Founder/President of Longtermtrading.com
Program(s) Developed: Ready-Set-Go
Interview Date: August, 2005
Interviewed by John F. Gallwas, Founder of Striker Securities, Inc
Striker President John Gallwas sits down with Alan Pryor, the principal of LongTermTrading.com and the developer of their mechanical trading systems, who is a registered CTA (NFA 312980) located in Davis, California. Mr. Pryor is also an active Agricultural/Environmental Engineer and the President of Ozone Process Consultants, Inc.
John Gallwas: How does a graduate from the University of California at Berkeley with a MS in Industrial Hygiene Engineering develop a second career in the design and marketing of trading systems?
Alan Pryor: Even though I have been providing trading systems to customers for a relatively short time, my interest in technical analysis and system development goes back 25 years to when I was a graduate student and accidentally picked up a copy of Joseph Granville's book on "On-Balance Volume". That incident led to a lifetime of technical analysis studies on the markets, not only because I found it mentally challenging but also because it inspired me to try to put order to seemingly chaotic prices by developing profitable trading systems.
As an Agricultural/Environmental engineer, I used my technical, mathematical, and engineering skills to study the markets, which evolved into the development of trading systems for my own use. I decided in 2001 that because there was so much "system vendor hype" offering expensive boxes with "pie-in-the-sky" results in the marketplace, I would offer the traders the opportunity to buy my systems. I believe that serious traders are interested in purchasing reasonably priced, robust, and completely non-optimized systems. We treat our prospective buyers intelligently by offering them open (White Box) systems that have extensive and fully disclosed backtest results, which enable them to make well-informed decisions.
John Gallwas: Define "Long Term", and what are the basic characteristics of "Long Term" trading systems?
Alan Pryor: By long term, I mean both extended time duration for trades as well as a certain frame of mind. My systems typically have an average profitable trade length of from 1 week to 6 months and average losing trade duration of from 1 day to 1 month. The systems follow the proven long-term strategies of cutting losses and letting profits run. However, adhering to this age-old adage is more difficult than one might think because it requires that a trader have a mindset that is not only disciplined but also consistent.
For instance, the normal reaction that most traders have if they get a sudden, large price move in their favor is to take the profits and run. A true long term trader would see the same price move, but exercise the discipline to wait for the system to signal that the price trend has reversed before liquidating the position. In order to be successful, a long-term trader must ensure they have the proper frame of mind to follow a long term trading system.
John Gallwas: Why do your systems use weekly data for analysis, rather than daily like many other system?
Alan Pryor: When I developed the basic theory behind my trading system, I soon realized that the daily market action produced too much statistical "noise", so I switched to weekly data. The improvement in performance was dramatic in terms of increased profits, decreased drawdowns, and a reduced number of trades.
The reason the performance for my systems improved, by using weekly data, was essentially because the weekly data is smoother and easier for my long-term trading systems to analyze. This is not an anomaly, in fact; this disparity in the data occurs very often, and these differences are easily exploited by appropriate technical analyses embodied in our systems.
John Gallwas: Which of your systems work best in a portfolio for our readers interested in a diversified systems program?
Alan Pryor: For either new or experienced traders, I generally recommend they start with my Ready-Set-Go system because it is very robust, market-adaptive, and exceptionally good at minimizing drawdowns. Futures Truth has recently included Ready-Set-Go in their latest release of their "Top Ten Most Consistent Performing Systems".
John Gallwas: Your systems are all "White Box" systems. Can you explain what this means, and the implications for traders?
Alan Pryor: A "White Box" system is one in which all the trading rules and information necessary to properly trade the system is fully and completely disclosed to the system purchaser. Nothing is held back, which means there is no ambiguity or need for interpretation in the signals that are generated. A "White Box" system is fundamentally different from a "Black Box" system in which trading details are not disclosed, and in which a computer program generates buy and sell signals based on rules unknown to the trader.
Although I certainly face a greater risk of piracy when the systems are fully disclosed, I feel it is extremely important that every trader who purchases a system have the opportunity to study and fully understand the systems' rules. I believe that if the trader has a good understanding of how a trading system works, it will help the trader to have the mental discipline and confidence to weather the inevitable rough drawdown periods that are inevitable in any trading system.
John Gallwas: Do you personally trade your systems, and how do you manage your account?
Alan Pryor: Yes, I trade all my systems, but I do not try to operate my systems anymore. I wish I was as good at trading a system, but to tell the truth I'm not. I have made all the classical mistakes that plague most traders who do not have the mental discipline to follow their system. So I finally turn the operation of my systems over to a system assist-type broker to do the trading for me, which was one of the smartest trading decisions I ever made.
Indeed, the very best advice I can give to system buyers is to seriously consider having a system assist-type broker trade your system for you. Human frailty in terms of discipline, consistency, money management, and error are the major downfall of traders, and using a system assist broker removes the trader from operating the system, while maintaining control. While I realize that most traders are a fiercely independent, and want to do-it-themselves, my recommendation to outsource the systems operation is based on first hand experience and the experience of many of our customers.
John Gallwas: Is there anything in the "What's New" department you would like to share with our readers at this time
Alan Pryor: I am always looking for ways to improve my systems in both orthodox and unorthodox ways. For example, I am currently doing basic research on the weekly CFTC's "Commitment of Traders Report", which summarizes the open positions of hedgers and traders, to determine if there is an indicator in the data that could be applied as an entry filter or to modify exit strategies. One never knows where the next good trading idea will come from, but one thing is for sure, unless a developer is constantly looking, he will never find them.
This interview is for informational purposes only and is not intended to be
a solicitation of any kind. Trade only with risk capital. The risk of
trading can be substantial and each investor and/or trader must consider
whether trading systems are a suitable investment.
There is a risk of loss in trading. It is the nature of commodity and securities trading that where there is the opportunity for profit, there is also the risk of loss. Commodity trading involves a certain degree of risk, and may not be suitable for all investors. Derivative transactions, including futures, are complex and carry the risk of substantial losses. Past performance is not necessarily indicative of future results. Please read additional risk matters on our web site, www.striker.com. It is important you understand all the risks involved with trading, and you should only trade with risk capital. This communication is intended for the sole use of the intended recipient.
About this report The information and links on this website are for informational purposes. The risk of trading can be substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Striker is a member of the National Futures Association ("NFA"), the Managed Funds Association ("MFA"), and the National Introducing Broker Association ("NIBA"). Striker is registered with the Commodity Futures Trading Commission ("CFTC"), and was formerly registered with the Securities Exchange Commission ("SEC"). Additionally, Striker is a former member of the Financial Industry Regulatory Authority ("FINRA"), and the Securities Investor Protection Corporation ("SIPC"). FINRA is the largest non-governmental regulator for all securities business in the United States. Please read Striker Disclosure Statement for the additional disclosure.
The trading performance cited throughout our web site is based on actual trading history, unless otherwise noted. The starting account balance is based on the system developer recommendation. Striker tracks actual performance by recording and maintaining each trade ticket for each system generated. The performance information assumes that no additions or withdrawals have been made. The rate of return for all systems disclosed in the Striker Report is cumulative from the day the system actually started trading at Striker. We maintain a "life" track for all 3rd party systems. We do not necessarily base our records on any particular client account. No one particular customer has achieved these results. The percentage returns reflect inclusion of commissions and fees.The actual percentage gains/losses experienced by investors will vary depending on many factors, including, but not limited to: starting account balances, market behavior, the duration and extent of investor participation (whether or not a client takes all signals for a system) in the specified system and money management techniques.
Striker is a revolutionary concept in action: an international, professional team of brokers dedicated to trading only for clients. It bears repeating: unlike most other brokers, Striker does NOT trade futures for itself or any of its employees. This policy has been in place from the start in order to guarantee that our entire focus remains on the interests of our clientele. Striker believes that when brokers are allowed to trade for themselves (or have in-house trading practices) there is a strong potential for conflict of interest, as the broker may place more importance on his own trading activities (or that of his firm's) than on those of his clients. Finally, Striker has no financial ties to system developers, so there no bias or pressure on how we report the actual trading results posted in our client section. This section is designed specifically for Striker's clients, so they may audit their results on a daily, weekly, monthly, or annual basis.