By Zachary Storella
Today, I am very pleased to bring you our latest trader interview with Chris Vermeulen. Chris is an experienced trader in stocks, commodities, currencies, ETFs & futures and is the founder of popular trading websites TheGoldandOilGuy.com and TheTechnicalTraders.com. In this interview, Chris talks about his newest website at AlgoTrades.net that is geared towards clients who want to utilize his automated trading service. Chris shares his thoughts on automated trading, his system and some ideas on the outlook for the markets.
Q: You have developed something that is highly sought after for many traders, you have successfully created an automated trading system that trades the markets for you and your clients. Can you give us a little history on your automated trading, how and why you developed your system and what you feel your system does particularly well? What markets does your system trade?
A: Sure, to be completely honest I do not have a whole lot of history with automated trading. That side of the trading is relatively new to me. I’m not a programmer, not a mathematician, not a rocket scientist, and I don’t come from an Ivy League school. I’m just an ordinary hard-working individual.
I think it’s everyone’s dream to have a system that trades for you and makes money. But that is easier said than done and why there are only a handful of us providing fully automated trading systems with proven results.
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What sets my automated trading system development apart from the others available is that I did not use software to create and test trading strategies to find the best method to trade. Instead I used my 16 years of trading knowledge and proven strategies and simply hired one of the best system programmers to automate my trading strategies and five years later AlgoTrades system was born.
Most systems that are built by individuals look and work great when back tested but when running live in the market trading real money they underperforms or completely fail.
Because I simply automated a few of my strategies that I know make money it was a no-brainer to convert them into an automated trading system. But don’t get me wrong running in automated trading system is no simple task. It has a steep learning curve and still requires a lot of work monitoring and updating the robot.
The benefits of automating my trading strategies far outweighs the costs and effort to build and maintain them. The increase in my trading performance, reduced workload, and my overall stress that comes with trading is now a fraction of what it used to be. And best of all I can share my strategy with those who do not have the time to learn and trade on their own.
The elbow trade system does particularly well in low volatility sideways markets, and also during trending market conditions. It currently struggles with a sideways market that has high volatility. If the market is in heavy rotation flipping from an uptrend to a downtrend repeatedly over a short period of time we can get whipsawed out of positions and have multiple losing trades.
2014 was the first year the system ran live trading money of my own and clients. While the first year was a big success for investors earning 16.2% ROI the elbow trade system is still in its infancy stage. This year I plan to roll out AlgoTrades 2.0 which has many improvements including increased performance, more trades, added my high volatility trading strategy and improved position and money management rules, so I’m very excited to say the least.
The system currently trades the ES mini futures and ETF’s based around the SP 500 index.
Q: Who do you think would be the ideal candidates to sign up for your service and utilize your automated trading system?
The ideal candidate would be someone who wants a portion of their portfolio actively traded in a way that can generate profits in rising, sideways and falling market conditions. It would simply add diversification to the portfolio.
It also caters to those who are having trouble making money in the markets and/or do not have the time to learn and trade on their own.
Q: What should prospective clients expect from your service?
A: AlgoTrades is a true full-service automated trading system. We work with select brokers and our system links automatically into the client’s brokerage account and does the trading for them. The system generates anywhere from 20 to 60 trades per year.
Q: In general, what type of characteristics do you think an automated system requires in order to be successful in today’s markets?
A: As we all know the stock market has many different price characteristics. Between high volatility to low volatility, to uptrends, side trends and down trends and automated system must be able to identify each market condition and switch trading strategies when the market permits.
Unfortunately most system developers only create a long strategy and a short strategy. They do not incorporate multiple trading strategies for various market conditions and because of this it causes their system to fall in and out of favor. This means winning streaks followed by even longer losing streaks.
Q: I know you have been an active trader in the SP500 stock market index. We have seen this market continue to go on to new high levels. Can you share your analysis of this market? Do you feel that we are going to keep going higher in the SP500?
A: Sure, my Outlook varies drastically depending on the time frame you are interested in. If we look forward just a month or two I expect the stock market to slowly rise but with increased volatility (choppiness). During the second half of 2015 all the way through to 2016 I feel the US stock market will be forming a major market top. 2016 will most likely be down year for stock investors.
As an active Gold & Silver trader, you have seen these markets trading more bearish since the middle of last year. Are you bullish on these two commodities going forward or do you think we are looking at more bearish levels in the future? What indicators do you like best to help you analyze these markets?
A: I actually just wrote a detailed report on what I expect gold and silver will do in the coming weeks in years. You can learn more about this CLICK HERE. In short though the precious metals sector has been out of favor for several years along with the commodity market in general. With the stocks in the late stages of a bull market we should see commodities become investment of choice later in 2015 and into 2016.
Finally, after touching upon some stocks & commodities, do you feel there is another market or instrument that may have a chance to be an out-performer this year, that may not be getting the attention by traders or investors that it should?
A: I think there’s some great long-term plays out there. I like sugar (SGG), livestock (COW), oil (USO), and Russia (RSX). Looking forward 6 to 12 months, these could post solid gains while the rest of the US stock market struggles.
Thank you Chris for taking the time to answer my questions in our latest interview. To read more analysis and trading ideas by Chris, please visit his websites at TheGoldandOilGuy.com, TheTechnicalTraders.com and AlgoTrades.net.