Sunday, August 21, 2011

41. The best speculative strategies for (Vanilla) Options accordingto the succesful results for decades of CHUCK HUGHES

41. The best  strategies to trade (Vanilla) Options for a free basic income accordingto the succesful results for decades of CHUCK HUGHES

A GREAT PSYCHOLOGICAL ADVANTAGE OF THE OPTIONS:

OPTIONS BEHAVE IN AN ENTIRELY MORE SMOOTH WAY THAN THE UNDERLYING SPOT  INSTRUMENT MOVEMENTS, ALTHOUGH THE ELASTICITY MAY BE LARGE AND IN THE OPOSITE WAY . THIS HAS THE EFFECT  THAT THE DETERIORATING PSYCHOLOGY OF THE DEMAND-SUPLY CRISESS AND PANIC MOVES IN THE SPOT MARKET ARE REFLECTED ENTERILY MORE SMOOTH AND QUANTITAVELY DIFFERENT TO THE OPTIONS INVESTOR . THUS THEY  LACK THE NEGATIVE PSYCHOLOGY AND CHAOTIC TURMOIL OF THE MARKET. THIS ALLOWS THE INVESTOR FOR MORE STABLE PSYCHOLOGY AND CLEAR SIMPLE DECISIONS.



The option fair pricing theory of Black-Scholes is quite unrealistic because it is based on the hypothesis of the markets being efficient and follow a random walk and furthermore that the markets are always neutral as far as trend is concerned (trendless or driftless), that is that there is 50% probability to go up and 50% probability to go down. This gives rise to a systematic flaw: The fair price of the options is wrongly valued. When buying e.g. a call options when there is an up-trend , the options is usually under-valued, as its fair pricing is based on a trendless market. Of course the market makers, detecting themselves the trend, try to correct it by increasing the assumed volatility of the underlying in their option pricing, and decreasing it in say put options. In fact not even this is adequate as by increasing the volatility the options behaves wrongly at the changes of the underlying. It would be closer to reality to change the strike price, and make it as if more in-the-money, but strike prices are never a very fine grid, rather a coarse grid. And they cannot really increase the volatility of the underlying sufficiently, as this will increase the time value of the options, and the time value itself is exploited by other traders, that e.g. buy a vertical in-the-money debit spread, betting too in the up trend of the underlying, and they profit will be more the more is the time value of the call options. Even if in an overall portfolio of calls and puts, their selective altering of the volatility may correct a bit the wrong pricing, when isolated on a call option, at a particular strike price, the options is still quite wrongly priced relative to the detected trend. The market makers by utilizing the Black-Scholes option pricing model which is hard-coded in their software, cannot really offer a realistic fair pricing for the options during a trending market, which fact, gives systematic opportunities to exploit it. And when the options are closer to expiration, and there is a clear trend, the flaw is even larger, as the time value of the option is less , therefore the "cost of the asymmetry" also less. The asymmetry in the final value of the option is the advantage of the option trader, compared to trading the underlying asset. When trading the underlying asset, there is no asymmetry in the final value, relative to where the underlying will end at expiration. But when trading e.g. a call options on the underlying there is a clear asymmetry, by the very definition of a call option. The asymmetry in the final value of the option is the advantage of the option trader, compared to trading the underlying asset, and it is better for the option purchaser, to cost as little as possible. The time value of an option can be considered the cost of this asymmetry, when buying options.


On of the best examples is the very successful option strategies as executed by Chuck Hughes (see http://www.chuckhughes.com/ or http://www.chuckhughesonline.com/ )


The best of the strategies that Chuck Hughes is utilizing is the simplest one which is buying only call options. 

A 2nd best strategy is the straddle for neutral markets 

and 3rd best strategy us the vertical bull spreads. 


https://chuckhughes.com/real-time-results/

https://www.chuckhughesonline.com/


1) Vertical (debit ,in-the-money) bull  spreads (e.g. buy a  call at 70%-80% of the spot price as strike,and sell a  call at 90%-95% price as strike, this would make the vertical spread profitable at a range of at least +-10% of underlying price changes.  The theoretical values give that such a startegy is profitable only when the volatility (thus the implied vilatility in the pricing ofthe options too) is significan which means e.g. more than 25%. The profit comes from the difference of the time value of the sold-minus the bought, but also from the width of the strike-price difference of the two.  Therefore it is significant to open the spread early enough so that there is significant time value to exploit. The spread may be exited when it reaches 90% of its profit potential.Such a strategy will be the appropriate if the market is rather stationary , with no significant trends, or that there s rather steady trend opposite to the side of the spread. (that simple option purchases can capture.)


Bellow is a simple excell-like table of the scenaria of risk for this Vertical, in the money Bull (debit) spread  from -10%  to 10% change of the underlying spot instrument at the expiration (which in the example here it was about 5 weeks (weekly options). Of course we open the spread if the prices of the options as in the table below give a  signficant profit rate (e.g. 0.2MDS OR 1mds  In other words  50%% 100% etc of an about monthly duration trade. ). The trigger of opening the spread was a 30% in the money expiration price (or a spot price at 130% of the lower buy call excirsize price) and an expectation of non-decrease or decrease at most 10% (or increase from 0% to 10%  of the value) All increase from 0% to 10% scenaria give the same profit here 148% ) . The maximum risk for the risk management is the cost of the debit spread (if the s[ot at expiration goes lower than  the lower excersize price) which should not be higher than 2%-6% of the available funds each time.
At expiration the spot value increased eventually to  5.1 thus 5% increase compared to the opening spot price 52.48. Thus it gave a profit rate of 5.97/4.03=148% (from 100 options 597$ net profit or final value ofthe spread 1000$, with initial value 403$, 1000/403=2.48 or net 148% ) , And the  maximum risk  of 403$ is a 6000$ account was 6.75% while in a 10000$ account was 4%) It seems that the frequence for each instrument that someone can find such profitable opportunities of "in the money bull call spreads" is high , probably more than 50% ofthe time. 


https://www.youtube.com/watch?v=mxirTn0vlyY&feature=youtu.be



IT IS QUITE APPARENT  THAT SINCE 5 WEEKS IS SHORT TIME PERIOD FOR SERIOUS TREND TO APPEAR AND  THE STRATEGY IS PROFITABLE FOR A NEUTRAL BEHAVIOR OF +-10% CHANGE OF THE SPOT PRICE , THE STRATEGY SHOULD BE CONSIDERED AS GAINING MAINLY FROM THE TIME VALUE OF THE OPTIONS BASED MAINLY ON THE SHORT TERM STATIONARITY OF THE MARKETS AND  STANDARD SHORT TERM  SHIFT DUE TO THE LONG TERM TREND OF THE STOCK MARKETS. THE OPPORTUNITY EXISTS AS PROFITABLE ONLY BECAUSE THE VOLATILITY OF THE MATKET IS HIGH AND THUS THE IMPLIED VOLATILITY IN PRICING THE OPTIONS TOO.

2) THE BEST STARTEGY BETTER FROM ALLCALL Option purchases. (E.g. at calls:The profit comes from the intrisic value if the underlying price increased, minus the time value decay of the premium that better be less than 1% of the overall value per month which means quite in-the-money.) If after purchasing e.g. a call option we reach at the desired profit, and the expiration is not very close, we may sell a call option to make a debit vertical in-the-money spread, that stabilizes the profit of the purchases call option, and gradually extracts the time value till expiration. In this way the initial time value of the purchased call option does not cost to us, instead an additional time value becomes profit. Option purchases (that is only buying options) is essentially the basic trading method for binary options too. At the current state of the art of binary options, are offered only at the money binary options not out of the money or in the money binary options. A successful method of trading binary options by purchases is described in post 44, after the gratido-minute-wise system. 


https://www.youtube.com/watch?v=TY6il6iwjJM

Options purchasing compared to simple spot or underlying trading has the next optimal advantage: In spot trading it is optimal to pyramid, but this has extra transaction costs. If options are utilised then the pyramiding is automatic, from the very-definition of the option fair price, that increases or decreases the price of option, as the price of the underlying goes away or not from the strike price, exactly as in a kind of pyramiding of the underlying. But there are no transaction costs here for the automatic "pyramiding" with options.The disadvantage of time-value decay of option purchases is covered by the above advantage. Thus in over all it is more optimal to conduct a seasonal trading of the underlying, with option purchasing instead of spot trading.



Chuck Hughes video here. https://www.youtube.com/watch?v=mowEUI0INCI
https://www.youtube.com/watch?v=zTpgpvZ6Vds

Chuck Hughes started with an account of about 4,600$ and after some years made it some millions. The first 2 years made 460K $, which is 21% nonthly reinvested. And at that time weekly options were not even available in the stock exchanges!


https://www.youtube.com/watch?v=dZDk03C0zaU&t=1638s

For a technical scientific discussion which is relevant the next is a link of a published paper


by the author.


http://users.softlab.ece.ntua.gr/~kyritsis/PapersInEconomics/InsuranceOpFairPricing.doc


Other also very successful option strategies can be found in the book by Jeff Augen.


His approach is not that of Chuck Hughes (who is exploiting the systematic option risk over-pricing. through high time value of the options) but he is based on the known systematic periodicity of the stocks prices volatility at the dates of publication of the financial statements (quarterly publications) and therefore his strategy is a volatility long strategy as it is not known if the excitement or panic will follow the publication of the financial statements.


The Volatility Edge in Options Trading (text only) 1st (First) edition by J. Augen [Hardcover]


http://www.amazon.com/Volatility-Options-Trading-First-Augen/dp/B003SCFAI4/ref=sr_1_2?s=books&ie=UTF8&qid=1339515602&sr=1-2


If we want to compare the methods of J. Augen with Chuck Hughes, by far the Chuck Hughes method is better as it is based not any period demand-supply effects but on the way that the software systems define the "fair" price of options which in fact is a systematic overpricing of the volatility risk. This flaw is always there and can be exploited systematically.


A call options can be considered an insurance contract for losses from short position of the underlying. And a put option an insurance contract for losses of a long position of the underlying.


Buying and selling such insurance contracts, is business like that of an insurance company which is is selling insurance and at the same time it is purchasing reinsurance from other insurance companies. If in addition there is "flaw" of wrongly valuing the insured risk, then such business will be lucratively profitable.


Since 2005 to 2010, the Chicago Board of Options Exchange (CBOE) started introducing the weekly options that expire every Friday (and now start every previous Thursday thus allowing for rollovers). In this way the "flaw" of the time-value of the options became very little , and decreases very fast as it is close to expiration. And now there are weekly opportunities, to follow one of the many option strategies, with easily known outcome at the expiration. Theoretically at least 50 opportunities per year.


And even without any "flaw" in the option pricing, the option strategies allow to design and "insure" events that are of more than 99% probability, that they will not happen, so there is the opportunity for systematic gains. And even if this 1% probability insured event is approaching 20%-30% loss in the trade relative to its initial cost), then we can easily take action (with once per day monitoring the account) , close the combination with a rather fair loss, and "insure" the opposite event, again with 99% of not happening. In this way the weekly action is saved, to a profitable result again. In this way, in a quite easy daily protocol, even without robots, a very good income can be created, with weekly profiatble results, that can go for 5 years with 100% succesful weeks! In comparison such a situation may be almost impossible with forex trading.


There are by now quite many good online Options Brokers with , very good online platforms and zero minimum initial deposit when opening the account. It seems to me that due to the increased degrees of freedom in choosing the "event" that you want to "insure" with options, the capitalisation growth and income that can be programmed to be obtained by weekly, (plus quarterly and annual) options is by far more easier to schedule (to those that have studied sufficiently the options strategies) than the programmability of the capitalization growth that can be obtained with manual or 100% automated trading in forex. In other words with options you can schedule your profits with high probability of success, and this mainly does not depend on the stocks (in general underlying) going up or down, but on the known method of fair pricing of options, through the software systems of the market makers.




https://www.researchgate.net/publication/282943701_OPTION_PRICING_BASED_ON_THE_CONCEPT_OF_INSURANCE_MARKET_MODELS-FREE_METHODS_THAT_GIVE_AS_SPECIAL_CASE_THE_BLACK-_SCHOLES_OPTION_PRICING

Sunday, August 7, 2011

39. The unsuccesful practice of trading and sucessful scientific complete modeling

There are 3 contexts of laws required in trading . The appropriate LAWS OF THINKING for trading, the appropriate LAWS OF FEELINGS for trading , and the appropriate LAWS OF ACTIONS for trading. 
The Successful trading is based according to these three laws on
1) POWER OF COLLECTIVE  SCIENTIFIC THINKING: A GREAT AND SIMPLE SCIENTIFIC PERCEPTION OF THE FUNCTION OF THE ECONOMY THROUGH SOME GLOBAL STATISTICAL LAW. E.g. The law of Universal attraction in economy: that big money attracts more big money in the capital markets, and this by the balance of demand and supply makes securities indexes of the companies , that are indeed the big money, to have mainly stable ascending trend, whenever one can observe such one. Valid statistical deductions can be obtained with simple statistical hypotheses tests about the existence or not of a trend, with sample size half the period of a dominating cycle). (STABLE GREAT SCIENTIFIC THOUGHT-FORM  OR BELIEF FACTOR IN TRADING. )

2) POWER OF COLLECTIVE PSYCHOLOGY: A LINK WITH THE POSITIVE COLLECTIVE PSYCHOLOGY.(E.g. that the growth of security indexes also represent the optimism of the growth and success of real business of the involved companies. And we bet or trade only on the ascension of the index, whenever  an ascending trend is observable). (STABLE GREAT POSITIVE COLLECTIVE   EMOTIONAL OR PSYCHOLOGICAL FACTOR IN TRADING. )


3) POWER OF INDIVIDUALS SIMPLE , CONSISTENT AND EASY TO CONDUCT PRACTICE. (e.g. a trading system with about 80% success  rate that utilizes essentially only one indicator in 3 time frames, simple risk management rules of stop loss, take profit, trailing and escalation, and time spent not more than 20 minutes per day. In this way there are not many opportunities of human errors in the conduction of the trading practice. Failed trades are attributed to the randomness and are not to blame the trader). (STABLE SIMPLE AND EASY PRACTICAL  FACTOR IN TRADING)

We may make the metaphor that successful trading is the ability to have successful resonance with the  activities of top minority of those who determine the markets.

In trading there are 3 components in the feelings that must be dealt with. 1) The feeling of MONEY itself, 2) The feeling of the UTILITY of the money 3) The feeling of the RISK of the money each time. What is called usually money management in trading is essentially RISK MANAGEMENT. 



VALID STATISTICS AND PREDICTABILITY
We must make here some remarks about the robust application of statistical predictions in the capital markets.

1) The theory that the efficient markets and in particular that they follow a pure random walk is easy to refute with better statistical experiments and hypotheses tests. The random walk would fit to a market where the sizes of the economic organizations are uniformly random. But the reality is that they follow a Pareto or power distribution, therefore this is inherited in the distribution of the volumes of transactions and also in the emerging trends or drifts. 

2) The statistical models of time series  are more robust , when they apply to the entity MARKET as a whole and are better as  non-parametric , and not when they apply to single stocks and are linear or parametric. The reasons is that  a time series as a stochastic process , requires data of a sample of paths, and for a single stock is available only a single path. While for all the market the path of each stock or security is considered one path from the sample of all paths of all the stocks. 

3) The less ambitious the statistical application the more valid the result. E.g. applying a statistical hypothesis test, or analysis of variance   to test if there is an up or a down trend (drift) or none, is a more valid statistical deduction , than applying a linear model of a time series and requiring prediction of the next step price. 

4) Multivariate statistics, like factor analysis, discriminant analysis , logistic regression,  cluster analysis , goal programming e.t.c.,  are possible to utilize for a more detailed theory of predictability and of portfolio analysis, and sector analysis of the market and not only H. Markowitz theory. 

5) In applying of the above applications of statistics, the researcher must have at first a very good "feeling" of the data, and should verify rather with statistics the result rather than discover it. 

6) The "Pareto rule of complexity-results" also holds here. In other words with less than 20% of the complexity of the calculations is derived more than 80% of the deduction. The rest of the 20% requires more than 80% more complexity in the calculations.


The scientific statistical and mathematical method can answer in a valid and reliable way the next questions.

1) Is there a trend  (drift) in the market or in a particular instrument ?
2) Is the trend up, or down or neutral?
3) What is the expected  and most probable duration of the trend?
4) What is the most probable slope or intensity  of the trend?
5) What is the average volatility of this trend ?
6) What is the most dominant cyclic behavior in a particular time scale?
7) How predictability depends on time scales?
8) What are the betas per instrument in the market relative to the whole of the market?
9) What is an optimal according to probability of profit , portfolio of instruments in the market?
10) What is an optimal according to portfolio volatility  , portfolio of instruments in the market?
11) What is an optimal trading in respect to escalation, stop loss and take profit or trailing based on the probability of crashing the account ?
12) What is the optimal risked  funds in opening a position?
etc


The statistical quantities from the front-office in trading need to me measured are 
1) the price position in the channel around the average, 2) the velocity (1st derivative) and 
3) the acceleration-deceleration (2nd derivative), which is done as statistical quantities by a hypothesis test or confidence interval. 
4) The support-resistance levels can be measured also by action-volume histograms.  The measurements are done with convenient indicators, and can also define in a statistically valid way, not only , the channels , the trend, reversal, and
5)  (Eliot) waves but also 
6) the spikes
7) It is required also an in advance in the past measurement and discovery of the basic stable cycles in the markets (see post 5)
8) An in advanced in the past measurement and discovery that trends duration and length, and volumes follow the Pareto distribution (see post 11,25 etc). 
In addition for the back-office of trading we need to measure the 
9) probability of success of trade based on the past history of trades, to apply the Kelly criterion, and also 
10) the average rate of increase of the trading funds and
11)  its variance again from the past history of trading.

The back-office statistical quantities in 9), 10), 11) are related , by simulation as e.g. in the simulator in post 43.

I have also created a simulator to experiment with different rules of withdrawals.

There are many who complain that the indicators have lag, and prefer not to use indicators at all, but only the prices. This is rather stupid! The indicators when are measuring a statistical quantity  MUST have lag, because we are not interested for the price at the now only, but in a short-term past horizon too, which defines the statistical momentum which is statically conserved. It is not a race of speed, it is  a challenge of successful perception. The science of statistics is the best for the moment one can have , from the collective scientific thinking, and collective consensus, and we must  be honest and humble to admit is restricted abilities, but also trust , respect it and be confident for the success   when applying it. When we are applying the statistical mode of thinking for the markets, we never run serious dangers of being "burned"and "busted" in our deductions, as statistics claims everything only up to some probability, or probability inequality and intervals.  


There are some also that claim to have "intuitive guessing" about how the markets will move beyond the observable state of the markets. This of course cannot be included easily in  the standard statistical inference. But it seems to me that sometimes, this is in certain human and social environmental conditions, is too much to ask from yourself, and it may fire-back to systematic opposite to the actual markets moves, guessing! I believe that fortunately pure statistical inference from the observable states of the market only,  may be adequate for very profitable trading.   

Traditionally the academic scientific world has been accused that the dominant public enforceable theory it supports is that of the efficient markets, in other words that e.g. in securities, only the very long term trend (more than 11.1 years) is real and constant, and anything else in the fluctuations is randomly neutral for up or down direction. It seems to me that there is a hidden moral reason behind it: To discourage people to trade, and encourage them only to invest long term which is the closest to real business. It is also true that it is hardly possible to find sufficient realistic and successful academic models for a time varying and variable (shorter term) trend in the markets, which is a common notion to practical traders. On the other side practical traders are quite proud of their successful practice, and that they do not make any scientific assumption whatsoever for the statistical behaviour of the markets. But what practical traders maybe ignore is that

1) For any successful trading system, there is always a minimal set of statistical assumptions about the (front office )behaviour of the market (mathematician would call it hypothesis about the market being particular stochastic process see http://en.wikipedia.org/wiki/Stochastic_process), that after these assumptions, the particular trading system is rather optimal mathematical solution according to some criteria or metrics, that leads to a growing account (backoffice statistical behaviour) .

2) Conversely of course it is known to econometricians, that from the moment you make a set of statistical assumptions about the (front office) behaviour of the markets, and set a system of criteria or metrics then there is an optimal (relative to the metrics) solution of it as trading, which makes a growing (backoffice) account.

So practical traders are one sided only: They just invent a trading protocol that creates a growing account (back-office statistical or stochastic process). Scientists are double sided: The assume a set of statistical assumptions for the behaviour of the market (front-office statistical or stochastic proces), and then rationally mathematically solve it (as we solve a system of equations) to derive an optimal protocol for trading, that creates a growing account (back-office statistical or stochastic process).
Once the scientists make the hypothesis of the statistical behaviour of the market, and once the trading protocol is defined, the back-office behaviour of the account can be derived with mathematical-statistical reasoning. While the practical non-scientific traders, just invent or discover the trading protocol, and then they must measure (back-tests) the statistical behaviour of the account (back-office statistics)

This scientist's approach we may call scientifically complete trading. It is obvious to me that the latter scientific approach has advantages:
a) It is an inner thinking imagery-temple and conceptual system of thinking which is based on the collective scientific thinking, so it is stable and rational for many decades

b) The statistical assumptions about the market may be easier to define and test compared to trading system backtesting, while the optimal trading solutions maybe non-obvious but valid mathematical solution.

There are of course disadvantages too:
a) The scientific approach is more difficult, more complicated and a minority only of scientists are good in doing it.
 b) Very often the correct statistical assumptions about the behaviour of the market, are obscured by a numerous of carrier-oriented econometricians, that are not at all interested in trading money or helping other people trade money, but just to publish an impressively complicated scientific paper.

We notice here that from an econometric point of view there are two stochastic processes:

1) The front-office statistical behaviour of the market (a complicate stochastic process)

2) The back-office statistical behaviour of the account ( a simpler stochastic process).

It is ironic that the academic public enforceable theory of efficient markets, and long term only constant trend, fits rather well to the back-office statistical behaviour of the account of a successful trading system, rather than the real statistical behaviour of the markets.

From 1997, to 2003, I was following myself the traditional, approach of practical traders, not making any statistical assumptions about the markets. Since 2004, nevertheless, I programmed a quite realistic simulator of how the markets behave statistically, and solved it to find optimal trading systems ( I called it rainbow price generator or simulator) . By far the mental and emotional satisfaction was greater. Both intellect and emotions were satisfied in a scientific valid way. But it is difficult.
I tested that any known to me successful trading system (not invented by me) when applied to my artificially generated prices by my rainbow simulator, it gave approximately the same profitability performance as when on the real historic data, Conversely, any successful trading system, that I invented, on the artificial prices of the rainbow simulator, gave approximately the same profitability performance when applied to the real historic price data.
Somehow I did it, so as to exorcise a scientific mocking voice in me claiming that "there is no long term successful trading". In addition I did it to prove to me that in shorter time frames than daily bars, there are long term successful trading systems, with surprisingly adequate profitability performance.

THE TOP 6 FACTORS OF ATTENTION IN MANUAL TRADING

1) NEVER USE ALL YOUR FUNDS FOR TRADING.  DIVIDE THEM TO TRADING AND NON-TRADING FUNDS BY THE RATIO f=R/a^2 RULE (see below for this ratio or in posts 3,13,33). THE DIVISION OF FUNDS AT EACH PERIOD IS ADJUSTED TO CONFORM WITH  THIS PERCENTAGE RATIO. NEVER WITHDRAW PER PERIOD FROM THE NON-TRADING FUNDS MORE THAN HALF OF THE AVERAGE PROFITS OF THE TRADING FUNDS PER PERIOD. This division and adjustment of the funds has been applied for many years in buy and hold investments by  professor Michael LeBoeuf. 

2)  THE ONLY CERTAINTY, WHILE TRADING IS ALSO OUR  FIRST PRIORITY: WE MAY DETERMINE THAT OUR LOSSES AT EACH POSITION WILL NOT BE LARGER THAN A SPECIFIED PERCENTAGE DEFINED BY THE KELLY CRITERION (see below or posts 3, 13, 33)

3) FOCUS ON MACROSCOPIC INSTRUMENTS LIKE  STOCK INDEXES WITH PERMANENT STRONG LONG TERM TREND, even if you want to trade at short time scales. (e.g. of the American Economy which is young and strong and indexes like Dow Jones, SnP500, Nasdaq etc)

4) FOR VERY LOW RISK AT OPENING POSITIONS ON THE PREVIOUS INDEXES WITH PERMANENT STRONG TREND, OPEN AT TERMINAL SPIKES AGAINST THE TREND. This is the Bill Williams technique. 

5) THE ASSESSMENT OF THE PATTERNS OF THE MARKET REQUIRES THAT IT IS DONE IN MANY SUCCESSIVE TIME FRAMES CHARTS. This is a basic recommendation by Alexander Elder, which, by now, it is a common knowledge to traders


6) BE FLEXIBLE IN FORECASTING THE MARKET AND DO NOT HESITATE TO FOLLOW PROMPTLY ANY UNEXPECTED CHANGES OF THE TREND OF THE MARKET.