Spokane, WA (PRWEB) December 12, 2007 -
It's a principle that can be easily practiced by investors, beginner to expert, small to large, mutual fund to baseball cards: Diversify your investments.
TradingVisions Systems, Inc. (http://www.TradingVisions.com) announced today that it has made it easier to harness the power of diversification by releasing updated and expanded Vista Portfolios (http://www.TradingVisions.com/Vista.pdf), 24 select combinations of the TradingVisions index futures trading systems and their markets. These portfolios allow a person to achieve diversity in three important ways, through a variety of systems, markets, and time-frames.
"Smart investors know that one of the most powerful and productive rules of successful investing is to spread risk by varying their holdings across a range of assets," states Lincoln Fiske, President and system developer of TradingVisions. "In the futures market arena, diversification is even more important because of the leverage involved."
What make a portfolio approach so powerful?
Let's take a simple example. It's late May, you have $15,000 available for an investment, and you've decided to open a futures account and lease systems from TradingVisions. One possibility could be Delphi II, which trades the e-mini Midcap futures contract, and which was released in late May of 2007. TradingVisions recommends 1 contract for a 15k account. According to Mr. Fiske, who is a registered informational Commodity Trading Advisor, "This year has presented unusually good trading opportunities, and from June 1 through November 30, Delphi II was up $10,590, based on my actual fills, after deducting $15 commissions and the $50 monthly lease fee."
Another possibility could be Impetus, which day trades the e-mini Russell futures contract, and which Mr. Fiske has personally traded for over 4 years in his account. Because of its lower risk profile, a 15k account can trade 2 contracts. Impetus is up in Mr. Fiske's account $7,942 in 6 months, after fees.
"Both choices present excellent returns, and it might be difficult to choose between them. But there is a third possibility, one that can improve the return significantly, and that is to create a portfolio that includes both systems," Mr. Fiske states.
The ideal in creating a portfolio is to find assets that balance each other's performance--when one is down, another is up. In this way, volatility and risk are reduced, lessening the tendency for larger drawdowns, which are swings from an equity high to a lower account value.
Mr. Fiske points out that, "By combining one contract each of Impetus and Delphi II--two very different strategies trading two markets in two time-frames (day trade and swing trade)--we achieve a powerful improvement: Lower risk and a better return on our investment."
The evidence of the portfolio effect can be seen in the impact on maximum drawdowns in actual trading this year. For one contract of Impetus the maximum is $2,651 and for Delphi II it is $3,950, but when traded together, instead of $6,601, the drawdown is $3,490. How can this be? It's because the systems balance each other.
To get a clear idea of this balancing, here are the actual monthly results for one contract each, net of all fees:
Impetus Delphi II
June $837 $1,065
July $1,298 $1,385
August $1,972 (-$1,320)
September (-$103) $2,350
October $655 $280
November (-$688) $6,840
Three times one system suffered a losing month, while the other more than made up for it. "This is exactly what we look for in combining systems and markets: Reducing risk by cushioning drawdowns," Mr. Fiske points out. "By joining the two systems, we have an investment with less risk, but it will still earn the combined profits of the components. While trading each system separately would have required $15,000, when you combine them, rather than the $30,000 you might expect to need, I still recommend a $15,000 account. This is because the two systems work together to lower risk, allowing us to use less capital. The result is a return on investment that is considerably higher than with trading each system alone."
How much higher? In each of the 3 examples the investor started with $15,000. Trading two contracts of Impetus, the net profit was $7,942, on a maximum drawdown of $5,302 (2 contracts with a drawdown of $2,651 each). Trading Delphi II, the net profit was $10,590 on a drawdown of $3,950. But trading Vista II, the investor would have made $3,971 on the one contract of Impetus and $10,590 from Delphi II, for a total net of $14,561. And the investor would have done it with less risk, a maximum drawdown of $3,490. As Mr. Fiske observes, "This is what's so powerful about diversification, that it helps you to use your money more efficiently. I've heard diversification described as 'the only free lunch in the investment world,' and it's true. Not every portfolio will work as perfectly as this example, but time and again, diversification proves itself."
"Everyone is looking for an advantage in investing. Diversification is the best one I know of," concludes Mr. Fiske.
All the Vista Portfolios focus on index futures contracts, which present more consistently tradable volatility, as well as good trending characteristics. The portfolios beyond Vista II add additional systems and markets, all the way up to Vista 100, which is for 100k accounts.
Investors can lease the Vista Portfolios, starting with Vista II for $100 per month. Clients may either trade the portfolio themselves or have it traded for them in their existing futures brokerage account or in a specialized broker-assist program. No prior experience, software, or monitoring is required. For further details on leasing and purchasing, please visit the TradingVisions site.
About TradingVisions Systems, Inc. and Lincoln Fiske:
Lincoln Fiske is a full-time futures trading system developer who founded TradingVisions, Inc. in 2003. An educator for over 20 years, Mr. Fiske has long been interested in the markets, and he began developing his own systems in the mid-1990's, first making them available to the public in 1999. His approach to the markets stresses careful system design, diversification, and realistic expectations.
TradingVisions Systems, Inc.
1-800-878-1983 or 1-509-466-8435
Commodity trading bears a high degree of risk. People can and do lose money. Past performance does not guarantee future results. Hypothetical results have many inherent limitations. Please read the disclosures & disclaimers statement at the TradingVisions site.