Our Trading Program

It’s a pleasure to introduce you to our trading program which seeks above average returns primarily through buying and selling in the U.S. Treasury Government Bond futures market. Our trading program is designed to enhance returns, reduce overall portfolio volatility, and increase diversification. At the heart of our trading lies several key proprietary trading techniques.  Developed over many years of market observation and research, these techniques provide us with a non-conventional perspective of  market activity and trading.

Seasoned traders know that sideways (choppy and trendless) markets are seen far more often than trending markets. Although trending markets are the exception rather than the rule, the trading programs of many money managers require prices to be trending in order to be successful.   Absent a sustained price trend, these programs frequently struggle to perform. Not so with the trading strategies of Jalex Trading. Whether prices are moving higher, lower or sideways it makes no difference – in any market environment our trading strategies have an equal potential for profit.

Attractive Features:

Overview: From a macro perspective, we approach our evaluation of the bond markets by analyzing both fundamental as well as technical indicators. Fundamental analysis concentrates on factors that affect supply and demand such as seasonal price patterns, domestic and international political developments, government reports and policies.  In analyzing market fundamentals, we examine many factors and important fundamental indicators such as various industry supply/demand and other government economic reports. Often, it’s the fundamental factors that most greatly influence long-term market price trends.

In contrast, technical analysis is based on the theory that market prices alone reflect all known factors affecting supply and demand  and that the study of price data, volume and open interest provide sufficient information for predicting futures prices. In analyzing market technical’s, we carefully examine patterns of recurring market activity as well as other various technical factors (chart patterns, support and resistance lines, and numerous other technical indicators).

Like people, each market has a distinct “personality”:  If you know an individual’s personality, over time, you gain an understanding of how that person is likely to react to certain types of events.  For example, if a husband brings flowers home to his wife, there may be a very high probability she’ll have a smile on here face.  Or, for example, if a teenager returns home two hours past their curfew there may be a very high probability that one if not both of their parents will be angry.  Thus, if a specific action occurs you can deduce (with a high degree of probability) that a specific reaction is likely to follow. At Jalex Trading, we apply this same approach with the markets we trade. 

By analyzing real-time market activity, we’ve identified and categorized numerous recurring action and reaction events within the price activity of the bond markets. We’ve determined how frequently each action has in fact been followed by the anticipated price reaction.  Those price events with the highest probability (the highest probability of the action leading to the anticipated price reaction) form the foundation of our trading program.

Each trading day, we monitor bond market price activity to see when “qualified” price actions occur.  When an action is identified, we then establish market positions in an attempt to profit from the anticipated price reaction.   Of course, there are times when price action fails to produce the expected reaction. 

All of the trades we execute are entered with predetermined exit parameters (both for taking profits and “stop-loss” orders to protect the position).  The length of time a trade is held open in our trading program will vary from trade to trade.

As part of our trade selection and entry process, we determine what we believe will be the duration and magnitude of the anticipated market price move. In successful trades, positions are closed-out when specific price targets are reached.  When trades are unsuccessful, the closing-out of those positions may be carried out by the election of stop-loss orders. (A stop loss order is a type of order most often used to exit an unfavorable market position.  When a trade occurs at a “stop price”, the stop-loss order becomes a market order and is executed accordingly. Although the use of stop-loss orders are one technique we utilize in our effort to control market losses, there’s no guarantee that the stop-loss order will in fact limit those losses.)  At times however, we may simply determine that the market is not behaving as expected and in those cases, the trade may be exited before stop-loss price level is reached.  Most often, trades are opened and closed within the same daily trading session.