- Frequently Asked Questions
A daily newsletter for active
SPI • Nikkei • Taiwan • Hang Seng • Dax
• Ftse • Nasdaq • SP500
Frequently Asked Questions
Could you please tell me
the difference between IndexTrader and IndexAlert? Correct me if I'm wrong
but does IndexTrader have different signals to IndexAlert? What is the
advantage of subscribing to a newsletter each year with an on-going cost as
opposed to purchasing IndexTrader which is a one off cost?
Good question. IndexTrader and IndexALERT are two different animals. IndexTRADER is a fully disclosed 100% mechanical model while IndexALERT is a
newsletter. IndexTrader and IndexALERT are both simple mechanical pattern
based recognition models. IndexTrader only discloses 4 patterns while
IndexALERT trades a larger portfolio of patterns (4 of them are
IndexTrader's patterns)... which are not disclosed to subscribers. The
benefit of IndexTrader is that people learn a simple but robust methodology
and gain an insight into what works (and will hopefully continue to work
into the future .... but as you know there are no guarantees when it comes
to the markets). IndexALERT is a newsletter service where I do all the work
and over the longer term it makes much more money than IndexTrader as it
trades more patterns. I suppose it comes down to whether people wish to
become independent and do their own stuff or if they are time poor and would
like to use a signal service. Once learning IndexTrader they can go off and
discover their own patterns ... while using the same simple Trade Plan
IndexTrader uses ...I certainly don't have a mortgage on patterns. For those
who don't mind relying on me ... and hope to make more money then
IndexTrader... they can subscribe to IndexALERT.
Hi Brent. I've been on your email list for a few years and usually just
have a casual glance through the results table. I've just been reading
through the list of your upcoming workshops and initially was interested in
your master trader workshop. However I then had a good look through your
website at the different subscriptions you have available. I have traded
equities spasmodically over the last 10 years with reasonable level of
success. I'm reasonably familiar with technical analysis having completed a
diploma of technical analysis many years ago. As I have other interests and
employment it has often been difficult for me to consistently devote enough
time to my trading to be as successful as I would like. If anything money
management would be my weak point. Something that was simple, provided a
strict set of rules and would fit into my time poor lifestyle would be
ideal. Looking through your models I started to think maybe there might be
something in them that may suit me. I have a few questions: I have never
traded the futures markets. Do your subscriptions provide advice on how to
place orders etc? With regard to opening accounts can you provide any
direction on a good advisor/broker for new traders? Based on what I have
written above would you have any recommendations on which of your
models/newsletters you think would be most appropriate for me to begin with?
Realistically what level of starting capital would be ideal to trade your
methods? Your thoughts would be much appreciated.
Thanks for your email. I hope I can answer your questions to your
satisfaction as many of them relate to “personal” advice and I’m only
licensed to give “general” advice. But I’ll give it a go. My newsletters
provide everything you need to trade: The index/currency market, entry, stop
and exit instructions. Subscribers just copy, paste and email the orders
direct to their broker. I’ve attached today’s IndexALERT and ForexALERT for
your review. For brokers who are familiar with my newsletters and orders
types you can refer to the following link;
Now for what is best for you.
If you’re time poor then a newsletter subscription would be more appropriate
(either IndexALERT or ForexALERT). If you wish to become independent then
you would consider one of the short-term models (SpiTrader/IndexTrader) or
medium-term trend trading strategies (BBTT/Key Levels). Everything is fully
disclosed and 100% mechanical. Alternatively, if you have never traded
futures before then you may prefer not to commit a lot of money initially.
If this was the case then you could consider a newsletter subscription which
is only AUD490 per quarter. And as a side bar you are not locked into an
initial 12 month subscription. People can keep subscribing on a 3-month
basis for as long as they like…and when they’re comfortable they can
subscribe for 12 months and receive a good saving. But initially a quarterly
subscription would possibly be the best way to put your toe in. And even
before that. Get a copy of my book Trading The SPI. For $30 it will give you
an insight into how I think about the markets and how I approach trading.
It’s no good subscribing to a service or purchasing a model of mine if
you’re not comfortable with how I engage with the markets.
If you do decide to subscribe its difficult to advise what an appropriate
account balance to start with because it contains personal advice. However I
can tell you what I have done. In the attached real time results you’ll see
I opened a small account to demonstrate how people could trade IndexALERT.
IndexALERT trades 8 global index futures: Spi, Nikkei, Taiwan, Hang Seng
(ASIAN PORTFOLIO), Ftse, Dax, Mini Nasdaq and E-Mini SP500 (ALL = GLOBAL
PORTFOLIO). My simple money management rule was to only trade the signals
for the ASIAN PORTFOLIO whenever the account was under $40,000 and trade all
the signals when the account was over $40,000.
I opened this demonstration account on the 1st November 2005 when the ASX200
was at 4468. At time of writing (May 2009) the ASX200 is down to 3779.
Over this period the ASX200 has fallen -15%.
As you can see my small IndexALERT account has enjoyed +123% gain.
That is what I did….but then it’s my newsletter that I’m trading…so I know
it’s easier for me. And if you enjoy the same success with one of the
newsletters and in time you wish to become independent then you could
consider purchasing one of the models out of your trading profits.
But to start with you should take up a free trial of either IndexALERT or
ForexALERT and get a free look and feel for professional futures trading.
I hope this helps.
Can I use your Index
Alert service on CFD Indices?
I really can't say as I don't trade CFDs, however since both CFDs and
futures trade off the same physical index you would expect them to trade
the same. However
have received the following observation regarding the tracking of CFDs
compared to Futures. These are a very interesting observations.
" .... I hope that you still
remember our last correspondences about IndexALERT, which I asked whether I
could use CFDs to trade the services ... Well I have been watching for about
2 months the movement between the indices futures market with CFD indices
(from XXX) and here is what I have found;
1. The spread is considerably
wider for some CFD indices (more than 2 points) such as Hang Seng 10 points,
Nikkei 20 points.
2. The difference between future
prices and CFD prices on some markets are 'huge' such as FTSE 22 points,
Nikkei 23 points in which cfd prices are always less than the real future
3. The movement, CFDs were less
responsive, it’s understandable as its like 'a shadow' from the real market
... but in some occasions it can be costly......"
Can the mechanical trading system that you have built be used forever, or
will there come a time when it will not work, and if so how you will
Good question. The simply
answer is I don’t know. As you know there are no guarantees in life and all
that us traders can do is to manage our risk the best we can. For developing
a trading methodology the biggest risk we face is “curve fitting” an
idea/model to historical data. When we do this we expose ourselves to an
illusion of competency which at best is foolish and at worst financially
expensive. So the idea is to build “robust” methodologies that can hold up
under both bullish and bearish market conditions across multiple markets.
opinion my mechanical systems and IndexALERT are robust models. They all
embrace a logical investment philosophy and employ simple rules. They do not
utilise any technical indicators for their trade set-ups so there are no
parameters that have been optimized to improve the results.
address your question whether IndexALERT will continue to work as well into
the futures as it has in the past, I can’t say as only time will tell us.
However I can say I believe its simplicity will hold it in good stead and
help it to maintain its robustness going forward.
Now to the
question of how to recognise when IndexALERT has lost its edge.
This is a
very good question as I actually trade every recommendation that IndexALERT
makes so naturally this is a question I always have in the back of my mind
when I’m trading. Consequently its also in my interest to be sensitive to
I'm a big believer in measuring and trading equity momentum (see
Trading The SPI).
Equity momentum monitors and measures the financial health of a
methodology's trading edge. If the momentum is positive the methodology is
going well. If it turns negative then the methodology may be losing its
So the first thing subscribers see in IndexALERT is its equity momentum. I
recommend to subscribers (because this is what I do) to trade the signals
when the equity momentum is positive and to step to the sidelines when it
turns negative. When it turns negative this will be the first sign we'll
receive as to whether or not IndexALERT has lost its edge. At this time you
would not trade the signals and wait for positive equity momentum to return
With your IndexAlert service should I trade all the signals to get your
performance or can I trade only some and experience the same performance
result? For example I only trade SPI & DAX markets.
To duplicate IndexALERT’s performance you would have to trade every signal.
You could not do so with just trading the SPI and DAX signals.
What account size do I need to trade all of the signals to get the same
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 (drawdown), financial position
and investment objectives. And not every trader uses the same money
So this is a very difficult
question to answer and I can only offer general advice. For example if you
choose to only trade the SPI and DAX signals and the model shows that
hypothetically the worst largest accumulative loss (drawdown) was $10,000
(and I’m only guessing here as I haven’t run IndexALERT over just the SPI
and DAX) then you would have to determine what percentage loss you would
want it to represent? For example if you would wish to limit your worst lost
to only 30% of your trading capital then you would need $30,000 in your
trading account. In addition there is every possibility that IndexALERT’s™
future drawdown on the SPI and DAX portfolio will be greater than $10,000
(if that is the correct figure) so you may want to double it to $20,000. If
you still wished to limit your worst drawdown to 30% then you would need to
have $60,00 in your trading account.
Now historically IndexALERT’s™
worst accumulative drawdown on the Global portfolio (all 8 index markets)
has been roughly AUD25,000. In addition to the drawdown you would also need
to keep in mind the capital required to fund the margin requirements.
hope this makes sense?
Am I correct in assuming IndexALERT uses support & resistance levels
combined with a breakout methodology for the alert service and that you are
not using your patterns (like you use for SpiTrader and IndexTrader)? Can I
IndexALERT does use patterns to identify potential
support and resistant levels. It may sound a little confusing as most
traders associate support and resistance levels with fibonacci price
retracements/extensions, trend lines, double tops/bottoms, swing highs/lows
etc. What I use in my models and IndexALERT are simple price patterns.
Does IndexAlert go off the same signals as IndexTrader and how long have you
IndexALERT does incorporate IndexTrader but it is
also more then IndexTrader. IndexTrader contains a portfolio of 4
patterns. IndexALERT trades a larger portfolio of patterns which do
include the 4 patterns IndexTrader has. I started trading IndexTrader with
the expanded portfolio (SPI and Hang Seng) in November 2002 and added more
markets as my account balance grew and I started trading IndexALERT
in January 2004 when I launched it.
Does the IndexALERT's back tested results include slippage and brokerage?
How many people trade the IndexALERT system and does that make a difference
Well that's a personal question and I hope you can understand my preference
to keep that information to myself. But to answer the second part of your
question about whether too many people will make a difference to slippage, I
don't know. However I suspect it won’t for a number of reasons. Firstly
IndexALERT is only
available to private traders. Since institutional traders dominated the
futures markets (i.e. CTAs running managed futures hedge funds) I can’t
believe that IndexALERT with its private subscribers will cause too much of
a ripple. And secondly IndexALERT only trades liquid markets. The equity
indices are one of the most liquid sectors traded where thousands of
contracts are executed each day. So I can't imagine IndexALERT private
subscribers will make much of a splash in these huge markets. But
suppose you can never know until you experience some wild slippage. If down
the track I feel too many subscribers are entering and exiting at my levels
and are disadvantaging me since I als trade IndexALERT then I’ll stop
receiving new subscriptions and cease the service.
What was the largest draw down when trading all indexes?
Roughly AUD25,000 (which does include an estimate for brokerage and
Nasdaq and SP500 markets the full contract or E-minis?
When does IndexALERT come out? The portfolio I trade will span across 24
hours. What time I will receive the orders daily?
I attempt to get the
email out by 9:00am each morning.
I enjoyed the seminar again and will probably subscribe to IndexALERT.
However, I'm concerned that as more people subscribe, slippage will increase
and expectancy will suffer. How many/what volume is there at the moment and
at what stage do you stop accepting new subscribers.
glad you enjoyed my presentation and I hope I didn't bore you too much going
over the old ground of why we lose so often ... even I was getting tired of
it! That's a good question about IndexALERT. Essentially it is my policy
that once I feel too many people are entering and exiting at my levels and
causing me too much slippage then I will remove the particular model or
IndexALERT from the web site. As you know I trade everything I offer and
that's my priority.
Naturally people who have the models will continue to have them. Subscribers
will continue to receive IndexALERT but I won't accept new subscribers.
I'll then monitor my slippage and see how it goes ...letting the new
subscribers fall away (not allowing them to renew) until I'm happy with the
remaining subscriber group. It'll then become a closed group and I'll only
accept new subscribers if old ones roll off.
I suppose the question is how many subscribers will it take to impact my
fills. I don't really know. I think it'll have to take a large number
because global indices are huge. Our SPI is probably the smallest index but
its still averaging around 20,000 contracts a day which is plenty. So I
think there will be plenty of room for traders to jump in and out at my
But as I
said. If I'm disadvantaging myself then I'll pull the models and stop
accepting new subscribers.
Is it possible to get your brokers details to verify actual trades?
No worries. Matt Andronicus is my broker and you can get his details off my
web site on the Broker page above.
What happens to the
daily newsletter when you go on holidays or if you get sick?
When I go away I let my subscribers know in advance and I suspend their
subscription until I return. When I'm sick I keep going. If I feel I'm not
even able to do that I will send out a newsletter to manage any open
positions but I wont initiate any new trades.
My situation is - I’m an
institutional only ASX broker, traded equities for years, dabbled with bonds
+ SPI. Your alert came along at a point I’m looking to diversify (primarily
commodities/currencies). Although I watch markets all day I can’t be on the
phone to brokers, I would need to setup an a/c with a futures broker who had
some software where I could set and forget orders on markets which trade in
my time zone (and I’d probably have my wife do this at home). Can you
recommend a broker who would have the right software?
sure whether going with a broker who has the software to allow you to set
and forget is the way to go?
the ultimate electronic broker you can use is Interactive Broker (IB) who
have the most competitive brokerage and they allow third party applications
which plug into IB's order execution software. These 3rd party applications
allow you to set and forget ... if you can work them out!
Now it all
I have used
IB years ago and they were fantastic, however it takes some courage to set
and forget. The are no issues when the world operates perfectly. Your PC
will never go down, it'll be on 24 hours a day. It will never receive a
virus. IB's Asian Server in Hong Kong similarly will never go off line when
you have an open position and Telstra's telephone exchanges will never
experience interruptions etc, etc.
Can you see
where I'm going with this?
it depends on how brave you want to be. However you can always bet that when
you have a large position on Murphy's Law will strike and you'll receive a
huge bite on the backside! Your PC may become infected, your brokers' server
may go off line etc. etc.
general advice is not to be too worried about going electronic. As you know
my orders are involved and I think you or your wife will have more peace of
mind when the order is handed over to a human broker - an old fashion Client
I personally use a Client Advisor.
For a list of brokers who are familiar with IndexALERT you can click on the
Brokers link above.
Btw I don't
receive any benefit from suggesting certain brokers. I do it because I know
they can execute my types of orders.