BBTT FAQ | Index and Forex Trading

I'm interested in your Back to Basics book. You mention on the website that it offers a subscription to a newsletter showing you trading live - is this trading IndexTrader?
No. The subscription is to the Back to Basics newsletter where subscribers can watch me trade the methodology contained within the Back to Basics course book. IndexTrader is a short-term system. Back to Basics teaches a medium term trend trading methodology.

I have previously read your book on trading the SPI and subscribed to your free 21 day free trial of Index Alert. I am interested in purchasing the BBTT Trading System Book however before I do could you please answer a couple of questions. I have previously purchased trading manuals from "Safety in The Market" and unfortunately found them not very helpful. I was constantly being asked to pay more for more extensive "trading education" which I was not prepared to do. Is your book a complete trading system with all the rules carefully explained and easy to implement. I would like to trade the indices via CFDs as I find this the easiest and I can do it online at any time. I have read everything on your web site and I am comfortable with a 33% win rate. I need to make sure that I do not need to purchase anything else other than your BBT Newsletter, should I choose to do so.
There is nothing more that you will have to purchase. What I'm making available is a two step process for traders to learn. Firstly providing good theory (the Universal Principles covering money management, methodology and psychology which is accompanied by BBTT ...a fully disclosed 100% mechanical medium-term trend trading methodology that can be used to trade both indices and currencies) and secondly making the newsletter available for owners of BBTT to see it in action as I personally trade it on the indices (and I trade Key Levels on forex). The newsletter is designed to reinforce traders understanding of the theory. For experienced traders they will only need BBTT and not the newsletter. Traders looking for additional assurances subscribe to the newsletter.

I am receiving a free trial of Index Alert. I find the track record of Index Trader quite impressive. I would like to be involved in a system that works but that I could also afford to trade. I've been trading shares, CFDs and index CFDs for a while with mixed results, and have ridden the trading educators' gravy train for many years now. I would feel confident to trade futures but the capital requirement would make it prohibitive for me just yet. I would like to know how I could get started with one of your methodologies. I would be interested in looking at BBTT as a system and following with the newsletter. -Can that method be used for share CFDs as well? - Are the exit strategies safe enough to reduce the 67% loss rate to a minimum. -Could I start from a low capital base and move up in the equity curve say with a capital of $20K approximately? Thanks.

Thanks for your email. BBTT is a medium-term trend trading strategy that can be applied to any market. Unfortunately I can’t guarantee BBTT will make money in every market in every year as its almost impossible from my experience for any strategy to be profitable in every year in every market since markets don’t always trend. As such BBTT is best used to trade a portfolio of markets which will increase your chance that you will catch a trending market. BBTT can be used to trade any instrument – futures, CFDS, shares, options, warrants etc. Once BBTT identifies a trade set-up in your preferred market it’s up to you which instrument you choose to execute the strategy. And CFDs are particularly good since you can customize your trade size to reduce your individual trade risk that is appropriate for a 20k account. And unfortunately I can't do anything about the 67% loss rate. I wish it was otherwise however markets rarely trend and that is why trend trading, like BBTT, has such a low win rate. However, since trend traders attempt to trade in the direction of the trend, when they do catch a win it's usually large which makes up for all the losing trades. I hope this helps.

Would you be able to send us the actual BBTT trades you have recorded ? (eg entry date/price and exit data/price) For example all trades for the S&P Over the last 10 years ? This would verify our results.
No worries.

A couple of questions if I may. On the performance graph, what do the two curves represent.
The blue line is BBTT’s equity curve, trading one futures contract per signal, with no money management. The black line is the SPI chart.

How long have you traded this system
Since the start of 2008.

Does your real time experience match with the model?
Unfortunately not. I trade BBTT on a discretionary basis, picking and choosing my signals and I’m currently behind the models hypothetical performance. And fyi BBTT is still officially short the Nikkei which I exited (prematurely on a discretionary basis). And I’m still kicking myself because that $3,790 trade is currently worth $10,000!

What size of account would you recommend to trade all the markets.
This is a difficult question to answer as it falls into “personal” advice and I’m only licensed to give “general” advice. In addition every trader is different regarding their appetite for risk, financial position and investment objectives. And not every trader uses the same money management strategy. Hopefully the performance metrics on the web site can help a trader decide an appropriate account balance. Also the number of markets someone would like to trade will also impact on their decision.

As a general idea, if a trader only wished to trade the indices, I’d suggest they not consider trading BBTT with an account balance with less then AUD25,000. If they wished to trade both the index and currency futures (13 futures markets in total) then a trader could possibly consider doing it with a AUD50,000 account.

If a trader only wished to trade the Asian portfolio (i.e. Spi, Nikkei, Taiwan, Hang Seng, Japanese Yen and Australian Dollar futures) then they could possibly consider doing it with a AUD30,000 account.

However a trader really needs to determine, either with or without the assistant of a person licensed to give “personal” advice, whether their preferred account size containing their risk capital would be appropriate for them given their particular needs, financial situation and investment objectives.

In addition if traders prefer to trade CFDs then obviously they could trade BBTT with a much smaller account size as they cn customize CFD contract sizes to restrict their dollar risk per trade. With Futures you can’t do that as they are standardized.

How long do you think it would take each day …once you are experienced?
Possibly 2 minutes per market looking for set-ups. Then it’s up to you how long it takes you to prepare your order/s. But visually looking for the pattern on a chart takes only a blink, is it there or isn’t it?

I have read through your website and all the products and services you offer. I am interested in the book BBTT and maybe Trading the SPI. I have been trading ad hoc for many years and spend fortunes trying to get myself into a reliable trading system. I have XXXXX XX XXX XXXXXX (editors deletion) and XXXXXXX (editors deletion) learning material and systems, spending upwards of $6,000 already and still don’t have a system I can confidently go to the market with. I have read Trading in the Zone by Mark Douglas and found it a really good trading Psychology book. He continually talks about thinking in probabilities and having an edge. I really lack in the edge part, having a sound system in place and achieving consistent results. I don’t care what market I trade, as I have traded most of them and they are not foreign to me. FX, Index futures, stocks, whatever. Reading through your site and book reviews your book may be what I am looking for, but if it is the same as all the other stuff out there, it will be the most expensive book I have, collecting dust on my bookshelf, which is my main concern. Most info and systems with trading is nothing more than a con, but you do seem more genuine, since you do trade what you preach. What would you recommend to be the best for me to get a sound system to give me consistent results that you can offer. I know losses are all part of trading and fully accept that I am totally responsible for every trade I put on. Thank you for your time.
The best for you, if you believe you can successfully trend trade, is to buy BBTT as its my best methodology across both indices and FX. But you have to believe you can trade with the trend successful which really means can you accept only winning a third of your trades?…. because markets rarely trend…but when they do our average winners are big…but you need to be aware of that and accept losing 67% of your trades. If you purchase BBTT you also have the option of then subscribing to my BBTT newsletters where you can watch me apply BBTT every day looking for and trading BBTT set-ups.

If you purchase BBTT you won’t be disappointed and reason why it’s a higher priced book is because I disclose my BBTT trading system…..which has a real unoptimised edge and does work.

I may be interested in your BBTT. My biggest consideration is, as a current day trader, would I have the right personality to also convert to medium term trading. I did that years ago until I realized day trading suited me much better. Anyway I'll give it some more thought and let you know.
Have a serious look at BBTT. I certainly understand your timeframe concerns as I’m the same in that I prefer holding only for short periods. But the reason why I looked into and developed a medium-term trend trading methodology was to help diversify my results following IndexALERT’s poor performance during 2007.

By March 2007 IndexALERT was into its 6th month of drawdown and that got me thinking about looking at a different form of trading that would not duplicate but compliment my short-term trading, and help me stay out of drawdown overall. So I thought a medium-term timeframe (as opposed to my short-term) and trend trading (as opposed to much of my predominant short-term swing trading) should compliment my existing trading and diversify my results. Particularly as I believed the continuing bull market in equities at the time caused a contraction in market volatility that impacted IndexALERT’s results. So I got thinking about developing a medium-term trend trading methodology that if it had legs would have an equity curve that would compliment my short-term trading results.

In addition I also wanted to develop a methodology for forex to further diversify my reliance on index trading.

It wasn’t until mid 2007 that the ideas of BBTT and Key Level developed in my head, and it wasn’t until October and November that I had been able to program and prove the ideas and watch them live for a few months to see them working well in real time. And I had hoped to start trading them in December 2007 but decided not to since as you know I usually shut down by the second week of December.

Anyway, BBTT and Key Levels came about as I wanted to have another methodology and market that was different and complimentary to my existing short-term index swing trading, to diversify my results and I believe I have achieved it.

In addition you must believe you can successfully trade with the trend which really means whether you can accept losing 67% of the time as markets rarely trend. So you need to give that careful thought. Its one thing to see BBTT’s profit potential but its another thing to trade and loss 67% of the time. Most struggling traders cannot do that.

Also I should say that although I don’t day trade I believe BBTT should work across all timeframes and all markets. It’s basically one huge price pattern that should work across all timeframes, including day trading. I’d be surprised if it didn’t work on intra day data, but the downside, as I’ve said above, is that it is trend trading meaning that you can only expect to win a 1/3 of the time although when you do win you should expect to see your wins on average be 3 times the size of our losses.

I have a few questions regarding your BBTT book. What is the main difference in methodology between BBTT and say your other models – IndexTrader, SpiTrader.
The main difference would be timeframe and style since they’re all 100% price pattern based trading methodologies. All the set-ups across SpiTrader, IndexTrader, BBTT, Key Level, IndexALERT and ForexALERT are based on 100% price alone. So the difference would be their timeframe and style. SpiTrader and IndexTrader are short-term systems where trades last between 1 to 3 days. BBTT and Key Level are medium-term trend trading approaches where trades last on average between 10 to 12 days. Although SpiTrader and IndexTrader do have continuation trend patterns they are predominantly counter-trend or swing trading patterns. BBTT and Key Level are trend trading methodology with a low 30% accuracy.

I have been looking at purchasing IndexTrader but then yesterday I looked at the section on your new Back to Basics book and I wondered why should I get IndexTrader over the book? To set the scene somewhat I am a complete newbie at futures trading, in fact any form of trading other than direct shares. However, I'd like to branch out into some other markets now, hence my initial interest in IndexTrader. I currently work full-time, with limited Internet access so a system that can be researched and implemented out of trading hours would work best for me. Given this scenario, should I continue with IndexTrader or would purchasing the book be a better option for me?
It’s a good question and the answer will depend on a number of factors. Firstly they are two different approaches. IndexTrader is a short-term system with a combination of swing and trend continuation patterns, with trades lasting between 1-3 days with an accuracy around 50%. BBTT is a medium-term trend trading methodology with trades lasting on average around 12 days with a low accuracy of around 33%. BBTT is best when you can afford to trade at least 10 markets…since with trend trading not all markets make money every year…so you have to have a portfolio approach to capture that market that has a good trending year. IndexTrader can be traded on 1 to 3 markets to begin with and therefore can be traded with a smaller account and with its shorter average trade length of between 1-3 days and higher accuracy…it is easier to trade. However IndexTrader is more expensive then one of my Back to Basics Trading books (BBTT or Key Level).

It’s not an easy decision. Although IndexTrader is better suited to the newer trader as it is easier to trade I’m reluctant to recommend it to you as it costs (AUD4,500) a lot more. And I should say it costs more since it’s my oldest methodology that I make available to the public since I launched it 2001 and it's still going as strong as ever (which I believe BBTT will also demonstrate in time)! But then IndexTrader's continuing good performance is not surprising to me as I’m a trader first and foremost and not a dodgy system vendor or educator masquerading as a trader.

Anyway I hope this makes sense.

I was just reading about your latest course and you mention that subscribers can see your live trading etc. Is this done in real time via a live chat room or is this done afterwards via email and newsletter etc?
The live trading occurs before the markets open each day. Although BBTT can be traded over any timeframe I personally trade is off end of day bars. So when a daily session finishes I know whether a set-up has developed or not for the next day. So each morning before the markets open I send out an email discussing any BBTT set-ups that have developed and the required trade plan to trade the set-up. I also state whether I recommend trading the set-up or not and what my personal intentions are. I usually get the daily email out by 9:30am each morning. So traders know exactly what I’ll be doing and where I’ll be entering my trades and where I’ll be placing my stops and where I’ll be exiting my trades all before the markets open. When I do enter trades I also share with BBTT traders my fills and positions.

What is the reason for picking and choosing the set-ups rather then trading it mechanically?
It’s only a personal decision since BBTT can be traded mechanically as the set-up and trade plan is 100% objective.

I was wondering if you have the past performance on an excel spreadsheet ?
Yes. Historical trade results across all the index futures and currency futures markets are available on request to owners of the book. I don’t make them available to people making enquires about the book. I do this as it is a pain for me to play around with the results to hide their entry and exit dates to protect BBTT’s trading methodology from people who would like to reverse engineer it.

How long is the newsletter for $490? Also what type of support mentoring do I get?
It’s a quarterly subscription and you have to remember it’s only a newsletter to support the trading theory contained in BBTT. It’s not a mentorship program although I do run one with my Workshops. However, having said that, I’m always available for chats with people about trading, particularly subscribers of mine and owners of BBTT and my models. I always answer my phone!

Do you know any CFD brokers who can reduce the $ risk per contract?
I don’t trade CFDs as I prefer futures so I’m no expert on them. However I’m sure traders can reduce the contract size of the CFDs they trade to limit the potential risk to a manageable proportion of their accounts. However you’ll really need to speak to a CFD provider to get it from the horse’s mouth so to speak.

I guess there is no escaping the fact that a larger drawdown then historically will always occur. I was looking at IndexTrader’s long term equity curve and looks quite solid. I understand that in early 2007 you experienced a pro-longed drawdown (maybe due to the drop in volatility) and hence BBTT was born. My question is what market style or period do you think BBTT will have trouble in? or are you quite confident it is quite superior.
Good question. BBTT being a trend following system will struggle during consolidation and range bound markets. SpiTrader, IndexTrader and IndexALERT will struggle during prolonged periods of strong up trends as up trending markets are usually associated with diminishing volatility. We know markets exhibit both trending and counter trend behaviour. The trick is to have a diversified trading approach that comprises both trend trading and counter trend (swing) trading. Now if we could know with certainty when a particular market will commence trending strongly we would only have to trade BBTT. If we knew when a market was about to go into a 3 month period of consolidation and choppiness then we would only trade the short-term swing models. Unfortunately I don’t know how to determine what a market is about to do (geez I don’t know what my 3 year son is going to do in the next second!) so I prefer to trade both my trend and swing trading systems simultaneously when set-ups occur. I hope this makes sense.

I am sure that in the past years there has been many periods of consolidation / range bound markets etc ... but it seems for BBTT’s equity curve it is still very strong with no real apparent drawdown (compared to that suffered by SpiTrader or IndexTrader) ... is this maybe due to the diversification across many markets ? (then again IndexTrader is also diversified ?).
Where BBTT does gain an edget over SpiTrader and IndexTrader is that is does trade the currency futures in addition to the index futures. So its portfolio of markets is more diversified then the index trading models.

I finished reading Trading the SPI a little while ago, and I liked your book very much. I've been trading SPI CFD's for a few months now with excellent results using my own very simple system, but am always looking for more. Just wanted to know a bit more about the red BBTT book as I've not spent over $500 for one book before. I've spent well over that educating myself so far, but am always curious as to what I'm getting.
There is really very little I can add to what you can read on my web site. At the end of the day traders want to trade with a methodology that has an edge and that is what BBTT has, an edge. So the biggest value in the book is learning my BBTT trading methodology (and that is why the book is priced at AUD670). However before you consider the book you have to ask yourself whether you can be a successful medium-term trend trader where you can only expect to win a third of your trades since markets rarely trend. If you believe that you can be a good loser, losing 67% of the time to catch the big 33% winners, then you will not be disappointed by BBTT. It’s a simple, clean and robust methodology that has an edge.