Founder/President of Mariner Futures
Program(s) Developed: Compass
Interview Date: March, 2005
Interviewed by John F. Gallwas, Founder of Striker Securities, Inc.
Jack Telford is the founder of Mariner Futures and is registered as a Commodity Trading Advisor (NFA # 339212)) with the Commodity Trading futures Commission. On a personal note, he is an ardent ice hockey fan and devoted to his young son's participation in the game.
This is the fifth anniversary of Striker's tracking of Mr. Telford's original and best-known Mariner Compass S&P Trading System. To mark the occasion, we thought it would be a good time to interview him regarding his systems and their outlook.
By way of introduction, to those who do not know Jack Telford, he has a degree in computer science, and while working as a software developer in 1986 he became interested in the futures markets, an interest which eventually led to Compass's unique analytical approach to generating trading signals. The Compass system in actual trading (including commissions) has been profitable in all but one of the last five years at Striker, and 2004 was not only difficult for Compass but many other day trading systems as well.
John Gallwas: Before we discuss the nature of your trading systems, what is your company's mission and can you give us the risk profile of a typical customer?
Jack Telford: Well to begin this interview today John, I'd like to take a few moments to thank Striker Securities for their support for the past five years, and maintaining their structure of no-nonsense, hard working salaried brokers. Striker Securities is very important to Mariner Futures because of your ability to maintain the industry's only real time, non-interrupted five-year track record for an S&P day trading system (Compass).
Mariner Future's mission statement is pretty simply. To provide a low-risk, low-drawdown day trading system that returns consistent monthly profits. My intention when I designed Compass was to have an S&P day trading system that would consistently generate $5000 per month and would allow me the luxury to quit my day job and do market research from home. Of course being constantly under capitalized I'd have to be able to do this with an account size under $10,000. As usual, things don't always work out as planned.
John Gallwas: We mentioned in our introduction that Compass has a unique methodology in generating its trading signals. What can you tell us about this proprietary system, and what are its optimum market conditions
Jack Telford: Well John, as you know Compass is designed specifically for the S&P 500 stock index futures markets. Compass is distinctly different from any other mechanical day trading system because of the unique concept it uses to day trade the stock index futures markets. Instead of dependence on individual bars like systems based on technical indicators, Compass attempts to identify and isolate a small number of consistent and reliable patterns that have always existed in the stock index futures markets. The design of Compass relies on the consistency of the index markets to repeat those specific patterns, patterns that should exist as long as stock index futures markets trade. Compass is also unique in the fact that it relies exclusively on price and time, and contains no technical indicators. Compass identifies a specific type of trading day in which a trend is established in the morning, has a shallow pullback during midday, and then is re-established the in the afternoon. Once the midday pullback begins, Compass identifies the pattern and attempts to enter the market in the direction of the trend. Trades are exited at the end of the day, and the initial stop is trailed at a predetermined level. Compass generates only one setup per day and trades on average 10 days per month.
John Gallwas: After four good years, 2004 was not good for Compass. Can you tell us what went wrong in 2004, and have you made any changes to the system, hopefully in order to avoid the problem in the future?
Jack Telford: That's a great question John, and right to the point. As you know you're only as good as your last month's performance. I'll try to answer your question without getting too technical. In a nutshell, starting in July 2003, the S&P futures market's range and volatility began to shrink. For example, the preceding years leading up to July 2003 the average daily range for the S&P 500 futures market was over 16 points. Today the S&P 500 average daily range is half of that. That's the bad news. There is good news however: Compass was designed utilizing advanced artificial intelligence techniques, and has been busily re-training itself over the past 18 months to be able to trade in reduced range markets. Compass's efforts are evident in its last quarter's results. And to answer your question fully, there are no changes scheduled for Compass.
John Gallwas Looking forward, are there S&P market patters that are more favorable than others for the Compass trading system?
Jack Telford: Not really John, the most favorable pattern for Compass remains the standard 38% retracement against the morning trend. However, Compass also does very well with consolidation patterns in very bullish or bearish market conditions.
John Gallwas: Do you have anything in the "what's new" department that you would like to share with us now?
Jack Telford: Well John, your question relates back to your first question, so I'll relate my answer to an old adage, when I went in to drain the swamp 15 years ago I was sure that I would be able to design a trading system that would produce $5000 consistently every month, well that hasn't happened. What Compass is, is a really good blue collar trading system that sticks its nose to the grindstone and attempts to produce profits within the framework of having its first priority being damage control. The fact of the matter is that Compass does not produce a monthly paycheck. Some months it produces more and some months nothing. In an effort to reach my original goal that I set for myself 15 years ago, I have been working for the past two years on three new trading systems. The new systems code named Schooner (Euro), Typhoon (Yen) and Clipper (Russell) are designed with the same philosophy as Compass, with the goal of maintaining a very low drawdown. The systems are in beta testing and all can be traded at Striker Securities, Inc. by contacting your son William Gallwas for further information. William and I have a common passion, the game of Ice Hockey, as William plays in an adult hockey league in Chicago and I coach a team here near Cincinnati so while it is sad the National Hockey League was cancelled this season - at least a few of us are keeping the game alive!
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.
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