Trade the Open with Quantified Strategies

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1 Trade the Open with Quantified Strategies Scott Andrews CEO and Co-Founder

2 Risk Disclosure Statement Information contained in webinars is provided for educational purposes only. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy securities. While information contained herein is believed to be accurate at the time of publication, we make no representation as to the accuracy or completeness of any data, statistics, studies, or opinions expressed and it should not be relied upon as such., Inc, its employees, owners, and/or affiliates may have positions or other interests in securities (including derivatives) directly or indirectly which are the subject of information shown on. Neither, nor any officer or employee of, accepts any liability whatsoever for any direct or consequential loss arising from any use of this presentation or its contents. Trading futures, options on futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Commodity Futures Trading Commission (CFTC) Rule 4.41 HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. TESTIMONIALS SHOWN ON THE SITE AND AND REFERENCED FROM TIME TO TIME ARE FROM SELECT CUSTOMERS. THEIR EXPERIENCES MAY NOT BE TYPICAL OF WHAT YOU CAN EXPECT TO ACHIEVE, AS RESULTS MAY VARY. CLAIMS CONTAINED WITHIN TESTIMONIALS HAVE NOT BEEN VERIFIED. CUSTOMERS WERE NOT PAID OR COMPENSATED IN ANY WAY FOR THEIR STATEMENTS.

Today s Presentation Agenda Trade the Open with Quantified

Help you understand the 2 types of opening trades Explain

Trading Success (That you won t hear anywhere else) Four

3 Today s Presentation Agenda Trade the Open with Quantified Strategies Show the only thing that matters on my resume Help you understand the 2 types of opening trades Explain the logic & research I use to trade gaps My #1 Tip For Trading Success (That you won t hear anywhere else) Four ways you can learn more We make learning, fun. CAMERA ONE STANDBY

4 Scott Andrews Bio Full-time Trader for Over a Decade Educated Thousands of Traders Since 2008 Took a Company Public in 1999 (SQI) B.S. from West Point, MBA from UNC Former Army Officer & Helicopter Pilot Scott Andrews CEO and Co-Founder, Inc.

5 Scott Andrews Bio Full-time Trader for Over 12 Years Educated Thousands of Traders Since 2008 Took a Company Public in 1999 (SQI) B.S. from West Point, MBA from UNC Former Army Officer & Helicopter Pilot Scott Andrews CEO and Co-Founder, Inc.

6 Equity Curve 9/1/2007-9/1/2016 The Only Thing That Should Matter To You On My Résumé Scott Andrews Equity Curve for over 2,000 live money, futures trades since he started educating traders in September of 2007

7 The Basics of Trading the Open 1) Fade The Gap 2) Follow The Gap GAP BASICS

8 Scott, What is a Gap? A gap is the difference between a security's opening price and its prior day (session) closing price. The difference is shown visually on a price chart as a vertical space or a gap. GAP BASICS

9 Opening Gap Example Prior day s Closing Price at 4:15 PM ET Next day s Opening Price at 9:30 AM ET Figure 1. Opening Up Gap Example $ES_F, 5-Min Chart GAP BASICS

10 Option #1: Fade the Opening Gap Sell at the Prior Close Trade in the OPPOSITE direction of the opening gap which means: If the gap is UP, then SHORT. If the gap is DOWN, then BUY. Buy at the Open Figure 2. Strategy: Fade the Opening Gap, 5-Min Chart OPENING GAP FADES

11 Why Opening Gap Fades Work Economic and geopolitical events cause Futures markets to gap overnight 65% to 70% of all Opening Gaps in equity markets fill the same day Gap Fades take advantage of emotional, news-driven traders Gap Fades trade in the same direction as institutions and funds who rarely pay retail market prices at the open Scott Andrews Trading Tip Opening Gap Fades take advantage of the Mean Reverting Bias of most large, highly liquid markets such as Indices, large cap stocks and other highly liquid markets. OPENING GAP FADES

12 Option #2: Follow the Opening Gap Sell at the End of Day or pre-determined Target Buy the Open Trade in the SAME direction of the opening gap, which means: (prior close) If the gap is UP, then BUY. If the gap is DOWN, then SHORT. Figure 3. Strategy: Follow the Opening Gap, 5-Min Chart, ES

13 Scott, if a gap has a 70% probability of filling Why would you trade against it? (prior close) Because many opening gaps have a high probability of: a) Filling and then reversing, b) Trending after the open then reversing and filling, or c) Trending and never filling Figure 4. 5 min ES: Filling the gap, then reversing.

14 Gap Trading Statistics Since 2009 Fade the Gap Follow the Gap (Target: Gap Fill, with End of Day Stop) (Target: 30% of 5 Day ATR, with End of Day Stop) Since 2009, Fading the Gap and Following the Gap have shown Comparable historical performance

15 Stop and Target Placement STOPS AND TARGETS

16 Stops and Target Summary STOPS Bigger stops generally increase the Win Rate Tighter stops generally decrease the Win Rate 30% of the 5-day Average True Range (ATR) is good for Fades and Follows for most markets TARGETS Scott Andrews Trading Tip There is no right or wrong choice. It is a matter of the desired Win Rate. Trade SELECTION is your key to maximizing profits. Gap Fade: Prior session close has high win rate Gap Follows: End of day is good for profits Percentages up to 40% of the ATR works well for both Fades and Follows STOPS AND TARGETS

17 Gap Trade Selection GAP TRADE SELECTION

18 Gap Size is a Good Selection Criteria Scott Andrews Trading Tip Fades: Work best if <40% of ATR Follows: Work best if >40% of ATR Figure 5. Historical Gap Fade Results as a Percent of 5 Day ATR (Average True Range) GAP TRADE SELECTION

19 Day of the Week is a Good Trade Selection Criteria Number of Gaps Fade Win % Long Fade Win % Short Fade Win % Monday % 67% 63% Tuesday % 71% 62% Wednesday % 74% 67% Thursday % 72% 64% Friday % 69% 72% Figure 6. Day of the Week Results for Fading the Gap. GAP TRADE SELECTION

20 IQ Trade Selection Process Trend Momentum Volatility Robust quantitative analysis of the historical performance of similar gaps during similar market conditions. Trade Expectancy OB/OS Seasonal This is called: Ensemble Forecasting.

Hypothetical historical performance for $40k Fade & Follow Portfolio.

21 Hypothetical $40k Portfolio (4 Strategies: 2 Fades & 2 Follows : S&P 500 Futures & Bonds) Figure 7. Hypothetical historical performance for $40k Fade & Follow Portfolio. Commissions and slippage estimated and included. Strategies include Camera Ready, Good Dog, Double Check and Sister Pearl.

22 iq Strategies are Robust Auto- adapt to changing market conditions & own performance Are NOT curve fit i.e. based on optimizing targets, stops, etc. Work across multiple markets Available in limited quantities

23 Final Thoughts... GAP TRADE SELECTION

24 Why Are You Trading? Entertainment? - or - Financial Goals?

25 Which Do the Serious Gamblers Play? Slots? - or - Blackjack?

26 What Type of Strategy Should You Trade? Chart-Based Edge Quantified Edge Discretionary rules Strict, non-discretionary rules No back-tested results Quantified results available No audited performance Verified by live trading and 3rd party Historical edge promoted, but NOT proven, nor quantified Historical edge is known and proven

27 Why Risk It? Why risk your time and hard earned capital on any technique that can not prove or verify its mathematical edge?

28 Trust, But Verify years of verifiable, live trading record? Are daily results logged accurately? Reference list consisting of multi - year paying subscribers?

29 IQ Quantified Strategies are Available Via: IQ Trading Platform IQ Alerts Identify and avoid high risk scenarios Identify intraday directional biases Trade with History on Your Side Decision Support IQ Autotrading Know when an IQ Strategy identifies Autotrade IQ s quantified strategies a historically attractive trade for Manual Execution using IQ s Autotrading Apps or IQ s White Glove Service Trade Signals Strategy Execution

30 3 Ways to Learn More Try iq Tra de A lert FRE s E TR IAL Kiosk: Stop by and see us Presentation: Learn about IQ Strategies & Alerts at 8:00 AM tomorrow Online: Go to

31 Thank You for Attending We thank you for taking time to learn more about how s products and services can help you Trade Smarter and achieve your financial goals. Contact Us Share the Love, Inc. 124 Quade Drive Cary, North Carolina USA Support@.com.com

32 Additional slides not included in the live presentation are below.

33 Hypothetical $100k Portfolio (6 Fades & 4 Follows: S&P 500 Futures & Bonds) Figure 7. Hypothetical historical performance for $100k Fade & Follow Portfolio

34 IQ Solution Guide IQ Platform IQ Alerts IQ Autotrading Manual or Auto Execution Key Advantage Best Suited For Manual Unlimited trading opportunities & contracts Experienced traders Manual Real edges with minimal effort or experience required Traders looking for simple strategies to execute Not tied to desk Busy traders & active investors Auto # of Hands None!

35 What is (IQ)? Innovative financial technology company, founded in 2008, consisting of 6 experienced traders (with over 60 years of trading experience) and multiple software engineers. Member-owned. Over 30 clients are investors in the company. We provide a suite of predictive analytic tools and autotrading services. Hundreds of retail and professional traders have licensed our research for many years. Our mission is to help self-directed investors at all skill levels quietly and systematically create wealth by combining the power of big data, predictive analytics and investment automation with first class, world-class education, training and support. You might be the single biggest risk to achieving your trading goals. Get out of your own way with.

36 Which Black Jack Table? Stocks Futures Index futures provide more leverage and are highly liquid, more tax efficient, and easier for shorting. for free video on Basics of Futures.

The Cowboy Gap Fade. SFO Webinar May 18, Scott Andrews

The Cowboy Gap Fade. SFO Webinar May 18, Scott Andrews The Cowboy Gap Fade SFO Webinar May 18, 2010 Scott Andrews Disclaimer This material is intended for educational purposes only and is believed to be accurate, but its accuracy is not guaranteed. Trading