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Pinnacle Alternative Investments, LLC
ROCK ("Results Oriented Commodity Knowledge")
There is no performance data for this program
Program Description: The advisors sole trading program as of the date of this disclosure document is called ROCK ("Results Oriented Commodity Knowledge"). ROCK is a diversified systematic trading program that reflects the combination of 35 years of trading insight and experience and a rigorous 5 years of testing, research and development prior to it's introduction by the Advisor. The core of ROCK trading approach encompasses a complete understanding of the commodity markets and follows a strict set of trading rules that eliminates the detrimental emotions of fear and greed. The basis for the manner in which ROCK determines buy and sells signals is derived from a fundamental understanding of Elliot Wave Theory. There are 8 trading and money management rules that are actively employed in the execution of ROCK. They are as follows: Rule#1: Investment wisdom requires diversification. Subsequently, ROCK scans 39 different commodity contracts covering all 8 major commodity sectors that are traded on the CBOT, CME and NYBOT/NYMEX: Currencies, Stock Indices, Financials, Metals, Softs, Energies, Meats and grains. The 39 commodity contracts were selected based upon their trading market volume and liquidity. Rule#2: Trading time frames can range from 1 minute to several months or years. However, is has proved best for ROCK that trades be analyzed on a daily price chart. The longer the time frame, the more accurate the charting. The shorter the time frame the more inaccurate the charting. Since the advisor feels that daily charting is more consistent than hourly charting or charting of lesser time frames and weekly and yearly charting requires excessive account sizes and drawdowns, the daily charting eliminates other time frame shortcomings. It is long enough to give accurate charting and short enough for most investment account sizes. Rule#3: In order to generate profits in the commodity markets prices need to rise or fall (unless options are part of the trading program). Prices that move sideways are generally unprofitable and account for a considerable % of all trading losses experienced by professional and amateur traders alike. ROCK seeks to enter commodity markets only where there is an indication of an impending up/down price movement. Rule#4: Identification of vertical price movement is accomplished through the analysis of the underlying "current" of the specific commodity market. Prices move through repetitive geometric chart patterns and as a result, the subsurface price direction of the Market can be followed. Four proprietary oscillators that are split between daily and weekly price movement identify the directional chart patterns. These oscillators measure the momentum of the market and the speed of that momentum. Rule#5: Once a market displays a potential price movement (either up or down) strategic geometric points that underlie the geometric chart patterns are used only if they are in the direction of market momentum. Additional contracts are added to a commodity price movement if the proprietary oscillator indicators show momentum and/or momentum speed strength. Rule#6: After a position is taken, profits need to be protected or a loss needs to be minimized. Two proprietary moving averages are used to determine most exit points. Typically, stop-close-only ("SCO") orders are used to guard against market price volatility that is contrary to the overall market direction. The use of stop ("STOP") orders is employed only after a market movement is nearing its' end point. The end of a seasoned price movement is determined by a change in momentum, as well as an increase in trading volume, but also with a commensurate decrease in the price-to-volume ratio. The employment of market ("MARKET") orders to exit a position(s) is used only in case of a daily windfall gain (as determined by a set proprietary of rules developed by the advisor). Rule#7: Money Management; Account size minimums are established to allow for all entry signals covering 39 different commodity contracts. Portfolio balance is positioned amongst the 8 different commodity sectors and the margin-to-equity ratio averages approximately 40%-80% during any given time when accounts are actively traded. Of course, this level of margin-to-equity ratio usage implies an aggressive philosophy as employed by ROCK. Rule#8: Commodity brokerage competency in managing every aspect of the order handling and order execution phase of ROCK's implementation is a must. Trading system understanding, trade facilitation, trade monitoring, daily account reconciliation with the clearing firm, industry expertise, compliance knowledge, as well as people and business skills are all essential for the correct and optimal implementation of ROCK's methodology.
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