MES555 Program (Proprietary)

The MES555 systematic program exclusively trades the e-Mini S&P 500 futures contract. A set of proprietary indicators are used to determine initial trade entry points, which can be on the buy or sell side. The MES555 program is fundamentally a long/short strategy that uses weekly trading ranges to determine trade sequence. Positions are held for no more than two days and generally are not held over a weekend. Short-dated options may be used to counter unusually volatile market conditions or to lock in profits. The program appears to perform well during periods of medium to high market volatility. Historically, volatility tends to rise as stocks move lower. The Program trades approximately 30 times per year and generally requires a 10% to 15% margin to equity. Speculating in Commodity Interests is a high-risk endeavor. There is no assurance the Program will achieve its profit objectives or that clients will avoid substantial losses.

The Program is primarily systematic but allows for discretionary overrides on trading signals in particular situations. This means that while the Advisor employs automated, pre-defined, or mechanical rules to select markets, determine position sizing, identify or select trades, and employ risk management techniques, resulting trades can be offset or not acted upon in the Advisor’s sole discretion in certain unusual market conditions, primarily as a risk reduction strategy. The Advisor also believes discretionary override capabilities are advantageous over a strictly mechanical, rules-based trading approach. However, there is no assurance that discretionary overrides will ultimately prove beneficial or will not result in losses because a strict rules-based approach might, among other things, prevent various cognitive biases from detrimentally affecting performance.

In its systematic methodology, the Advisor analyzes both pattern recognition and other technical factors of the markets in which the Advisor trades.

Technical analysis is based on the theory that the study of the past price action in a given market, rather than factors that affect the supply and demand of a particular Commodity Interest, provides a means of anticipating future prices. Technical analysis operates on the theory that market prices at any given time reflect all known factors affecting supply and demand for a particular Commodity Interest. Under this theory, analysis of factors such as daily, weekly, and monthly price fluctuations, volume variations, and changes in open interest are of predictive value when determining the future course of price movements.

Effective risk management, such as limiting exposure to a short period that does not include weekends, is a crucial aspect of the Program. The Advisor will sometimes employ risk management techniques at its discretion. However, prospective clients are cautioned that by their nature, risk management techniques are not guaranteed to limit losses or to limit losses to pre-determined amounts. Consequently, there is no assurance that such techniques will be effective during the times they are employed.