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About Edge Investment Management Limited
Edge Investment Management Limited is a BVI limited liability company incorporated in June 2006. EIM has been registered with the Commodity Futures Trading Commission (“CFTC”) as a Commodity Trading Advisor (“CTA”) since August 8, 2007 and has been a member of the National Futures Association (“NFA”) since August 9, 2007.
Trading Program Description
The objective of EIM Global Diversified Program is to seek high absolute returns with low volatility and low correlation to the traditional equity and fixed income investments. There can be no assurance that EIM and its client accounts will achieve this objective, or that the client accounts will not incur losses. Moreover, there can be no assurance that EIM’s trading will yield the same results as it has in the past.
Investment Philosophy:
The development of our trading models is based on the finding that the price movement of financial and commodity markets is not totally random. It follows somewhat of regular patterns. This is because the price movement reflects the human nature and emotions of investors, which results in similar reactions under similar market conditions across various markets. By using a systematic and discipline approach to follow through such regular patterns and invest in a well-diversified portfolio, the performance is usually more consistent than using a discretionary approach.
Investment Process:
Quantitative Strategies - We have taken a scientific and quantitative approach to conduct a comprehensive research and analysis of various futures markets across massive data sets. And we have identified numerous regular patterns, which repeat so frequently in these markets. However, only those are logical, statistically significant and profitable across various markets, and have been proven to be the most robust are used to formulate strategies in actual trading.
Non-Correlated - Each strategy is by designed to deal with a specific pattern or market condition, and which is independent and non-correlated to the others. These strategies can be categorized as but not limit to Intra-day Trend Following (which is different from the traditional Long Term Trend Following), Counter Trend, Volatility Expansion/Contraction, and Price Pattern Recognition. They are non-parametric and adaptive to different market volatility conditions.
It is possible that one strategy may signal a long position while another strategy signals a short position in the same market. EIM intends to offset those signals to reduce unnecessary trading, but if the signals are not simultaneous, both trades will be taken and, since it is unlikely that both positions would prove profitable, in retrospect one or both trades will appear to have been unnecessary. EIM follows trade signals of each strategy independently of the others.
Proprietary - By combining and employing a set of non-correlated strategies (some are mutual exclusive while some are complementary to each other) in a single market, we have developed our robust proprietary trading models which are able to capture as many trading opportunities as possible while reduce the risk exposures.
Diversified - The Program invests only in the markets with high liquidity (in the opinion of the Advisor), which including but not limit to stock indices futures in US markets (E-mini S&P 500, E-mini Nasdaq 100, E-mini Russell 2000, E-mini S&P Mid-cap 400), European markets (DAX, CAC40, FTSE 100, DJ Euro Stoxx 50), Asian markets (Nikkei 225, KOSPI, MSCI Taiwan, HSI, HSCEI); currencies futures (EUR, GBP); energies futures (Crude Oil, Natural Gas); metals futures (Gold, Silver).
Markets in the same time zone tend to be more correlated to each other. Thus, the portfolio under management is not only diversified by strategies, markets and asset classes, but also by time zones, which may reduce the risk exposure to certain contingency events (e.g. system failure, internet connection problem, political incidents) as well.
Day Trade - Being a day-trade program, all positions are exited before the end of day to eliminate any overnight risk. This is an edge that allows the Program to manage the portfolio more aggressively with a higher margin/equity ratio.
Besides, as the Asian markets are closed during the European and US sessions, all Asian contracts positions are exited as well. The margin allocated for trading Asian markets will then allocated for trading European and US markets. In other words, it can use the same capital to invest in more markets and so as to capture more opportunities and more profit while reducing the risk exposure. With such arrangement, the average monthly return has been increased while the portfolio maximum drawdown has been reduced in our rigorous back tests and actual trading. However, there can be no assurance that such arrangement would not increase the risk exposure in the future, especially when the historically non-correlated strategies and/or markets may at times exhibit a high degree of correlation. As it may occur, a client’s account can experience a dramatic drawdown in its equity.
Automated Execution - The Program is a systematic and mechanical trading model. The execution of the trading strategies, trade allocation and risk management are fully automated by the system with the cutting-edge technologies. The system will be overridden only in certain extraordinary circumstances that rarely happen. However, discretion plays a role in the evolution of the trading system over time as the Advisor seeks improvements to the trading strategy.
Risk Management
The risk management of the Program is monitored and controlled by our proprietary model in certain levels: individual strategy, individual market, and the whole portfolio. Each open position is protected by a stop order that is automated generated by the system shortly after the entry order has been triggered. During a significant drawdown in equity, the system may scale-down the position size to reduce the risk exposure.
