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Robert Taylor’s Personal Trading Strategy:
Dear subscriber, I would like to share my Personal Trading Strategy with you, not
as trading advice but merely as a new type of proven trading methodology I designed
to best take advantage of the Xyber9 market forecasts.
My trading strategy supports
the percentage score results that are posted on the Home Page of this website. These
results are not audited nor do they include trading fees. The trading fees are extremely
low and my fund net returns are tax deferred, or better said, not subject to ordinary
income taxes, short term or long term capital gains taxes as long as I choose. The
scores are as accurate as best as I can determine.
The percentage scores on the
Home Page represent a comparison between my trading strategy which is buying and
holding the S&P500 (SPY (Spiders shares)) always long and hedging with S&P500 E-mini
futures contracts during weeks that are forecasted to be down, then comparing my
results with the actual S&P500 (SPY (Spiders)) results for the periods YTD, One
Year and Accumulative.
We will update the YTD and accumulative percentage results
on the Home Page at the end of each U.S. Market weekly trend.
Best regards,
Robert Taylor
Home Page Results:
The Year to Date (YTD) scores are based on the funds results from January 1st, 2007
to the current date. This score will be updated at the end of each forecasted weekly
trend. The One Year scores are based on the original date I opened the fund on October
20th, 2006 and ending on October 20th, 2007.
The Accumulative scores are based on
the original date I opened the fund on October 20th, 2006 and continuing to the
current date. This score will be updated at the end of each forecasted weekly trend.
A note from Trend Corporation, Inc.:
Neither Trend Corporation nor its principals will suggest to anyone what financial
positions to place in the markets, or offer trading advice. We are merely providing
forecasts for the anticipated market direction and duration.
The trading strategy provided below simply describes how Robert Taylor trades the
financial markets while incorporating the U.S. Xyber9 weekly market forecasts. His
strategy could and may be used on other U.S. market indices such as the Dow or the
NASDAQ, or international financial markets as well, although Robert Taylor has not
traded in these other indices using this strategy or has it been brought to our
attention that anyone else is doing so.
Note: It would be advisable to consult your investment or tax advisor before incorporating
any trading strategy Trend Corporation mentions here. Trend Corporation is not a
financial advisors or tax professional. Trend Corporation is merely presenting a
strategy that Robert Taylor incorporates to conservatively utilize the Xyber9 U.S.
Market forecasts.
Trading Strategy:
I designed this trading strategy to beat the S&P500 yearly while owning and trading
the S&P500, and to produce better than expected returns by taking advantage of the
Xyber9 weekly trends for several reasons, first to simplify my trading activity,
secondly to create a trading methodology that is less stressful, and thirdly to
accommodate my busy schedule.
Brokerage accounts:
To utilize my trading strategy to the fullest tax deferred extent, I first opened
three (3) brokerage trading accounts at TradeStation Securities and funded one account
(the securities account) with sufficient non IRA dollars to buy 1000 shares of the
S&P500 Spiders (symbol SPY). Secondly I opened an IRA futures account and funded
it in order to trade S&P500 E-mini futures contracts. Thirdly I opened an IRA securities
account but did not fund it because I plan on funding this account later with profits
produced from trading in my futures account during the trading year. I will discuss
this later.
Trading begins:
At the end of the first Xyber9 forecasted weekly downtrend I bought 1000 shares
of the S&P500 (Spiders (symbol SPY)) at 136.78 on October 20th, 2006 to open the
funds trading. The trading commissions were $8.00. A separate IRA futures account
with TradeStation Securities will be used to trade the S&P500 E-mini futures contracts
short (sell) as a hedge against losing principal invested dollars or any profits
during forecasted down weekly trends. The futures contracts commissions are .25
- $1.20 per side, per contract plus exchange, regulatory and overnight fees, which
roughly amounts to $5.00 per round trip per contract, or estimated to be less than
$100.00 annually for this fund.
My trading strategy relies on the proven accuracy of the Xyber9 trends in order
to capture as much of the profits as possible during the weekly up trends and to
keep from losing as much as possible during the weekly downtrends. By holding my
long securities (SPY shares) position and not selling any of these shares during
the year or as long as I wish, I will not incur any ordinary income taxes, short
term or long term capital gains taxes from the securities (SPY) profits. I will
not incur any taxable consequences in my IRA futures account, so long as I do not
remove any of the funds. When I do fund the IRA securities account with my futures
profits, I will not incur any taxes in that account either because it is also an
IRA account. The net effect is simple; all gains will be tax deferred, which allow
the combined accounts to grow faster including the possibility of becoming exponential
in growth over time.
During the forecasted weekly up trends my SPY shares will earn whatever profits
the S&P500 market provides during that uptrend. When the Xyber9 forecast shows the
end date of the weekly uptrend, during that ending day I will sell two (2) S&P500
E-mini futures contracts to offset any losses in my securities SPY shares, in other
words I am creating a (market neutral) position in my combined accounts during the
forecasted weekly downtrends. I cannot either lose anything or gain anything in
my combined accounts during the weekly downtrends while the futures contracts are
positioned (sold).
If the market move against me and moves up during a weekly downtrend the SPY shares
will gain the same amount of money the futures contracts lose and create a no loss
situation. In other words, there will be no loses if the market moves against me,
only lost potential profits.
If the market moves down as expected during a down weekly trend the SPY shares will
lose, although the futures contracts will gain the same amount the SPY shares lose.
In other words, the combined accounts will not suffer loses once the futures contracts
are in place (sold).
The combined effect of hedging with futures contracts during down weekly trends
and allowing the SPY shares to capture profits during up trends has proven to provide
me with exceptional percentage returns as shown on the Home Page of this website.
If I am in a forecasted uptrend and the market moves down instead, I will lose whatever
the market provides during this trend. You can refer to the Home Page to see the
total gains in my fund compared to the S&P500 (SPY). These results include loses
from trends that were forecasted wrong.
How I calculated the number of futures contracts I needed to trade effectively:
Currently, one short futures contract will (hedge) or offset losses for approximately
$77,000 worth of the S&P500 Spiders (SPY) shares. This number will vary depending
on the value of the S&P500 Spiders (symbol SPY). The actual amount can be easily
calculated by using the following formula ($50 x the SPY price x 10). For example,
if the SPY shares are valued at 155.60, you would multiply this number by $50 then
by 10 (the leveraged futures value). Each futures contract in this example would
hedge (market neutral) during down weekly trends $77,800.00 worth of SPY shares
in a non IRA securities account.
To take this example further, I deposited $25,000 in an IRA futures account, and
using the governed margin rule, which is, for each futures contract that I hold
during the overnight session, I would need approximately $4000.00 in my futures
account. Still using this example, I would be able to trade six (6) futures contracts.
The net result is this, 6 futures contracts sold short would hedge, (create a market
neutral position) during down weekly trends, $466,800.00 of invested dollars in
a non IRA securities account where all the taxes are deferred until I sell any SPY
shares. This strategy insures that during a down weekly trend I would suffer as
little losses as possible during that time period, depending when and what price
my sell order was filled for the futures contracts.
On the last day of the weekly downtrends I close my futures position and allow the
SPY shares to move up with the market for whatever gain the market provides during
the subsequent weekly up trend. Also, at the end of each weekly downtrend, quarterly
or annually, I can sweep the additional profits from the futures account gained
during the weekly downtrends over to the IRA securities account to buy more (Spiders
(SPY)) shares. By sweeping the futures profits to buy additional shares of the SPY,
this increases the number of SPY shares in both securities accounts, all purchased
at a price lower than the beginning of the preceding weekly down trend, therefore
increasing my equity position and providing the possibility of gaining additional
profits during each subsequent weekly uptrend by virtue of the additional SPY shares.
If I keep repeating this procedure during the year or years, I should see the number
of shares in my securities account increase internally (without adding outside invested
dollars), where my combined account will start to grow exponentially, given both
equity values (numbers of shares) and net asset values (percentage of dollars gained)
do continue to gain. I will not have to pay taxes on the futures earnings and also
will not have to pay taxes on the securities (SPY) profits, providing I don't sell
any of their securities (SPY shares) and create a taxable consequence.
*I could have chosen to use a standard (non IRA) futures account and still use this
strategy successfully, although I would have to pay taxes on the futures profits
derived during the trading year.
Remember, if I don’t sell my shares of the Spiders (symbol SPY) I won’t be incurring
any taxes on the profits. With my futures account being invested in an IRA futures
account, my futures profits will be totally tax-deferred. The addition shares of
the SPY purchased by profits from the IRA futures accounts are deposited in an IRA
securities account and also tax-deferred, thus allowing all three of my accounts
tax deferred status. It is only when I sell shares in my non-IRA securities account
or withdraw money from either of my IRA accounts would I be subject to a tax liability.
If I hold my non-IRA SPY shares for over one year and then sell, I would be subject
to long-term capital gains tax. If I sell these same shares during a period less
than one year, these profits would be subject to short term capital gain taxes.
Again, if I withdraw money from their IRA securities or IRA futures accounts I will
be subject to taxes also.
Note: It would be advisable to consult your investment or tax advisor before incorporating
any trading strategy Trend Corporation mentions here. Trend Corporation is not a
financial advisors or tax professional. Trend Corporation is merely presenting a
strategy that Robert Taylor incorporates to conservatively utilize the Xyber9 U.S.
Market forecasts.
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