-Description of Trading Methods and Strategies Objectives Trading Program 1 is a trading program that takes positions across a diversified portfolio of futures markets. Directional Bias None. The program may be net long, short or flat any particular market or sector at any time. Average trade duration: one day to several months or more. Sector Exposure The program will have exposure to all major sectors, including, but not limited to, currencies, agriculturals, equity indices, interest rates, metals, energies, softs and meats. Trading Approach In broad terms, the different trading approaches that make up the trading program attempt to generate trading profits in (i) trending, (ii) non-trending, and (iii) reversal phases of any major market trend. All trades taken are actively managed, with the view of locking in as much of the prevailing market thrust as possible, while at the same time allowing each trade sufficient room to move in order to meet its return objectives. Becker Asset Management, LLC utilizes mechanical trading systems and risk management models for all trading programs that have been developed by the principals of Becker Asset Management.
The strategies are designed to take advantage of short, medium and long-term movements in the futures markets while keeping risk to a minimum. The strategies employed do not attempt to analyze economic fundamentals or predict the direction of markets. In developing its trading strategies, the Advisor undertook trading on both a discretionary and systematic basis; the results of this and a great deal of research and development reinforced the Advisor's opinion that computer-based trading strategies are preferable to a discretionary approach in the trading of futures markets. The main reasons for this is that firstly, many of the uncertainties associated with human emotion are eliminated, and secondly, thorough back and forward testing of strategies can be conducted which allows the trader to develop a suitable risk management environment in which to trade a system or systems. While the Advisor maintains that the optimal method of trading is by the use of a systematic trading approach, in the event of unique market conditions the trading models may be overridden and the discretion of the Advisor may be used to ensure that certain risk parameters are adhered to. Becker Asset Management's trading programs and strategies operate on two levels. The first part of the strategy involves the use of two trading systems operated simultaneously; each system used is profitable if run in isolation, but the combination of different models and strategies produces better returns than any of the trading models alone. The use of multiple systems also decreases the reliance on any one market or trading strategy to produce consistent trading profits. The consistency of returns generated by the Advisor has been achieved by the use of uncorrelated models run over the same markets. The combination of these strategies, which are applied predominantly over short, medium and long-term time frames, will perform in both volatile and erratic or trending markets. The Advisor defines 'short-term' as being positions that are open for less than a month. The second part of the trading strategy involves strict risk management procedures that are used in order to achieve trading returns with the least possible risk.
The Advisor believes that the leverage offered by futures contracts can work for and against an Advisor, and the understanding of risk is essential in trading mechanical systems over a wide range of futures markets. Risk is analyzed on a market basis and used to regularly balance the portfolio of contracts being traded at any given time. This in-depth analysis of risk on a number of levels has allowed the models to operate in a manner that minimizes risk on an account without compromising the potential to generate trading profits on a consistent basis.