Our trading programs are designed for above average returns across markets non-correlated to typical stock and bond investments.
Risk Management and Research
All trading decisions start with risk management, not charting patterns or technical indicators. Risk management is the first item we focus on. Why? Our firm believes that future profitability is built on today’s risk management. Tomorrow’s opportunities are wasted if you do not have capital to trade them.
Our goal of producing long-term compounded profits for our clients is best delivered through a process of continual research. We are determined to build a method which profits in a variety of market conditions. Our research team constantly looks for better markets and more effective ways to utilize capital while keeping risk balanced.
Human emotions can be detrimental to trading success. Most humans cannot make efficient decisions under stress. Markets are constantly changing. When unexpected events happen, it is best to know how you will react in advance. For this reason we program market contingencies into the model to minimize human thinking in real time. Reactions to events are then treated in a scientific method, rather than with excitement and emotion.
Trading ideas and strategies are researched and evaluated using statistical benchmarking before being implemented in real time. Each market and trading idea must meet specific criteria before it is included in our trading program. We do not trade markets solely for diversification. Markets must offer net performance as well as diversification before we will use them in the portfolio. This is one key area that separates us from our peers.
Our programs offer diversification generally unmatched in traditional investments. Few other investments allow an individual to diversify across such a wide range of markets in one vehicle. The system looks for trading opportunities in 40+ global markets in the following market sectors: Currencies, Energies, Grains, US based Interest Rates, International Interest Rates, Meats, Global Soft Commodities, and Global Stock Indexes.
For this reason our performance is nearly uncorrelated to the major market indexes in the United States, Europe and Asia.
|Correlation of Chadwick Global Large to Benchmark Indexes|
|Chadwick||Barclay’s||FTSE 100||Hang Seng||S&P 500|
|Chadwick Global Large||1.00|
|Barclay’s Bond Index||-0.03||1.00|
|FTSE 100 Stock Index||-0.14||0.15||1.00|
|Hang Seng Stock Index||-0.22||0.21||0.74||1.00|
|S&P 500 Stock Index||-0.234||0.13||0.90||0.74||1.00|
|Data shown is from June 2007 – January 2012|
Description of Benchmark Indexes
- Barclay’s US Aggregate Bond Index – The Barclay’s US Aggregate US Bond Index is a benchmark of US Treasury products. (Formerly the Lehman Brothers Bond Index)
- FTSE 100 Index – The FTSE 100 Index is a stock index created from the 100 largest capitalized companies listed on the London Stock Exchange.
- Hang Seng Index – The Hang Seng is a stock index created from the largest companies listed on the Hong Kong Stock Exchange.
- S&P 500 Index ® – The S&P 500 Index ® is an equity index created from the prices of 500 large-cap common stocks actively traded in the United States. S&P 500 ® is a trademark of The McGraw-Hill Companies.
There is no assurance that Chadwick’s investment programs will generate positive returns for their customers in the future. Past performance is not indicative of future results.
- Trading on non-US exchanges is not regulated by any US Government agency and may involve certain risks not applicable to trading on US Exchanges. You may be required to maintain deposits in foreign currency to satisfy margin rates set by foreign exchanges. In this circumstance your capital is at risk both to market movement and the movement of the non-US Dollar currency.
- In some circumstances futures contracts can become illiquid. This makes it difficult to establish or dispose of contracts. Although Chadwick intends to trade in liquid markets, no assurance can be given that Chadwick’s orders will be executed at or near the desired price.
- The use of Stop orders does not guarantee profits or losses set at a certain price. There may be extraordinary events which create circumstances where Stop orders are not executed as designed. Government actions in the market, the release of important statistics, or other macro events could create market volatility which causes a market to gap higher or lower in price. In situations such as these, programs may experience higher than normal risk in a market or market sector.
- Commodity prices are highly volatile. Price movements for commodities and futures are influenced by, among other things, changing supply and demand relationships; weather; agricultural, trade, fiscal, monetary, and exchange control programs and policies of governments; United States and foreign political and economic events and policies; changes in national and international interest rates and rates of inflation; currency devaluations and revaluations; and emotions of the marketplace. None of these factors can be controlled by Chadwick and no assurance can be given that Chadwick’s advice will result in profitable trades for a participating client or that a client will not incur losses.
- The low margin deposits normally required in commodity trading (typically between 2% and 15% of the value of the contract purchased or sold short) permit and extremely high degree of leverage. Accordingly, a relatively small price movement in a contract may result in immediate and substantial losses for the investor. For example, if at the time of purchase 10% of the price of a futures contract is deposited as margin, a 10% decrease in the price of the contract would, if the contract is then closed out, result in a total loss of the margin deposit before any deduction for brokerage commissions. A decrease of more than 10% would result in a loss of more than the total margin deposit. Thus, like other leverage investments, a trade may result in losses in excess of the amount invested.
- Most United States commodity exchanges limit fluctuations in certain commodity markets during a single day by means of a daily price limit. During a single trading day, no trades may be executed at prices beyond the daily limit. Once the price of a futures contract has increased or decreased to the limit point, positions cannot be taken or liquidated above or below the limit price. Price limits may affect Chadwick’s ability to execute orders in the Client’s account for one day or for several days. For instance a market may exceed a daily price limit making it impossible for Chadwick to liquidate a losing position for several days.
A more comprehensive list of program risks can be found in our Disclosure Document.