Optimal Models and Decisions Inc.

Heuristic Trading Program

The Heuristic Trading Program uses algorithms developed to replace human traders in a Virtual Trading Room. Overseeing the trading activity of the algorithms is the Risk Manager, whose aim is to produce the best risk-adjusted return. There are currently eleven types of Traders, each specializing in a particular time-frame and trading style. The styles include: trend following, contrarian, Dow theory, pattern recognition and signal processing. The algorithms are based on original research, not on widely used technical indicators, and embody statistically validated trading rules which recognize trends and anticipate market reversal points. A distinctive feature of the algorithms is the Adaptive Learning process, which uses trading losses as a learning experience. The Heuristic Trading System is based on the concept of a Virtual Trading Room, where algorithms replace traders and risk control procedures replace risk managers. The Trading Room consists of Trading Desks, one for each market traded, which are staffed by a diverse team of Traders. Overseeing the trading activity is the Risk Manager, whose aim is to produce the best risk-adjusted return. There are currently eleven types of Traders, each specializing in a particular trading style such as trend following, contrarian, Dow theory, pattern recognition and signal processing. The algorithms are based on original research, not on widely used technical indicators, and embody statistically validated trading rules which recognize trends and anticipate market reversal points. A distinctive feature of the algorithms is the Adaptive Learning process, which makes use of trading losses as learning experiences. The Traders are included in the Virtual Trading Room if they pass a multistage ‘hiring’ process. For every market traded, thousands of Traders from each trading style are evaluated by criteria of return, volatility, sensitivity to parameters change and diversity to produce a Trading Desk with the highest forecasted risk-adjusted return. This process is highly systematized and is proprietary to Optimod. Optimod will continue to enhance the Program by adding new markets and developing new trading methods. A proprietary systematic methodology will be used to determine their suitability for inclusion in the Program.