerTrac.com)

Just a quick question concerning your Risk Index . Could it ever reach a level when it would be indicating an imminent Stock Market Crash as witnessed in October 1929 and October 1987?

Our stock risk index indicates only the risk of global stock investments on a percentage basis. So this index does not indicate any imminent stock market crash.

Before we could answer your question, we have to inform you about our Risk Disclaimer: Our website and newsletter have been prepared solely for informational purposes, and are not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading or market timing strategy. The investments and the market timing signals discussed on our web site and in our newsletter may be unsuitable for investors depending on their specific investment objectives and financial position. So it is not our intention to provide individual investment advice. There are Registered Investment Advisors providing professional investment management services. No endorsement of any third-party products or services is expressed or implied by any information, material or content referred to or included on, or linked from or to our web site and our newsletter.

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Chinese stock trading system

FTSE/Xinhua Ch. 25 Index Fund / AMEX-Symbol: FXI