A Site Dedicated to Forex & Index Trading

SpiTrader Frequently Asked Questions

I'm interested in purchasing and would like to check this out further. Can you supply me with names of 2 or 3 people who have purchased SpiTrader and could you also supply me with some professional references such as your broker?
No problems and you're more than welcome to contact my broker. If you decide to consider SpiTrader and are looking for a reliable broker I can recommend a few who are familiar with the orders...which will give you added support encase you get an order back-to-front. :o) 

Do you trade SpiTrader yourself?
Yes I do.

How do your own results compare to what the system says should be achieved?
From October 2007 they're about spot on. Why not go to my home page and request a copy of my real time results?

How long have you been trading it privately?
Since April 2001 when SpiTrader was originally released. But from November 2002 I started trading SpiTrader in its "new" IndexTrader form across global index markets. You'll see my real time IndexTrader results when you request a copy. Since October 2007 I have recommenced trading my original SpiTrader model.

What sort of slippage do you experience on the local SPI contract?
I rarely get much slippage on the SPI and this is mainly due to SpiTrader's entry and exit techniques…...however I have at times experienced slippage when being stopped out and it is usually around 1 to 2  point...however overnigt can be up to 5 say sometimes 10 points.

Can you explain why you bother to sell SpiTrader?
There were two reasons behind why I decided to release SpiTrader to the public.

Firstly, my initial motivation was to make available a robust methodology to private traders. 

As experienced traders know private traders have been, and still are being taken advantage of by slick promoters peddling trading courses/systems/software that has little value. 

The catalyst for me to release a system was a very public run-in I had with a well known Australian trading educator and purported professional trader in 2000. This clash occurred on the WaveTraders forum. This person was, in my opinion, talking up a well publicised methodology which had no practical value except to sell books and trading courses. I took exception to this in that his spin had probably sent all the "newies" on the forum off on a wild goose chase when I felt this person also knew it had little value and in all probability did not use it himself in his own trading (if in actual fact he traded at all?). The only benefit I could see that he gained from the spin was to promote himself as being knowledgeable to the less knowledgeable members. 

After our clash I decided to make something available to the private trader, get licensed by ASIC and trade it myself. By doing so I hoped, and still do, that it will encourage all other genuine promoters of trading courses/systems/software to become licensed by ASIC and actually follow/trade/use/implement what they push...i.e. walk their talk.

The second reason why I sell SpiTrader is the same reason as to why I trade…..and that is to make money. By selling SpiTrader I hope to build my capital faster so I can shorten the time it will take me to really begin to enjoy the power of money management.

In addition SpiTrader doesn't represent every system I trade so I'm not giving away everything I do. SpiTrader only represents a handful of the patterns I trade.

You said "By selling SpiTrader I hope to build my capital faster so I can shorten the  time it will take me to really begin to enjoy the power of money management."  I must be missing something about money management. I'm a bit confused as to why you would demonstrate trading without the money management. Wouldn't that be more of an enticement to prospective buyers given the improvement you document in your Money Management section? I thought money management was basically the deployment of stop-loss orders to ensure profits were protected and losses minimised (as much as stop-loss can offer).  Why can't you "enjoy the power of money management" with whatever capital you have?
Money Management is indirectly linked to stop placement, but is not driven by stops.

I think you may be confused. 

When we trade we hope to do so with a robust methodology. 

Our methodology, if we hope to survive the markets should have 3 important elements. 

1. A set-up - what is our view of the market, should we be looking to get long or short? 

2. A Trade Plan - how do we articulate our view on the market eg.

Ø     Where do I enter...where do I buy/sell?

Ø  Where do I get out if the market proves me wrong eg my stop    placement?

Ø    If I'm right, where should I take profits .. my exit level?

 3. Money Management - given my account size and the amount of money per contract I'm risking on my trade, how many contracts can I afford to trade?

You see, stops are all about a methodology's "risk management", not money management. Money management tells us how many contracts we can afford to trade given our account balance. The greater our account balance the more contracts we should be able to trade. So stop placement refers to a system’s "risk management", how much money will you risk per contract.

SpiTrader always trades with a stop.

Until my SpiTrader account balance grows I am restricted to just trading 1 contract. Once I step-up to two contracts then I’ll expect my account to grow at a faster pace with Money Management. And I must say I am actually using Money Management at the moment because according to my Money Management rules I can't afford to trade more than 1 contract.

Thanks for your clear, honest answers.  Another SpiTrader question to help me understand what I would be purchasing. You mentioned that the methodology contains patterns. If an account permits 1 or 2 trades, do all patterns generate signals, or does one pick a pattern and use it exclusively ?
SpiTrader consists of a collection of patterns that produce on average 4 signals per month. SpiTrader is not interested in quantity but rather quality of trade potential. Each signal is taken unless two patterns generate a signal for the same day session in which case only the highest ranked pattern’s signal will be traded. SpiTrader only allows you to trade one signal a day.

On the money management issue, I have another question. Does your methodology include a unique management scheme/approach? I mean, is that one of the reasons to buy SpiTrader? Or does one buy it primarily for the patterns? I'm in a bit of knowledge vacuum as to what it takes to get the curve going up exponentially steeper.
SpiTrader doesn't disclose a "unique" approach to money management. It just discloses a good one.

I believe the reason to buy SpiTrader is that it provides a complete approach to  trading. SpiTrader provides high probability set-ups (patterns) combined with a robust trade plan (entry/stop/take profits), money management and an original approach to trading psychology.

In addition SpiTrader has an historical statistical positive expectancy of over 30%. And lastly, but not least, another reason why I believe people purchase SpiTrader is that the developer (me) also trades his own system  ..... which is very unusual  in this business!

No doubt some of the owners have customised SpiTrader to make it their own or have just bought it for the patterns or trade plan or money management or trading psychology. However overall I believe people have purchased SpiTrader for its complete methodology.

I've been trading now for 20 years having begun in 1983 when I joined Bank America as a trainee dealer. I can't say (although it does feel like it) that I have seen and tried just about every methodology there is to trading, however if I had access to the knowledge I have now, or a complete methodology like SpiTrader, then I wouldn't have received all the bumps and bruises that I’ve collected over the  years!

However, rather than hearing me blowing my own trumpet its probably better you contact some SpiTrader owners and ask them what they think.

The maths behind Money Management is really simple....it just means you trade more contracts as your balance increases and you decrease the number of contracts to trade as your balance falls from loses. It is essentially about momentum. The trick with money management is to stay in the game long enough so you can get your account up enough to take advantage of multiple contracts.

I can recommend Van Tharp's "Trade Your Way To Financial Freedom" as an excellent trading book that contains a section on money management. It would definitely be worth your expense to purchase it. I hope this helps.

Thanks Brent I've bought the Van Tharp text and am enjoying. I won't bother you with any more questions until I've read it all. 3 of the 6 contacts you gave me have responded with positive things to say about you and your methodology while the other 3 haven’t responded as yet.
Pleasure and I'm glad you're enjoying it and once again don't hesitate to contact me if you have any questions.

Ok, I will bother you with one or two. If I wanted to check SpiTrader and back test it myself on the SPI, where would I get the  data ?
I send SpiTrader owners a copy of my own data.

In the manual I strongly recommend owners to complete their own back testing to validate SpiTrader's trading results before they consider trading the signals. I encourage people to do this as they firstly need to prove to themselves that what they see on the web site regarding SpiTrader's historical performance is correct, and secondly, and more importantly, they need to develop their own belief system that SpiTrader has an edge. If people do their own testing and validate SpiTrader then they'll have more confidence in continuing to trade the system when they're in a drawdown.

Also what concepts are inherent in your patterns as Van Tharp makes a big deal about understanding the concept?
SpiTrader's patterns capture recurring "crowd behaviour". Although markets change over time peoples’ reaction to fear, hope and greed has not, and this is what SpiTrader's patterns try to capture.

I've read Tharp's book. Everything is helpful for me at my stage. It would seem that 30  cents for every dollar is a little low for a system  that only trades 4 times a month.  Is that an incorrect view? Is the objective high-R trades? Is the system looking for the long trend or shorter term swings?
I believe SpiTrader's 33% positive expectancy is good.

In a perfect world it would be ideal to trade a system that generates a signal each day which would produce 20 odd signals per month.

Unfortunately SpiTrader is unable to do this.

In general terms if you have two systems with a similar expectancy, say 30% then the system which produces more signals (or opportunities) per month would be superior.

Although SpiTrader only produces on average 4 signals per month its still enough to allow people to build their account (assuming the methodology remains robust).

I believe the objective of trading is to manage your capital, not to be right or wrong in your analysis. To do this you do need a methodology that produces a positive expectancy. It's also preferable to have a simpler methodology over a complex methodology to avoid "curve fitting".

Now a system's expectancy is made up of it's accuracy and average win to loss ratio (or "R" multiples as Van Tharp puts it).

Since there are two variables...accuracy and average win to loss ratio...I would say neither is more important than the other....as its their combination that creates the positive expectancy.

However, having said that, we traders are different from one another.

So one trader may prefer a high accuracy system with a small average win to loss ratio, while another trader may prefer a high average win to loss ratio (“R” multiple) while sacrificing accuracy.

So its difficult to say the objective is high "R" trades.

Although, once again in a perfect world, we would all like a robust methodology that had both a high accuracy rate and a high average profit to loss ratio (or "R" multiple).  I hope this makes sense?

SpiTrader is a short term trading system that can stay in a trade from between 1 to 5 days, with the average being 2 days.

To give me a little more feel for your system, could you overview say your stop  strategy. Is it based on equity%, volatility or combinations of things?
Unfortunately I can't tell you too much about SpiTrader because of its simplicity, if I did tell you a little then you'd know the whole methodology!

What I can say is that SpiTrader does not use a fix type stop. Markets are continually changing as their volatility jumps around the place. SpiTrader uses a dynamic stop that is a function of the market and not your equity account balance.

Can you give one liners to describe the money management system? Also, what's your basic strategy if you have positions in the spot period and rollover approaches.
I've already discussed a little about the Money Management, the only thing I can add is that its ultimately linked to the amount of money you have in your trading account and that you should reduce the number of contracts you trade as you lose, and  increase the number of contracts as you win.

SpiTrader’s™ manual specifically discusses issues surrounding contract roll-overs and what to do.

Do you offer money back if I don’t like your system?
Unfortunately I don't offer a money back guarantee. This is because once people have seen the model’s simple methodology it'll be permanently imprinted in their heads. Although they may be able to return the manual, they'll never be able to erase SpiTrader’s™ simple rules from their heads.....so it's almost impossible for people to truly "give back" their purchase for a refund. I wish this could be otherwise but unfortunately its not the case.

Can you explain the difference between SpiTrader and IndexTrader?
IndexTrader is SpiTrader renamed with four patterns removed and four markets added. In addition IndexTrader™ has a different Trade Plan.

I read through your web page and was fairly impressed with your trading model, but the price is quite expensive.  I would like to ask you a few questions if you don't mind regarding your system.
No problems.

Is the system provided in TS2000i code and is this code open?
Purchasers of the system receive SpiTrader's manual which fully discloses the model's simple methodology. Although I own TS4 I do all my own programming in VBA (Visual Basic for Applications) and so I don't have any TS code. Although code is not provided I'm confident in saying that SpiTrader's patterns would be easily programmable in Easy Language. If you have any trouble I'm sure I'd be able to assist you.

The performance statistics seem to suggest its only in a position for 2 day? 
This is correct, being a short term system SpiTrader, if its not stopped out immediately, is usually out of the market with its money within a couple of days. The benefit of this is that traders don't have to be "in the market" all the time reducing their exposure to markets which are basically random and thus unpredictable in nature.

It seems hard to believe that holding the position for only 2 days that you could achieve 70% wins? Almost no system can maintain this sort of result.  Can you suggest as to credibility of these numbers and your belief into their sustainability in light of the fact so few systems are able to?
Good question. 

I can't give any creditability to SpiTrader's performance except to say that I trade it and IndexTrader and that my real time results can speak for themselves. In addition the model has stood the test of time since it was originally released in April 2001 with both IndexTraderand SpiTrader's equity curves still rising. 

However with markets and systems there are no certainties that both will continue to behave in the future as they have in the past. I always believe my worst, and therefore SpiTrader's worst draw down, is just around the corner. 

Your question I suppose cuts straight to the robustness of SpiTrader's methodology. Although I can't say whether SpiTrader will continue to have an edge going forward (as no one with any experience in trading and systems can say that about any model) I can say that SpiTrader's ability to continue to extract profits (hypothetically) since its original release in 2001 speaks volumes for it's simple trading methodology. 

In addition when I originally designed SpiTrader in 2000 it was during a period of unprecedented bullishness. 

Global equities had been in a bull market since the earlier 1980s without a sign of slowing down. 

By perfect timing (NOT) I released SpiTrader just after the global indices had topped. The markets were then slaughtered before finding a bottom in March 2003 and have rallied strong ever since. As I've said there are no guarantees that SpiTrader will continue to perform in the future however I believe it's ability to extract profits (hypothetically) from out-of-sample data that experienced both bear market and bull market conditions speaks volume for its simple trading methodology. 

Can you provide a list of the trades that you have taken on the SPI?
Unfortunately I don't and the reason for this is that it wouldn't take much effort for someone to work out SpiTrader's simple methodology from its trading signals. I hope you can understand my reluctance. However I can say that purchasers of SpiTrader do receive an excel file containing all trade signals. If you wish I'd be happy to give you names of owners of SpiTrader who you could contact about the model.

Your largest winning SPI trade is 298 points. How is this possible if only holding for 2 days and there has not been a move of that magnitude?
Although it may appear weird I can say the trade signal did appear and there was such a trade.  

You mention it is pattern based.  Is it also a breakout type system?
SpiTrader's methodology is broken down into set-ups and a trade plan. The set-ups are purely pattern based (with no parameters) and identify possible buy or sell opportunities. The trade plan provides clear and precise entry and exit rules. The set-ups are purely pattern based.

Does the system actually have no optimiseable parameters?
The set-ups are purely pattern based with no parameters. SpiTrader doesn't use indicators of any sort so there aren't any parameters to "tweak".

Have you had a lot of experience at designing and implementing trading models?
I first traded the SPI in 1986 and only started to make money (and lose less money) since I became totally mechanical in 1998. I wouldn't call myself an expert system designer (and would be suspicious of anyone who did…since in this game you’re continually learning) however I've collected enough knocks and battle scars over my 20 years in trading to know what certainly does NOT work, and what does have a small edge.

As your method is very short term, do you believe its performance will be adversely affected (SPI only here) by others following your rules?
I'm not sure. In theory if every trader wanted to enter where SpiTrader did then we wouldn't have a market (since everyone would want to buy/sell at the same level) and therefore the model would not work. So far, since I have restricted SpiTrader to private traders, it hasn't been a problem.

Is your method based on just day only session of the SPI?
Yes, all the patterns' set-ups are based on day only session prices represented by the Open, High, Low and Close.

I hope you don't feel flooded by so many questions :-) I don't mean to grill you, but as your selling price is so high I feel I must do due diligence to justify the price. I would much appreciate if you could take a few moments and responded to my enquiries as best you can.  I may have other questions following your reply but I think I have covered most things here for now?
No problems. I hope this answers your questions and please do not hesitate to contact me again if you have any further questions.  

I am interested in your system but am worried for several reasons. How many have you sold and how many more do you intend to sell? Personal questions, I know but relevant since you are asking a 'not small' investment for this pattern.
Good question.

I've been asked this question a number of times and is one I'd prefer not to answer because as you say, its a personal question.

However your question does address an important concern for people considering SpiTrader.

Will the model maintain its edge as it becomes popular among private SPI traders?

As you know I can’t give you any guarantees that SpiTrader will continue to perform in the future as well as it has in the past, however I can share with you my thoughts.

Straight off its my intention to remove either SpiTrader, IndexTrader or IndexALERT from public sale or subscription once;

1.    I believe too many people are entering at my levels and causing me too much slippage or,

2.    The patterns appear to be losing their edge due to too many people being on my side of the trade.

As I trade SpiTrader its not in my interest to let too many people trade at my levels and this is why I restrict SpiTrader to only private traders.

I actually had a CTA order a copy of SpiTrader (its name change to IndexTrader) and I refused as I didn't want to risk the possibility of being trampled by an "elephant", even though I believe it would have only been a remote possibility due to SpiTrader’s simple, yet robust, methodology.

How many sales of SpiTrader will this take before too many people will cause me too much slippage and reduce SpiTrader’s edge?

I don’t know.

However I believe it may not become a problem for a number of reasons; 

1. Liquidity of entry and exit levels. There are certain points in market structure that are more liquid than others, where for less liquid points slippage can be a problem. SpiTrader's simple methodology has identified entry and exit levels which are very liquid spots in the market thereby minimising potential slippage.
2. Personalised trade plans. Traders have a tendency to slightly modify systems to make them their own. Some traders may adjust SpiTrader’s entry and exit levels to be in either earlier or later, thereby removing activity around the trigger points. Alternatively some people may have their own Trade Plan and only purchase SpiTrader for its patterns.

Anyway these are just my thoughts and as I’ve said as soon as I feel I'm being disadvantaged on my fills or the patterns appear to be losing their edge I'll remove SpiTrader from public sale.

Honestly there are a few simple pattern systems around that are well known. I hope this is not a pivot system OR a Donchian/Turtle style buy the 21 bar high/low system.
I can assure you that SpiTrader is not a Support and Resistant Pivot system or a Channel Breakout System like the Turtle 4 week (20 day) breakout model.

SpiTrader’s patterns are surprisingly simple and only contain daily bars with the Open, High, Low and Close. SpiTrader's patterns will jump off the charts once you start looking for them.

Top Of Page