I want to spend a few moments addressing a few of the basic questions that we get from people when they first start to learn a little about what we do here at RBJ Financial Group. These questions boil down to the basics…
”What is it about our approach to the world’s financial markets that allows us to produce radically different results?”
The simple answer is that we are approaching the markets in a radically different way, and I want to talk a little bit about that…
What you see on your screen right now is the pattern commonly referred to as a “bull flag”. This is a price formation that predicts that the market is likely to move back up to the highs, and perhaps break beyond.
This is a pattern that carries with it a stastical edge, and that is really where I want to start here.
Let’s go over to a web site called random.org, which creates random numbers from atmospheric noise, and let’s generate 1,000 numbers from 0 to 100, and I’ll just format that into a table 10 columns wide.
Now…Let’s imagine that like the bull flag, which has about a 60% chance of producing a profit (Which of course means that there is a 40% chance that it could produce a loss on any individual trade). This is what we would call a stastical edge…And that’s a good thing, because we know that we will win more times than we lose and that means that it could be turned into a very profitable trading strategy.
Now, let’s look at what the experience of trading that strategy would be like…
So, we have a bunch of numbers on the screen from 0 to 100. Let’s assume that any number above 60 is a winner, and anything below is a loss…
So if we use this to model how your experience might be, we can see that here is a winner, that’s great and feels good…The next two are losers, and then you have a winner, than a loser, than another loser, than a winner, and another winner, and yet another winner…
Now, you have had a nice “win cluster” there. Now, because we are human beings, we might feel excited and validated by this string of winning trades, and it’s easy to inappropriately view this win cluster as the result of something that we have done, when in reality it is just the expression of the stastical reality of that patterns edge in the markets.
This is the type of “stastical edge” that most market participants in the trading world utilize. There will be some form of a “setup” or methodology which defines their entry and offers a stastical probability for success.
This is where we begin to highlight the paradox of our firm’s 3D Apex Predictive Failure Technology™. This is the name that we have given to the toolset that we use to analyze and measure the markets. This “instrument panel” was created and developed by our partner Roger Khoury, and is the underlying engine for everything that we do here at RBJ Financial Group.
A trader who approaches the markets with a stastical edge will experience heartbreaking loss clusters and euphoric win clusters. These have little to do with their skill, or their ability to find or execute their trades, but rather are simply an expression of stastical reality.
Now, I want you to imagine that you have a technology that allows you to determine if a trade is likely to lose you money BEFORE you take it!
Imagine for a moment that we are about to bet $1,000 in a coin flip.
Now, everybody knows that a coin flip is a 50/50 proposition…So let us introduce some technology.
Let us set up a high speed camera that tracks the coin as it flips through the air, and let’s hook that camera up to a computer that models the coins arc in real time as it flips through the air. This model gives you an accurate indication about how the coin will land.
Now, this model will not be perfect, but it will be very accurate because of all the information gained from the camera and will be able to predict what is most likely to happen to the coin as it lands.
Now, what if the $1,000 bet was something that you could place at the last second?
If this were the case, you could place your bet when your technology indicates the odds are high for the coin to land “heads”, and avoid placing a bet if the prediction was that the coin would land “tails”.
If you flipped the coin 100 times, you could expect to see 50 heads and 50 tails. But if your technology break-through could help you avoid 90% of the “tails”, you would only lose 5 times out of the 50 potential losses.
Now, out of 100 flips, you are betting on only 55 of them…50 that were predicted to be winners, and 5 that turned out to be losers.
50 winners divided by the 55 flips that you participated in gives you a %90.9 EFFECTIVE win rate…On a 50/50 proposition!
It is important to understand the difference between a stastical edge and an effective or “experienced” edge in the markets…This is how 3D Apex Predictive Failure Technology™ uses its objective and scientifically measured informational advantage to break the risk/reward paradigm and thus allow for sustained win rates that “should” be statistically impossible.
What is interesting is that our ability to predict losing trades by utilizing 3D Apex Predictive Failure Technology™ also hovers around the 90% confidence level.
As I record this, we are ending the first quarter of the year…In January, we had 4 trades that were fully qualified due to the crosscurrents of geopolitical risk that have been washing through the markets. This meant that the vast majority of opportunities that we saw were very likely to fail. Because we have the informational advantage that 3D Apex Predictive Failure Technology™ offers, we did not take these trades, we did not lose money on these trades, and ended up the month without a loss.
In February, we had an even more chaotic market, and only 2 opportunities appeared that were fully qualified. As we sit here now, there are a few weeks left in the quarter, and for the month of March, we have taken 3 trades that passed our strict filtration and qualification process.
So, you can now see how we are able to step outside the stastical norm, and its distribution of gains and losses, and bias that in our favor. We were able to avoid most of the losing trades, while maintaining our ability to participate in the trades that produced gains. And of the last 20 trades that we passed on due to non-confirmation, only 2 met their profit objectives, thus proving the 90% success rate at predicting failure and avoiding trades that would have produced a loss.
This is why we call the instrument panel that Roger Khoury invented 3D Apex Predictive Failure Technology™, and this is why we can routinely produce gains in the markets with a consistency and quality of experience that many would deem impossible.
The other important edge we have here at RBJ Financial Group is that the majority of our competitors…The big Wall Street banks, fund managers and other entities are forced to be in the market. They either are pressured to trade and invest in order to look busy at the office and justify their paycheck, or are forced to be invested in the markets due to policy and their diversification mandate.
These forces restrict their agility to interact with the market due to those cultural pressures or investment policies.
At RBJ Financial Group, we own the firm…Myself, Bo Yoder and my partners Roger Khoury and Dr. Jared Goldstine all know that opportunity doesn’t necessarily come when you want it…it is something that you have to wait for and maintain patience for.
The markets will greatly reward you for having the discipline and patience to wait, and that patience is why we have had a 90% success rate this year on both picking the opportunities that were likely to make us money, as well as avoiding 90% of the potential opportunities that may have looked good on the surface, but had hidden risks that were likely to cause the trade to fail and lose us money.
This is the difference between a basic stastical edge and an informational advantage such as we enjoy through the utilization of 3D Apex Predictive Failure Technology™.
Another thing that is very useful for us in creating asymmetric risk/reward profiles, (Avoiding as much risk as possible, while capturing as much reward as possible) is a technology that allows us to objectively measure and analyze the power, liquidity and order flow in real time.
So when we take a trade that has a 90% chance for success, this still exposes us to a 10% chance that the trade will fail and lose money.
Our proprietary technology lets us monitor the health of a move in real time as it happens, which means that we can often predict failure within the 90% probability and exit the trade with a small profit or loss if it happens to be one of those 10% of opportunities that will end up as a failure.
We can literally see the volume and energy dry up and that allows us a great deal of flexibility to exit at our leisure. This powerful informational advantage works to reduce risk and losses, while helping us identify when we should stay in and hold onto a winning position to extract maximum value from the markets movement.
Simply put…Our edge in the markets allows us to break free of the conventional risk/reward paradigm and experience smaller and fewer losses, while capturing more and bigger gains. This sets us apart from all our peers as we are able to consistently see the kinds of results that others simply can’t or don’t produce.