Trading Methodology and Philosophy

 

A.Trading Strategy

ICA Managed Accounts Program aims to combine sophisticated risk management models, with a high probability market patterns recognition technique. Our strategy is featured by: 

  • Risk Management representing 70% of our trading strategy
  • Discretionary trading strategy with the same 6 pattern setups executed repeatedly.

Our 6 patterns are a combination of Elliot Waves, Harmonic, Fibonacci Arc, and Channel patterns.

These patterns are drawn on Daily and 4 hours charts.

The portfolio manager also has defined 2 market behaviors which would be considered as the trigger of these 6 developed patterns. 

  • The system provides us between 2 to maximum 5 tradable signals in a week.
    • Target of 140 trades per year.
    • The trade life span has an average of 36 hours.
    • Target of only 50% winning percentage. (Winning 70 trades from the 140 trades)
    • Target of 3% profit per trade, while risking 1.5%. (Reward/Risk = 2)
    • Target of 12% per month, and 140% per year.

 Our program is mainly invested into Foreign ExchangeMarket with a return goal of +140% per year.

The system has been implemented for managing live accounts for the year 2009, achieved +165% compounded net profits.

B.Philosophy and Vision

ICA has developed a combination of 7 theories:

The Heisenberg principle- If something is closely observed, the odds are it is going to be altered in the process.
The more a price pattern is observed by speculators the more prone you have false signals; the more the market is a product of non speculative activity, the greater the significance of technical breakout.

Jesse Livermore : there is the plain fool, who does the wrong thing all times everywhere, but there is the wall street fool, who thinks he must trade all the time.

Warren Buffet: Diversification is a protection against ignorance. It makes very little sense for those who know what they are doing.

George Soros: It is not about how many you win or how many you lose, it is about how much you make in the profitable trade, and how much you lose in the losing trade.

Gil Blake: You can diversify very well by just making enough trades per year.

Van Tharp: The simple truth is that most people are risk-aversive in the realm of profits - they prefer a sure, smaller gain to a wise gamble for a large gain.
And risk-seeking in the realm of losses - they prefer an unwise gamble to a sure loss- they cut their profits short and let their losses run.

 Bill Lipschutz: Always understand the risk/reward of the trade as it now stands, not as it existed when you put the position on.
Some people say, "I was playing with the market's money" that's the most ridiculous thing I ever heard.