Chuck LeBeau's System Traders Club announces:

"MACK" The NYFE TRADING SYSTEM

69% Winners -Trades Long and Short - Profit of $173,475 - Profit Factor of 6.20

Background

Since we released our Prudent S&P System we have had numerous requests for a system designed for the NYFE Index or the Dow Jones Index. The lack of availability of accurate historical testing data for the Dow Jones futures led us to select the NYFE as the trading vehicle for this system. The NYFE Index can be traded with much lower margin requirements than the S&P Index and our historical testing showed it to be an excellent trading vehicle.

Strengths of the System

We were quite pleasantly surprised with the results of the NYFE testing. The "MACK" System performs well on both long and short trades and shows an unusually high Profit Factor (Gross Profit Divided by Gross Loss) of 6.20.

The "MACK" System buys on dips and goes short on rallies using a novel strategy that does not include using RSI. The system incorporates break-even exits and does an excellent job of locking in profits at various levels. It tends to hold winning trades for about three weeks while generally cutting the losses after 4 market days. In our ten-year test period the system proved to be remarkably profitable in spite of spending very little time in the market. Trading one contract without any compounding of profits would have resulted in a hypothetical gain of $173,475 with a maximum drawdown of $7,550. The system easily meets our high standards for accuracy with 69% winning trades (31 winners out of 45 trades).

After adding $150 to every loser and subtracting $150 from every winner to allow for the substantial slippage and commission that is characteristic of index trading in recent years, the winning trades were still larger than losing trades by a factor of 2.80 to 1. In spite of these high costs the average trade (win and loss) was a very substantial $3855. We consider this to be an outstanding number. In our test period there were 8 consecutive winners while the maximum consecutive losers was only 2. The largest winning trade was $44,175 which accounted for about 25% of the net profit. The system has an unusually high profit factor (gross profit divided by gross loss) of 6.20.

Weaknesses

The liquidity of the NYFE futures market concerns us. This market is not nearly as widely traded as S&Ps and we have little personal experience in trading it. Although we have allowed a generous $150 per trade for commissions and slippage we have no way of knowing if this is a realistic figure.

Like most stock index systems the "MACK" System has made most of its historical profits in the last year or two and a few very large winners account for a substantial portion of the profits. The bullish bias of the recent historical data could easily lead traders to be overly optimistic about the potential for this system. Although this system does trade short from time to time during sharp declines, the underlying strength of the market will ultimately determine how profitable this system might be in the future. The "MACK" system does not require a roaring up trend to be profitable but it would certainly require a very strong market to duplicate the remarkable historical performance of the last year or two. Over half of the profits in the last ten years were made in 1998 and the system is off to a very good start in 1999.

Summary

We believe the "MACK" System is very capable of trading successfully in the broad-based NYFE Index and we expect it to be a very popular system, especially for those traders who would prefer to avoid the high margin S&P futures market.

Because the "MACK" System trades both long and short it appears to offer a great deal of potential in the current market conditions. We think traders will like the logic of the simple but unique entries and exits. The system has not been curve fit to maximize big profits and it is just as capable of taking small profits as big ones. We could easily have optimized a few of the parameters to bring the hypothetical profit level above $200,000. However we elected to stay with less profitable parameters that showed evidence of greater potential robustness. We think the "MACK" system will hold up well over time. There are many elements of the logic that could easily be applied to other markets and with larger stops the system also makes money in the S&P.


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 MACK NYFE System is priced at $250.00 and comes with complete documentation, fully disclosed rules and ELA code for TradeStation and SuperCharts 4.0. 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_mack.htm