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What is the basic theory behind Intensity?
- The big picture is to follow the advice of two market wizards - Richard Dennis and Larry Hite. Richard Dennis has advocated being as short-term or as long-term in your trading as you can stand but avoid the middle like the plague. Intensity achieves this objective by being shorter-term than the average trend-following system as the average trade is held about 30 days. Larry Hite has stated that the individual trader has an advantage over the pros in his/her ability to not trade until conditions are right. Intensity adheres to this philosophy by waiting until the odds are in it is favor to enter a trade, resulting in a 60% winning percentage and about 5 trades per year per market.
- To be more specific, the basic idea behind Intensity is to wait until the trend strengthens by an objective, quantifiable amount. This is the set up. Stops are set based on recent volatility. The exits get out of trades earlier than most trend following systems. I've been thinking about Intensity and actually believe that it is more of a trend-capturing system than a trend-following system. All the parameters in the system are adaptive. That is, recent volatility is used to determine stops, amount risked, etc. Fixed dollar amounts are NOT used at all in the system. This allows the system to adapt to changing market conditions, and allows the system to use the same rules across all markets.
Do you trade Intensity?
- Yes, I designed Intensity for my own trading. I developed it primarily as a way to provide diversification for my longer-term trading systems. Ironically enough, though, Intensity has been outperforming my trend-following systems by a wide margin.
Why are you offering Intensity for sale?
- I have purchase numerous trading systems, courses, and books over the years. While some of them have useful information and interesting ideas, in many cases I found myself scratching my head, asking myself "why did they add this filter?", etc. Many were curve-fit, few were robust, and some of the system rules were downright nonsensical. I also thought, with my extensive education in mathematics and economics, combined with my professional experience in mathematical modeling and practical experience in trading commodities for my own account, that I could do much better in designing systems than some of the products I have purchased.
What time frame is Intensity designed to trade?
- Intensity has been designed and tested on daily data.
What tools do you use for development?
- I currently use Trading Recipes and Tradestation. But I prefer Trading Recipes for its portfolio-level testing capabilities.
What markets does Intensity trade best?
- Intensity depends on sustained moves in markets. Because it exits earlier than most trend-following systems, Intensity can profitably trade more markets than traditional trend-following systems. For example, in my backtesting, Intensity makes an average of $834 per trade in the e-mini Nasdaq and $624 per trade in the e-mini S&P 500. It also does well in heating oil, gasoline, and lumber. However, there are some markets that simply don't have enough sustained moves to expect profits from any trend system, such as cocoa.
Is the system updated from time to time and are new releases provided to all those who purchase the system?
- Yes, Intensity is updated occasionally and purchasers of the current version Intensity will receive any additional updates.
Other questions? Send an e-mail to me at dr-smart@usa.net.