FX Quant / Options Quant Combine

FX Quant / Options Quant Combined

You might consider combined trading of FX Quant 10 and Options Quant programs to diversify your trading.

FX Quant

Options Quant

Advantages

- Very large positions and accounts can be traded without performance degradation

- Backtesting is 100% objective, as it is performed with spot Forex prices (roll-over/interest on open positions is not taken into account)

- Trades only once a day, at NY close (21:00 GMT)

- If needed, compounding (profit reinvesting) can be done every month

- Earn interest on unused account margin

- Small variability of returns and superior risk-adjusted returns

- Excellent Sharpe, Sortino and Sterling ratios can be achieved

- Makes only 1-3 trades per month

- 3-Month US T-Bills can be hold in the same account (as margin collateral); Interest adds to trading profit.

Disadvantages

- Larger variability of returns and larger drawdowns

- Liquidity can be a problem when large positions are traded

- Backtesting is not that accurate as with FX Quant 10

- Profit can not be reinvested more frequently than once per year

Each trading system has its advantages and disadvantages, but trading both systems generally improves the risk-adjusted return.

To diversify further, you can consider a stock portfolio trading system: Equity-Quant.com.

Below is given the hypothetical composite equity curve of the FX Quant 10 and Options Quant program. Results from the former version of the Options Quant Program are used. The chart below is given only as an illustration of trading program combination.

Trading ES options along with Forex is also important for the following reason. When the leverage of the FX Quant 10 trading program is significantly below its long term average (the system is doing extremely well, making a new equity high, but a drawdown is expected), we can temporarily decrease the FX Quant 10 trading size and allocate more funds to the options program. We can later increase the Forex trading size once the leverage rises above its average.

Hypothetical Composite Performance Disclaimer

THIS COMPOSITE PERFORMANCE REPORT IS HYPOTHETICAL AND THESE TRADING ADVISORS HAVE NOT TRADED TOGETHER IN THE MANNER SHOWN IN THE COMPOSITE. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY MULTI-ADVISOR MANAGED ACCOUNT OR POOL WILL OR IS LIKELY TO ACHIEVE A COMPOSITE PERFORMANCE RECORD SIMILAR TO THAT SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN A HYPOTHETICAL COMPOSITE PERFORMANCE RECORD AND THE ACTUAL RECORD SUBSEQUENTLY ACHIEVED.

ONE OF THE LIMITATIONS OF A HYPOTHETICAL COMPOSITE PERFORMANCE RECORD IS THAT DECISIONS RELATING TO THE SELECTION OF TRADING ADVISORS AND THE ALLOCATION OF ASSETS AMONG THOSE TRADING ADVISORS WERE MADE WITH THE BENEFIT OF HINDSIGHT BASED UPON THE HISTORICAL RATES OF RETURN OF THE SELECTED TRADING ADVISORS. THEREFORE, COMPOSITE PERFORMANCE RECORDS INVARIABLY SHOW POSITIVE RATES OF RETURN. ANOTHER INHERENT LIMITATION ON THESE RESULTS IS THAT THE ALLOCATION DECISIONS REFLECTED IN THE PERFORMANCE RECORDS WERE NOT MADE UNDER ACTUAL MARKET CONDITIONS AND, THEREFORE, CANNOT COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FURTHERMORE, THE COMPOSITE PERFORMANCE RECORD MAY BE DISTORTED BECAUSE THE ALLOCATION OF ASSETS CHANGES FROM TIME TO TIME AND THESE ADJUSTMENTS ARE NOT REFLECTED IN THE COMPOSITE.