Chuck LeBeau's System Traders Club Announces:

The "PRUDENT" S & P TRADING SYSTEM
62% Winners - Profit of $125,362.50 - $1500 MM Stop

Background:

We have been working on S & P trading systems for many years and we have designed several S & P systems that are capable of being highly profitable. However the potential profits always came with entirely too much risk attached. The Prudent S & P System is a breakthrough in our research and perhaps has changed the way we look at high-risk markets. Persistent research has led us to conclude that the S & P offers such an abundance of profit potential that we didn't have to be concerned about maximizing returns. Once we changed our primary focus from the profit side of the system and concentrated our research on reducing and controlling our risk at the entry level, the Prudent S & P system began to take shape.

Strengths of the System:

Because the size of the S & P contract was cut in half in 1997, we used the smaller $250 point value throughout the test period to avoid overstating profits and understating costs. In 1997 the hypothetical profits on one contract using the reduced $250 point value and $150 for commissions and slippage would have been $44,175 and in 1998 the profits would have been $41,125. Most importantly these profits were obtained with reasonable drawdowns and surprisingly tight stops. Among other safeguards, the risks in the system are substantially reduced because the system closely monitors volatility and requires us to spend the most volatile market days calmly watching the chaos from the sidelines.

In our ten-year test period trading one contract would have resulted in a hypothetical gain of $125,362 with a maximum drawdown of $8,875. Using the actual $500 point value in the trading, the gains and losses would have been substantially more. The system is reasonably accurate with 62% percent winning trades (87 winners out of 140 trades).

The long-only entry method is based on identifying dips using the RSI indicator, much like we do with the entries in our "25 by 25" Bond System. In the Prudent S & P System we have added several innovative features to help us handle the high risk of S & P trading. The exits are unique and the strategy uses logical profit targets that vary according to the strength of the trend. The Prudent System averages 14 trades per year and tends to hold winningtrades for about five market days while generally cutting the losses after 4 market days.

Weaknesses:

Being prudent has its costs and the historical profits could have been much higher if we were willing to take more risk. The Prudent System makes many accommodations and compromises to limit risk, almost to the point of paranoia.
For example, the volatility filter that we have added does nothing to contribute to profitability. Users can easily adjust the system to be more profitable and the winning percentage could also be increased,but both of these benefits would come at the cost of increased risk exposure in terms of drawdown and the size of the losing trades.

Summary:

In our opinion the Prudent S & P system is exactly what the name implies. We are pleased to have found a highly profitable S & P systems that could be operated with such tight risk control. Not everyone will agree with our decision to forsake potential profits for the comfort of trading with less stress.However we design our systems for our personal preferences and marketing considerations are secondary. We like this system and we will be comfortable trading it. We hope that many of our members will also find it to be a welcome change from the "profits at any cost" approach to trading S & P's.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.

The Prudent S&P System is priced at $250.00 and comes with complete documentation, fully disclosed rules and ELA code for TradeStation and
SuperCharts 4.0. As a new feature this system includes special coding enhancements that display orders on-screen.

To purchase the system using your credit card phone 310 265-9776 or send by fax to 310 265-9556. Members may also use our online order form on the web site at http://traderclub.com/systems_order.htm

For more details about system performance including an equity chart and a complete trade by trade report please go to: http://traderclub.com/systems_prudent.htm

Good Luck and Good Trading

Chuck