Trade Execution and Strategies

Trade Execution

Our timing signals are computer generated each trading day in the evening after the markets have closed. Subscribers are sent an email with the current signal before the markets open the next trading day. We send this notification before EVERY trading day even if there is no change in position. Emails do become lost or deleted and email servers do have down time on occasion. So that you can always check the latest signal, you will be given a user name and password to our "Members" page where signals are also updated every day.

Our computer model generates one of three signals each day. Either CASH, BUY or SELL.

A CASH signal indicates that the model is unsure of the direction of the market and subscribers should move to the safety of the money market fund.

A BUY signal in indicates that the model expects the market to move up and subscribers should move to the mutual fund that will increase in value as the market advances. Appropriate investment vehicles are listed below for various strategies that a subscriber may select.

A SELL signal in indicates that the model expects the market to move down and you should move to the fund that will increase in value as the market declines. Appropriate investments are listed below for strategies subscribers may select. (Trades in IRA's and other qualified retirement accounts or those simply not wishing to profit from a market decline should move to the safety of the money market fund during SELL signals.)

Trades or exchanges should be executed as soon as possible after the model generates a new signal. In most cases this execution will be the close of trading on the next business day after our signal is generated because nearly all mutual funds set prices just once a day at the close of business. We recommend that subscribers move 100% of the market capital that they've designated for this program to the appropriate signal position.

Subscribers using an investment vehicle that allows trades to be placed at the open of the next day, such as the QQQ or SPY, may wish to make signal changes as soon as possible. Long term results may be improved slightly by executing trades at the open the following day instead of the close. However, historical performance shows slightly better results by executing trades on the "next day's close" after the signal date.

Most mutual funds now allow exchange orders to be placed on-line or by telephone. We prefer to use the on-line method but you are free to use which ever feels more comfortable to you. Just be sure to place your order early enough to receive execution at the earliest possible opportunity.

Trading Strategies

Our timing model has been designed to work best on funds correlated to the S&P 500 Index. Below are several fund groups and other strategies subscribers can employ to use our system. Although we don't recommend one mutual fund group below over another, we do recommend using no-load mutual funds versus some of the other strategies outlined. Exchange traded trusts (ETF's) such as QQQ and SPY are also assumed to have been purchased or sold at the close of the day following the Buy, Cash or Sell signal.

Funds below with a beta of 1.0 will experience approximately the same volatility as the base index. Those with a beta of 2.0, for instance, attempt to have twice the volatility of the base index. Funds with a beta over 1.0 offer the potential for much higher annual returns but also result in much higher fluctuations in equity. You should decide whether higher potential return or less equity volatility is more important to you when selecting the investment vehicle to use with our service.

Pro Funds No-Load 1.0 Beta Strategy
www.profunds.com (888) 776-3637
BUY Signal - Bull Fund (fund attempts to mirror 100% of the return of the S&P 500 Index)
SELL Signal - Bear Fund (fund attempts to mirror 100% of the opposite of the return of the S&P 500 Index)
CASH Signal - Money Market Fund
$1.00 invested in 1987 would have grown to $163.30
Approximate Total Return from 1/1/1987 to 12/31/2004: +16,230.16%
Approximate Compound Annual Return from 1/1/1987 to 12/31/2004: +32.71%
Largest Drawdown From Peak: -19.48% Worst Losing Trade: -8.78%
vs.
Buy/Hold 1.0 Beta Compound Annual Return from 1/1/1987 to 12/31/2004: +9.25%
Buy/Hold 1.0 Beta Largest Drawdown From Peak: -49.15%
Buy/Hold $1.00 invested in 1987 would have grown to $4.91

Pro Funds No-Load 2.0 Beta Strategy
www.profunds.com (888) 776-3637
BUY Signal - UltraBull Fund (fund attempts to mirror 200% of the return of the S&P 500 Index)
SELL Signal - UltraBear Fund (fund attempts to mirror 200% of the opposite of the return of the S&P 500 Index)
CASH Signal - Money Market Fund
$1.00 invested in 1987 would have grown to $15,029.14
Approximate Total Return from 1/1/1987 to 12/31/2004: +1,502,814.94%
Approximate Compound Annual Return from 1/1/1987 to 12/31/2004: +70.59%
Largest Drawdown From Peak: -38.29% Worst Losing Trade: -17.56%
vs.
Buy/Hold 2.0 Beta Compound Annual Return from 1/1/1987 to 12/31/2004: +12.86%
Buy/Hold 2.0 Beta Largest Drawdown From Peak: -53.46%
Buy/Hold $1.00 invested in 1987 would have grown to $8.84

Rydex Funds No-Load 1.5 Beta Strategy
www.rydexfunds.com (800) 820-0888
BUY Signal - Nova Fund (fund attempts to mirror 150% of the return of the S&P 500 Index)
SELL Signal - Ursa Fund (fund attempts to mirror 100% of the opposite of the return of the S&P 500 Index)
CASH Signal - Money Market Fund
$1.00 invested in 1987 would have grown to $757.92
Approximate Total Return from 1/1/1987 to 12/31/2004: +75,692.32%
Approximate Compound Annual Return from 1/1/1987 to 12/31/2004: +44.51%
Largest Drawdown From Peak: -28.96% Worst Losing Trade: -10.49%
vs.
Buy/Hold 1.5 Beta Compound Annual Return from 1/1/1987 to 12/31/2004: +11.25%
Buy/Hold 1.5 Beta Largest Drawdown From Peak: -51.94%
Buy/Hold $1.00 invested in 1987 would have grown to $6.81

Rydex Funds No-Load 2.0 Beta Strategy
www.rydexfunds.com (800) 820-0888
BUY Signal - Titan 500 Fund (fund attempts to mirror 200% of the return of the S&P 500 Index)
SELL Signal - Tempest 500 Fund (fund attempts to mirror 200% of the opposite of the return of the S&P 500 Index)
CASH Signal - Money Market Fund
$1.00 invested in 1987 would have grown to $15,029.14
Approximate Total Return from 1/1/1987 to 12/31/2004: +1,502,814.94%
Approximate Compound Annual Return from 1/1/1987 to 12/31/2004: +70.59%
Largest Drawdown From Peak: -38.29% Worst Losing Trade: -17.56%
vs.
Buy/Hold 2.0 Beta Compound Annual Return from 1/1/1987 to 12/31/2004: +12.86%
Buy/Hold 2.0 Beta Largest Drawdown From Peak: -53.46%
Buy/Hold $1.00 invested in 1987 would have grown to $8.84

Standard & Poors Depository Receipts
SPY (Trades on AMEX)
BUY Signal - SPY (Buy long in broker margin account)
SELL Signal - SPY (Sell short in broker margin account)
CASH Signal - Broker's Money Market Fund
(Commissions and slippage not included below)
$1.00 invested in 1987 would have grown to $163.30
Approximate Total Return from 1/1/1987 to 12/31/2004: +16,230.16%
Approximate Compound Annual Return from 1/1/1987 to 12/31/2004: +32.71%
Largest Drawdown From Peak: -19.48% Worst Losing Trade: -8.78%
vs.
Buy/Hold 1.0 Beta Compound Annual Return from 1/1/1987 to 12/31/2004: +9.25%
Buy/Hold 1.0 Beta Largest Drawdown From Peak: -49.15%
Buy/Hold $1.00 invested in 1987 would have grown to $4.91

Nasdaq-100 Trust
QQQ (Trades on AMEX)
BUY Signal - QQQ (Buy long in broker margin account)
SELL Signal - QQQ (Sell short in broker margin account)
CASH Signal - Broker's Money Market Fund
(Commissions and slippage not included below)
$1.00 invested in 1987 would have grown to $1,759.78
Approximate Total Return from 1/1/1987 to 12/31/2004: +175,878.42%
Approximate Compound Annual Return from 1/1/1987 to 12/31/2004: +51.43%
Largest Drawdown From Peak: -34.26% Worst Losing Trade: -17.25%
vs.
Buy/Hold 1.0 Beta Compound Annual Return from 1/1/1987 to 12/31/2004: +14.44%
Buy/Hold 1.0 Beta Largest Drawdown From Peak: -82.90%
Buy/Hold $1.00 invested in 1987 would have grown to $11.34

If you are unable to use the above fund groups in your retirement or other account, you may use the fund that most resembles the S&P 500 as your BUY signal investment vehicle and move to the money market fund when a CASH or SELL signal is issued.

Your returns should approximate slightly less than those of the 1.0 Beta strategy above if you cannot use a short position fund. Please check with your mutual fund group to make sure you are allowed to make multiple exchanges between funds.

Historical Trades

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