The market was looking for a reason to sell off and Libya was the answer; however, the market is struggling to push past 1350 and volume was very heavy on the downside.  Strength is definitely towards the downside as we saw over a month's worth of gains wiped out in two days.

We outperformed the market by nearly 3 percentage points, as the markets tumbled hard this past week; however, we were hedged out for most of February as we attempted to close the books on our first 12 months performance, a fantastic 42.61%. 

NOTE:

I will be sending out another notice on some meetings that will take place in the next couple months to discuss ways you can take advantage of this system and application with your existing financial accounts (TradeStation is the broker for this system and as such you will work directly with TradeStation allowing us to operate BladeTrader against any account or amount you specify, other brokerage firms may or may not allow automated trading).

  If I told you, you could make 40% a year on your investment but at any given time you may lose 25% before you make that 40%.  Would you take it?  

What if you could make 8% on your investment, but you may lose 60% at any given period of time.

What if you could make 3% a year on your investment, but you would only lose 3%?

The above scenarios represents the risk associated with BladeTrader, the S&P, and various Bonds respectively (for recent 10 year periods).  When reading BladeTrader's risk profile this seems horrible, but compared to the next two, you might be thinking its pretty good.  But how does BladeTrader risk upwards of 25%?

When analyzing risk, you must think "peak to trough" in your analysis.  For instance, the peak in the S&P was roughly 1565 and the trough was 666 (recent trough).  This gives you a 57% decline, "peak to trough" risk profile--and "they" want you to buy and hold (are they serious?).  BladeTrader operates similarly, but we can hedge instruments and reduce risk to roughly 10% of the capital, since the hedge is covering the losses on the other side.  In most cases, as the market continues to decline, BladeTrader will short the market and collect profits on the way down, and then make profits on the way back up.

Risks associated with Bonds are diabolical sometimes, but for the most part represent just as much risk as Stocks, but with far less returns and can be even further eroded with inflation (I will discuss bond futures in another email and how they offer a great hedge against your portfolio while producing great profit potentially).

In the end, it doesn't matter what indicator you pick, or what type of trader you are, it all comes down to Risk profiles.  Can you stomach a 10% loss, what about a 25% loss, 50% loss?  

BladeTrader has "Peak to Trough" risk of 25% unhedged and for this last year showed only a 6% drawdown in reality (as it was properly hedged).  Interestingly enough, these drawdowns are usually during extreme event driven markets that rebound sharply in one direction or another covering any loss and making substantial gains afterwards.  BladeTrader thrives on volatility as it tries to capture profits on the up and downside.  I like to think that its a system that builds profits and then protects them (if not add to the profits) when the markets go south.