Author Bio

This is the fourth installment of our trader interview series.  Currensee Trade Leader Adantia LLC (Ticker: ROCED.A) uses strategy that stems from their strong background in software development and is evident in their fully automated trading approach. Their founding team has over 20 years of experience in the software industry, and this is one of the company’s core strengths and differentiators. Adantia lets the software do all the work but plays close attention to the events that may impact the strategy so they can see how the model reacts.  Over the past two years we have experienced a number of “shocks” including the Flash Crash, the Japanese Tsunami, Quantitative Easing I, II and III, North Korea shelling Yeonpyeong Island, etc. and Adantia’s Foreign Exchange Volatility Strategy has performed well and adapted to these shocks.

Do you believe 2012 will be as volatile as the end of 2011?

Yes, most of the issues that have contributed to the volatility have not been resolved and will take considerable time and effort before they are resolved:

• The Eurozone crisis is still in full swing.  Greece, Spain, Italy and Ireland have significant issues which will drag on the EUR for some time.  The new governments in Italy and Spain seem to be taking some of the right steps, but there is still much uncertainty.
• The Middle East is a mess.  Iran is working to become a global nuclear power, the U.S. has pulled out of Iraq and the succession of the leadership in Saudi Arabia is now in doubt.  The world still runs on oil and all of this uncertainty can rip around the markets.
• North Korea is more of a wild card than ever.  The world knew Kim Jong Il pretty well after all of his time as the Supreme Leader.  Kim Jong Un is a virtual unknown, and the country is not getting any healthier from an economic standpoint.  This could be very bad news for South Korea and ultimately most of the world.
• In the U.S. we have an election going on, so much will be done to spur on the U.S. economy so that the current leaders can get re-elected, BUT, many of the problems that we have in the U.S. are just being kicked down the road for the next leader to handle.  I expect employment numbers will get better throughout the year which will have a positive impact.  The partisan fighting in Congress will cause significant tension in the U.S. markets and if the leaders don’t come up with solutions then the markets are going to react.  Also, it will be interesting to see what the climate is for regulation in the U.S.  With the collapse of MF Global, U.S. Regulators could clamp down, which will have an impact on the markets as well. The Real Estate crisis in the U.S. is far from over.  The Banks own a lot of property that has yet to hit the markets and this will have a big impact as well.  Will Real Estate ever be a safe investment?

2. What types of Forex strategies will continue to prevail in 2012?

At Adantia, we think our strategy is well positioned to take advantage of the volatility that is inherent in the market.  We have been very successful over the past two years taking advantage of the tumultuous market.  We also believe that a well-diversified portfolio is a wise choice.  Alternative asset classes like FOREX can be a very important part of any portfolio and can produce returns that are not correlated to other investment types.  Within FOREX we believe investors should look to diversify using complimentary strategies.  Our Foreign Exchange Volatility Strategy tends to be counter-trend and is well complimented by trend following strategies.

3. What would a breakup of the euro mean for your strategy

Personally, I do not believe the Euro will break up.  I believe Germany and France will do whatever it takes to keep the European Union together.  The German people very successfully combined East and West Germany, and while that process was very painful, in the end they came out much stronger.  This is a different economic battle with many more countries involved, and it will be very painful, but, in the end the whole region will be stronger if the European Union is maintained.  The EUR/USD pair is a big part of our current strategy, so if the Euro were to break up we would have to remove that pair from our strategy.  We are confident that with research we could replace this pair, but it would take some time. No one can predict the future, so investors would do well to diversify and monitor their portfolios closely.  It is important when selecting different managers to make sure you are not getting too much overlap in the strategies the managers are using to truly diversify your portfolio.  This means the investors will have to do some legwork to understand the strategies the managers are using to get the returns.  Here’s hoping 2012 is a great year for everyone!

Next week: Janus Trading (JASMI.A), Chen Investments (CHCMP.S) & Bak Trading (TCBRF.A)

-------

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

One of Currensee’s newest Trade Leaders, Adantia leads with a smart strategy that puts risk management first. Adantia’s strategy stems from their strong background in software development and is evident in their fully automated trading approach. Their founding team has over 20 years of experience in the software industry, and this is one of the company’s core strengths and differentiators.  Their original model was built in 2008, and has seen a wide variety of market conditions since it started to be used for live trading.

The risk management strategy that Adantia has designed is the foundation for their actual trading strategy. They run four versions of the strategy, each with its own defined limitations along three risk measures considering account-wide loss, per position loss, and percentage of margin exposed.  A breach of any of these measures results in closing out of positions.

Adantia has built their strategy on the core belief that financial markets are driven by a herd-like dynamic, due to the current-day fluid availability of market information and the balance of traders using similar indicators to respond to the information. After defining the risk measures appropriate to the strategy, Adantia’s team built a mathematical model that was focused on maximizing returns within the constraints of the risk management strategy.  Stop-losses and take-profits are calculated based on the current conditions, using a capital-rationing algorithm that is different from the more typical pips-based approaches.

It’s important to point out that 100% of Adantia’s strategy and trading are automated – the software makes all decisions, there are no decisions made by humans.  There have been times in the past where the temptation was certainly present, but the decision to rely on the model has been proven time and time again in the team’s experience.

Recently, BarclayHedge ranked Adantia #1 currency trader managing under $10 million and Future’s Magazine listed them as a “Hot New CTA.” A live webinar with Adantia was also recorded to showcase their commitment to risk management and consistent, long-term returns. Adantia’s model also works exceptionally well during times of increased volatility, which seems to be the new norm in today’s market.

Currensee welcomes Adantia to our program.

-------

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

The rout in the markets yesterday (Thursday, May 6, 2010) will not soon be forgotten. At one point the Dow Jones had fallen 998 points or just shy of 1k. Risk aversion was in full force in all markets including in currencies where EURJPY went from approximately 120 to 110 in one afternoon. At one point it even gapped down an entire big figure.

As an investor this has to shake your confidence in the markets. It was just a few years ago that the markets dropped half their value and it hasn’t take long for the next shake-up in the markets to occur. As a trader you have to be careful for many reasons. One be sure to write down the handle of your execution, not just the “54”, but 114.54 since these markets are basically wild right now. Second you can certainly make incredible sums in a short span but losing money can not only put a major dent in your principal but also shake your confidence as well. If you want to be a trader for the long-term then survive these markets.

Now was it a computer glitch that caused the excessive reaction in the markets? Was it a fat finger? One can argue all they want about how automated the markets have become but at the end of the day it is still humans that compile these programs and write the instructions. Were we due for a correction? Technicians have been calling for one for a few weeks as the upward move in risk was on light volume. Or has the markets just had enough of Southern Europe, notably Greece, especially as protests have become deadly? In truth it was probably a combination with other factors contributing as well.

Ironically today we saw the strongest employment reports in a few years out of both the US and Canada. Economic growth is more sustainable today than it was when the markets collapsed in ‘07/’08. Interest rates around the globe are at arguably absurdly low levels. Yields in emerging markets in many cases hover 5% (is that worth the risk for an emerging market?) and G7 countries appear to be in no rush to raise rates.

While the next few days will likely see continued excessive volatility the question has to be asked, does the current situation present an opportunity for traders and investors? Remember the crash of 1987, how long did markets stay down in 2001/02 and even 2007/08? Markets each time were met with extraordinary trading circumstances that we’ll never forget but the smart investor understood that the potential for gains when risk-taking emerged would present itself. It may be too early to state that the time to reinvest is now but markets will return to normal, traders will trade and one day we will remember where we where when the market crashed on Thursday, May 6, 2010.

======

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.