Publisher COMMODEX, Inc
Program(s) Developed: COMMODEX Trading System
Interview Date: June, 2019
Interviewed by John Gallwas
COMMODEX is one of the oldest system developed, dating back to 1956, located in Closter, NJ, 10 miles up the Hudson River from New York City. The company continues using basic technical analysis formulas developed by its founder Edward B. Gotthelf, and carried on by his son Philip. The "trend-following" programs are commodity specific and seven COMMODEX systems are currently listed in Striker performance tables. Philip Gotthelf has been Publisher since 1975, and is well-known for his market analysis. As a result, he has been widely quoted in the financial press and appeared as a frequent CNBC guest because of his market knowledge and his reputation for uncanny accuracy.
John Gallwas: What are the four basic assumptions behind "COMMODIX logic"?
Philip Gotthelf: Essentially, COMMODEX views futures markets as auctions where participation is a reflection of volume (number of trades) and open interest (number of contracts). So, 1) if price is going up and open interest is expanding along with volume we assume long-side accumulation is taking place and the price will continue trending higher; 2) if price is going up, but open interest is shrinking along with volume the interest in being long is decreasing and we expect an end to the uptrend; 3) if price is going down and open interest is expanding along with volume we assume short-side accumulation is taking place and the price will continue trending downward; 4) if price is declining and open interest and volume are shrinking, the downtrend is over. The logic follows auction theory which states that if many hands go up during the bidding process, the price will be bid higher. If no hands go up, that's the end of the uptrend. The COMMODEX System using changes in volume and open interest to measure the number of "hands" going up or not.
John Gallwas: All of the seven COMMODEX systems, listed in Striker performance tables, are identified as "trend-following" systems. How do you define "trend-following" and do you use other types of systems as well?
Philip Gotthelf: A trend-following system seeks to identify supply and demand imbalances that can lead to directional price movement. Unlike "swing-trading" systems that also seek to identify directional price movement, COMMODEX can remain "neutral" if its measurements of "accumulation" or "distribution" fail to show directional potential. Swing-trading is always long or short, but not neutral; swinging from long to short or short to long. Since COMMODEX measure daily accumulation or distribution in its daily Index and monthly accumulation or distribution in its "Trend Index", these two components can be used for short-term trading like "day trading", or even options trading. For example, some COMMODEX subscribers buy call options when COMMODEX issues a "buy" signal and buy put options when COMMODEX issues a "sell" signal. When COMMODEX is "neutral" with no position (directional price movement), some subscribers sell calls and puts, hoping the price will stay static through option expiration. This has been extremely rewarding in a COMMODEX-based bond option selling program.
John Gallwas: What do you say to the individual who wants total control of his or her portfolio, but would also like the diversification provided by many costly CTA managed account programs?
Philip Gotthelf: The COMMODEX System Signals have always been available to the public by subscription and we provide an explanation on how to design personal portfolios based upon capital and risk aversion. This means anyone can trade a COMMODEX-based account with any brokerage firm. However, today's futures trading is no easy task. In the 1950s when COMMODEX was first introduced markets only had day sessions. Today, most markets are open close to 24 hours each day and volatility can be extreme. That's why we have developed "COMMODEX guided accounts" that trade on the Striker platform. This provides a verified track record of real accounts in various portfolio configurations for objective evaluation. It's one thing to review our real-time published record that dates all the way back to the beginning, but is based upon published results without slippage considerations and variable commissions. COMMODEX accounts with Striker show actual performance with real cash on the line.
John Gallwas: Other than your father, have there been any educators or books that you have found helpful as a system developer?
Philip Gotthelf: Of course, my father conducted seminars in the 1970s that were extremely enlightening and I had the advantage of having his development notes and research used to create the COMMODEX System. I found COMMODITIES MAGAZINE which later became FUTURES MAGAZINE helpful along with Stock & Commodities Magazine. Every system developer has probably read Technical Analysis of Stock Trends by Robert D. Edwards and John Magee. I wrote TechnoFundamental Analysis for Irwin Publishing that was bought by McGraw Hill. There's a lot out there.
John Gallwas: Do you have anything new at COMMODEX you can tell us about now?
Philip Gotthelf: There is an old saying, "If it ain't broke, don't fix it!" COMMODEX has worked the same since it was released in 1959 after three years of development. What's new are markets like Bitcoin which we have been successfully tracking since it became a futures contract. For sure, there are proprietary adjustments we have had to develop for new contracts like interest rates, stock indices, and energy. The good news is that we have not "tweaked" the formula in a way that would make our 60-year track record inconsistent.
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.
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