Fund & System Introduction. - Please Read This First

This Blog will be used as a comunications interface for Clients running managed accounts with us and using our packages of "Cross currency products".

Attached files of the packaged products recommended to buy into will be posted here and updates on how well the packages are doing will also be posted on weekends. Clients are of course welcome to post their feedback, questions, and even at times their fears & triumphs, as they watch their accounts grow, or decline as the case may be. All postings will be candidly answered.

Putting the standard risk disclaimers aside, we all know that there are No guarantees in the Forex trading. Unlike many, I shall make No promises to deliever, but will promise to always stand true to the potential that this system has to offer.

Before moving on to our currect product update. We will first take a technical look at what this Fund is about?. How the accounts will be traded?. And what to expect?. Clients would then be able to participate in future in-depth discussions, should the need arise.

This Fund is implementing a system that is based on interpretation of Elliot wave action through the use of the CCI indicator, weighted by an ADX factor.

The system used is called the Wave Segregation Index, (Wsi), and is based on a custom indicator that was designed by intergrating the above two indicators to make use of the following technical observations, and using them to confirm Elliot wave counts:-

If you were to superimpose both CCi and ADx indicators on one another, in one indicator window, the following would occur:-

1- Crosses arising from the superimposition of both indicators (CCI & ADX), give a preliminary signal of one higher degree wave termination, and the eruption of another. (See indented red & green arrows marked on the chart below.

2- Following such Gold & Dead crosses, the ADX measures the TREND. In essence, the ADX would meaure the maturity of the bull trend, so long as the CCI runs above it in a combined plot. And consequently measures maturity of the bear trend, when the CCI runs below it in a combined plot. (See illustrated blue labeled box outs in the figure above)

3- All wave reversals must be accompanied by an extreme swing of the ADX. These are indicated in the Figure above by red & green reversal arrows. Though the reader will note that there are other ADX extreme swings made that are not visually accompanied by a wave reversal, even these are accompanied by wave reversals of a lesser degree, if proper wave segregation is conducted by the WSi on a smaller decompressed time frame.

4- All Wave reversals/breakouts, MUST be accompanied by CCi Swing Failures or Bounces at, or close to The +/-100 levels. (As marked by the small black arrows numbered 1&3, and the red arrows numbered 2&4 on the figure below.

By adding together rules 3&4, it is concluded that, wave reversals and breakouts must be accompanied by an extreme reading of the ADx together with, a CCi swing failure or bounce around the +/-100 levels. This is really the corner stone behind establishing a working relation between the CCi, and ADx. Because by combining them into one index, it becomes possible to tell apart these CCi swings that lack continuation momentum, signaling reversal, and these that possess the necessary momentum for wave continuation, creating extensions.

Let us now see how.

We have filltered out possible whipsaws occuring at such CCi x ADx crosses by quantifying their relationship together into one that will now be called the Wsi shown below. Using the Wsi, progressive and regressive swings of the CCi can now be clearly and visually seperated apart, as illustrated on the chart below, and summarized by the following rules :-

1- The Wsi will signal the breakout of ANY impulse (motive) wave, by recording a reading > 1.5 for bull markets, and < -1.5 for bear markets. (See green dashed arrows on figure below). These blue and red spikes showing will be called motive pulses on the Wsi.

2- Corrective waves are signalled once the Wsi falls below 1.5 reading for bull markets. and rises above -1.5 for bear markets. In cases of corrective waves or pulses, the Wsi will continue to run entrapped between +1.5 --> -1.5 readings, and entwined with its signal line, throughout the duration of the corrective wave. See tan arrows above marking out the corrective pulses.

The Wsi therefore plots motive pulses to count motive waves, and distinctly lags in corrective pulses thus counting corrective waves

To correctly relate the generated pulse count in accordance with Elliot Nomenclature. The following rules are next implemented :-

1- Waves are counted in 1-5 in a succession of positive pulses + their corrections, or a succession of negative pulses + their corrections.

2- The 1st break in succession of positive pulses, and reversal into a negative pulse, Marks a wave-B in labelling. Similarly, the 1st break in succession of negative pulses, and reversal into a positive pulse Marks a wave-1. (See markings "B" & "1" on the chart below).

3- Failure of the Wsi to break above the <-1.5 to zero> zone during bear pulses, will signal completion of a wave-X, and continuation of a 2nd ABC in a complex correction down. This signal (X), also confirms an overall higher degree ABC correction in the making, that is coming after completion of a complete 5 wave advance of lesser degree. (See marking "X" on figure below).

4- An Extension or prolongation of several positive or negative pulses, signals an extended wave (Elliot's count of 9), and the progression or termination of such an extension can be confirmed early on by counting alltogether 9 peaks & bottoms made with the Wsi. (Example wave 5 on figure below).

A complete wave segregation example is shown on the chart below. Where the above rules are implemented to segregate a valid count for the Eurodollar spot currency from begining 2004 to current situation (Sept 08).

Having understood the strenght of the tool in our possession, we can now move on to the trading strategies that will be implemented by the FUND:-

A- Buying Market Bottoms - Market Turns, & Grand ABCs

Because the Wsi can confirm wave-X completions, The Fund can always accumlate precise market bottoms early on by taking limit longs at the 2.0, or 2.618 fib factor of the original lenght of wave-A. Effectively, the investor would have bought a Grand market turn. (See below).

A more accurate signal, regarding which fib factor to long from (2.0 or 2.618), can be readily taken off a decompressed (smaller) time frame as the Wsi breaks out into a Wave-1 on it. B- Buying TREND Retractions. (Waves 2 & 4)

The Wsi readily identifys corrective pulses, each time they are made. These in essence are corrective waves 2 & 4, that the Fund will always accumlate 38.2% --> 61.8% into for a breakout of the next TREND leg. (See chart above). Again a more accurate signal regarding the precise fib to accumulate at can be taken from a smaller decompressed frame that records a Wsi wave 1 signal.

C- Selling Market Tops

The Fund only shorts confirmations of higher degree ABC wave reversals, after confirming completion of lower degree wave extensions, by a valid Wsi 9 pulse count. See chart below. Targets are Fib related to wave A, or the original wave 2-4 Elliot channel line.
Having outlined the strategy, it now suffices to move on to " What to expect ?"

1- It is the duty of the fund manager to prepare the most opportune issues for engagement in accordance with the above strategies.

2- Such opportune issues will be regularly issued in "cross-currency-product" packages, and circulated amongst clients, showing :- co-related issues that will be accumlated at the same time, The accumulation range for each issue in a package, and the risk factor that will be endured, beyound which the manager will be hedging to curb drawdown, and generate side profits.

3- Positions are usually held for 3-4 month, with risk : reward potential of 1:6, and 1:12 for postions held over 6 month. That's why, at the manager's discretion holding times may be prolonged, if the manager envisions more lucrative extensions to a swing. Clients can however, ask to liquidate the profitable positions (or part of) anytime they see fit to their purpose - by direct mail request to the manager.

4- Usually positive carry crosses are accumulated in, so as to make additional profits during accumulation or consolidation periods.

Finally, though we do make every effort & service to encourage investors and speculators participation into the fund, bellow is listed A Risk Disclosure that truly applies to this investment model, so Please take the time to read & digest it Very Carefully.