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Substitutions Policy
We no longer permit substitution of components across systems in our portfolios. Some substitutions are still available within systems – see below for details. This change is for your and our mutual benefit. Too many people were chasing yesterday’s winners, and during this weak markets period in the first part of 2010, this placed too many contracts in the same systems and versions – causing everyone slippage. In addition to the permitted substitutions, you may add to your portfolio via individual subscriptions to natural gas and stock index systems. We have closed subscriptions to individual contracts of soybeans and meal. They are still available, for now, via portfolio subscription. ‘Trend System’ components are also not available via individual subscription, only via portfolio. Gold systems are not available for individual subscription at this time – if we find we can accommodate individual gold subscriptions without causing slippage, they will be made available. You may subtract from your portfolio by instructing your broker which components you do not wish to trade.
An additional consideration - some people were substituting for components going thru a ‘shut off’ period, because they ‘had paid’ for the components. We do not expect that all the markets or all the systems will trade all the time. Each has a low volatility shut off. This is reflected in portfolio configuration, historical performance, and subscription pricing. These periods of no or low trading activity are also reflected in the calculations showing what percentage subscription fees are of net trading gain. Note that subscription costs have been overall less than would be CTA performance fees. So don’t feel you have to substitute something when components go thru shut off periods. We provide our portfolios at ‘cut rate’ pricing (count the components) largely to accommodate periods when multiple markets and systems will go thru shut off periods, and because some people will not wish to trade all the markets represented in the portfolios. As you consider what your subscription is costing in relationship to trading performance, use at least 12 months as your time horizon, not just a month or few.
Substitutions permitted:
No substitution is permitted that will cause the portfolio to contain multiple contracts of the same system and version. Within that restriction, the following substitutions are permitted, if your broker supports the version you wish to substitute:
Kinetic Natural Gas (KNG) Any full size KNG contract for any other full size KNG contract. Any full size KNG contract for any ‘half size’ KNG contract. Any ‘half size’ KNG contract for any other ‘half size’ KNG contract.
Soybean Trader (SBT) Any full size SBT contract for any other full size SBT contract.
Stock Index Trader (SIT) Any e-mini SIT contract for any other e-mini SIT contract.
Gold Trader 1 (GT1) Any full size GT1 contract for any other full size GT1 contract. Consider the risks before switching from a version that does not hold short gold positions overnight/weekends to version ‘LS’ which does – a gap from $1,200 per ounce to $2,000 is an $80,000 increase for the full size contract.
Trend System (TS) Any trend version for any other trend version, except cannot substitute full size crude oil. Also, consider the risk before substituting e-mini crude oil ‘LS’ which trades both long and short. If crude oil were trading at $80 per barrel at the close of one day and gapped up to $180 the next morning, that is a $50,000 increase for the e-mini contract and $100,000 for the full size contract. Use care also in substituting the ‘LS’ version of Trend gold – a gap from $1,200 per ounce to $2,000 is an $80,000 increase for the full size contract.
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