FAQs

As you would know 99 % of people lose money in Financial Markets, & only 1% make money. The ones who make money normally follow models which are based on VAR (Value at Risk). Normally such similar models are developed & followed by the following players:

• Large Hedge Funds
• Investment Banks

Corporates/Retail Players/HNIs/NRIs/Brokers/Sub Brokers segment of the market do not have access/time/expertise/experience in implementing such advanced models based on VAR (Value at Risk)

• Trend Trading
• Mean Reversion Trading (Range Trading)

Trading in the Direction of Trend (Trend following is a form of reactive technical analysis)
Easy said than done
Issues in Trend Trading :
When to enter the trade? i.e. Timing of trade has to be identified
How much to trade? i.e. Quantity/Volume of trade has to be identified
What to trade? i.e. On which underlying the trade has to be entered has to be identified

Richard Dennis & Bill Eckhart were partners in a trading firm which was very successful.
Bill believed that Dennis had a special gift and Traders are born.
On the contrary, Dennis believed that Traders can be made.
To prove his point Dennis formed a group of people to teach his rules in 1983.
He called his students TURTLES after recalling turtle farms in Singapore.
Turtle traders were trained for 2 weeks. 80% of the time → spent on Risk Management&20% of the time → spent on Techniques to buy/sell
Turtles who followed discipline made significantly large returns and became one of the world’s most successful traders.
Experiment proved that:
Big money is not made when you buy low & sell high
Things that work best are RULES and not JUDGEMENT
Be consistent in techniques. Judge by process and not by the outcomes
Trend Traders don’t expect to be right every time. It’s not about frequencyof correctness but it’s about magnitude of correctness.

The original Turtle model was applied primarily in US markets on Commodities and Currencies in 1980’s. MarketConnected has modified the model for its application in India and has designed/innovated/back tested/implemented substantially advanced techniques to identify trends. We have named this model as “Trend Following Turtle” Model.

MC undertakes specific type of Technical Advisory services (training & handholding exercises) for participants

• Based on the type of underlyings
• Based on the amount of Capital.

There are 3 kinds of models based on underlying:

• Macro Model
• Forex Model
• Equity Model

Please note that the Target profits as mentioned in the below table are based on the returns which our existing participants have claimed to have generated on such models.

There are 2 kinds of models based on capital input:

• Rs 1 lakh to 5 lakh Capital.
• Above Rs 10 Lakh Capital.

The Key Features of Trend Following Turtle Style areDiversification – Trend Following Turtle Style has been inhibited with multiple underlings in which gives a perfect diversification in any mood of markets.

Pyramiding – Trend Following Turtle Style helps in accumulating at different levels (i.e. Averaging when price goes in direction of trend) by doing 4 hits in one underlying.

Maximum Drawdown risk – Trend Following Turtle Style has a very robust risk management system which defines the Value at Risk (VAR). VAR refers to a risk assessment measure that is used to establish the relationship between a possible declines in the market value of a portfolio over a specific period of time.

Trend Following Turtle Style has a very robust risk management system which defines the Value at Risk (VAR). VAR refers to a risk assessment measure that is used to establish the relationship between a possible declines in the market value of a portfolio over a specific period of time.(a)Portfolio Level VAR
Max Draw Down Risk -> 30%
Normal VAR -> i.e. Overnight VAR i.e. one day VAR -> 5%(b)Individual underlying Level VAR
Based on the volatility prevailing of each underlying and the co-relation between each underlying the model determines individual underlying level VAR.

We have been providing extensive training and handholding (Through our Technical Analysis services) to our participants on the above models. The types of returns that our participants have been generating in Turtle Model have been as followsa) Macro Model :

• In Trending market: 30%-40% return of capital p.a.
• In Non-trending market: 20%-25% return of capital p.a.

b) Forex Model : 20%-25% return of capital p.a. as currencies are less volatile

The model can go long or short in line with trend.

Average life of trade → 1 week
Range of life → 1 week → 1 month

Manual Model

Rule based model

Normally 8-10 trades per year per underlying are generated.

1-2 new trades in a day
Stop loss for all outstanding trades & next triggers for pyramiding are kept in the morning itself

Typical Success Rate on the Trades generated ranges between 60 – 70 %
Success rate is not the right word
Success rate doesn’t determine profitability of the model, rather the magnitude of profits in such successful trades counts
It’s not about frequency of correctness but about magnitude of correctness

Ideally 6 months

Model does not have target profit
So model does not exit the trade unless trend reverses
Trend following is a form of reactive technical analysis

Essentially techniques we follow are not complex.
We use simple technical analysis but yes it is a refined version of technical analysis
It is based on Trend, Momentum and Volatility.
Success in trading is not determined by what technique is followed
It is more about RISKMANAGEMENT
Things that work best are RULES and not JUDGEMENT
Be consistent in techniques.

Buy: When market breaks 20 day High and square when market breaks 10 day low
Sell: When market breaks 20 day Low and square when market breaks 10 day highAlternate Technique:
Buy: When market breaks 40 day High and square when market breaks 20 day low
Sell: When market breaks 40 day Low and square when market breaks 20 day high

Intermarket Analysis is performed to exit the position in the time of key event risk where the value at risk becomes high.

No, it’s not an arbitrage strategy. It’s a directional strategy.

Yes, the model currently applies on futures and has inherent levels of going levered up to 2x (2 times) typically.

Yes, it can be applied to cash portfolio, but currently we do not have any such model up and running.

The Trend Following strategy utilizes the funds for not more than 35-40% of trading days. The idle money can be applied on Option strategies and momentum strategies to generate an incremental return.

Short EURUSD in 2015 (Feb-March) – Shorted @ 1.21 & booked profit @ 1.16
Short EURUSD in 2015 (Feb-March) – Shorted @ 1.11 & booked profit @ 1.05
Bought Bank Nifty in 2014 (Nov-Dec) – Bought @ 15000 & booked profit @ 19000
Bought USDJPY in 2014 (Oct) – Bought @ 110 & booked profit @ 118

Jesse Livermore: (Great Bear of Wall Street) an American stock trader. He was famed for making and losing several multi-million dollar fortunes and short selling during the stock market crashes of in 1907 & 1929George Soros: Popularly known as “The Man broke the Bank of England”. He brought Bank of England to its knees when he demolished the monetary system of Great Britainwith an elegantly constructed bet against its currency

Richard Donchian: Creator of the managed futures industry