Website : Daily Index Trader Website
Publisher : Martin Carter
Cost : £287 with Thames Publishing 45 day guarantee
Review Date : October/November 2010

WHAT IT SAYS ON THE WEBSITE

The words "Geek" and "Nerd" seem common place on System vendor websites these days, this time the headline is "Stock market geek shows how you can take £2,461.74 ... £3,521.82 ... or £4,557.82 a month from 'unfashionable' index trading".

Martin Carter used to work in JP Morgan's Risk department, retired at the age of 49 and has been trading the financial markets for more than 30 years. He gets to his desk soon after 9am, spends 10 minutes pressing a few keys to "earn myself £101.05 ... or £139.04 ... or £113.39 ... or even £369.70". This "has brought in a 971% return on investment since 29 September 2009". This equates to "an average profit of £1,752.15 each month" or a closing balance of £53,532.13 based on a starting account balance of £5,000.

The Daily Index Trader "payout loophole" is based on pairs trading and it does not involve:

- Sitting in front of a computer waiting for complex chart patterns to evolve
- Monitoring open trades
- The need for a big trading account
- The need to have previous trading experience

The system is based on the theory "Get paid when you win, get paid when you lose" by "adding an insurance policy" that makes "it almost impossible to lose". It came about by mistake when one morning Martin wasn't thinking straight, got his numbers mixed up and placed his trades incorrectly.

Martin doubled his money on this mistake, so ran a few tests and discovered "this payout is so consistent and reliable that it's happened 76% of the time since I started live trading back on 29 September 2009".

There is a "live forward testing" statement and a host of testimonials included.

As mentioned above the system comes with a 45 day Money Back Guarantee, "if you don't see a minimum of £500 profit in your account within the first 45 days of testing out Daily Index Trader, you can walk away and not owe me a penny".

THE MATERIAL

A 69 page manual and a Trade "Evaluator".

The manual opens up with Martin providing some background and also providing his own personal email address.

He says you can ignore Chapters 1 and 2, they contain mainly background information. For a change we would say they are at least worth a quick scan through as they provide some useful information on indices and hedging. The CAC (French) and DAX (German) indices are the focus of this strategy in combination with Pairs ("hedge") trading.

Chapter 3 describes the strategy in some detail. The basics are that each day a long position will be taken on the CAC and a short position will be taken on the DAX or vice versa. The theory is that one trade will win and one will lose, the loser being around half the size of the winning trade. The major assumption is that if one trade is taken out (e.g. the CAC Long trade) then the other will go on to make double this (e.g. the DAX Short trade).

Trade sizing is vital to support the theory of this system and for this purposes the "Evaluator" (Excel spreadsheet) comes into its own. The process involves entering the CAC and DAX closing prices each morning, placing your trades as per the calculations then entering your results when the trades close out. The Evaluator is saved and the next day the process is repeated.

Trades are placed at 0915 UK time each day and chapters 5 and 6 are devoted to account set up and a detailed walk through of how to place your trades on the Gekko trading platform. It is not a requirement to use Gekko, it is simply the authors preferred platform.

Chapter 7 is devoted to risk. Three "Staking plans" are proposed, Flat, Simple compounding (both self explanatory) and "Enhanced profits". The latter determines risk based on "trends". For example, if Tuesdays win consistently and Wednesdays are bad days it will advise risking more on Tuesday than Wednesday.

There are then some discretionary elements to consider, such as news and Stop management, as well as FAQ's. Appendix A explains the mechanics of the Evaluator so the strategy can be traded without Microsoft Excel and Appendix B rounds off with an overview of Spread betting and trading on margin.

THE SYSTEM

The system is well explained as is the theory behind it. No charts are actually required to trade it as it's all based on Closing prices and the information the Evaluator throws out each morning. The Closing price data is simply obtained from the Yahoo Finance website.

The process of determining which trades to place is not straight forward the first time round, especially as you will have to ensure that the historic (Closing price) data is up to date. However, after a few goes it does become much easier and the system is then relatively easy to trade. Even absolute beginners should get a decent grasp of things within a week.

So - Each day around 0910 UK time the two Closing prices are entered into the Evaluator, the trade decision is kicked out and at 0915 trades are opened at the current market prices. These details are then entered into the Evaluator which kicks out the actual Stops and Targets to be applied to both the open trades. When both trades close out the actual results are added to the Evaluator, it's saved and then ready for use the next day.

Note: During our review an update was issued that "due to volume of business" results are being affected. It was advised to avoid 0915 to "take the 'heat' out of our trade as it goes into the markets". We had experienced no slippage to date from our broker, this, in our opinion, would be the first sign that trade volume was affecting the market. Thus all our results are still based on the 0915 entry time.

CAN IT WORK

As mentioned above, all our results are based on trading at 0915 and also using the Gekko platform as per the guidelines in the manual. We referenced only the spreadsheet (the Evaluator) and traded as advised (by it) - A 100% mechanical approach. Trades were placed every day, no discretionary aspects were applied, e.g. reference to news, etc. Of the 3 "Staking plans" we chose the Flat risk option of 2% with the view that this would make the review more measurable.

In October our performance was as follows:

- 10 days where 1 trade was Stopped out and the opposing trade hit it's Target (in accordance with the theory of the system)
- 11 days where both trades were Stopped out
- 0 days where both trades hit their Targets

In November our performance was as follows:

- 16 days where 1 trade was Stopped out and the opposing trade hit it's Target (in accordance with the theory of the system)
- 5 days where both trades were Stopped out
- 0 days where both trades hit their Targets

Performance wise, after 2 months, this resulted in a net loss of around -6% with a strike rate of just over 60%. The most troubling aspect of this, is that for a losing trade, 3 winning trades in a row are required to get back into positive territory, thus that strike rate really needs to be high.

Our results are pretty much the same as those reported by Martin, in his updates. Occasional differences will occur based on the exact timing of entries, we have to take is that this will work for/against, against/for as and when it happens.

This is a system which may interest those after a morning Set & Forget system, but only if the performance is more in-line with historic levels. With a new version of the "Evaluator" just released, we will keep our eye on this system for at least another month and report back at the end of the year.

SUPPORT

We had no reason to contact support so we cannot comment.

CONCLUSION

PRO's
• Simple to set up and operate, after a few attempts.
• About 5 minutes effort once a day around 0915.
• 100% mechanical, Set & Forget.
CON's
• Low Risk:Reward, 3 winning trades in a row are required to recover from a losing trade.
• Performance was disappointing based on 2 months live running.


We do still have an active Real-Time Trading room for this system and the link is here. For those wishing to participate you will have to own the system as the room is password protected so that the system can be openly discussed.

Do remember, your comments are important, if you decide to purchase this system, please support us by using our link and by reporting back your findings, both are valuable to us and the service.

In the Private trading room for Daily Index trader there has been a few rather poor, and some startling, results posted of late. For the DIT system the news is not good!

It was suggested (in the private trading room) that we add some comments into the open forum for the benefit of those looking at potentially purchasing the system.

Rather than me simply quote other members, possibly out of context, I thought it better that I set the ball rolling by way of some personal feedback for those that may not have access to the private (password protected) trading room for DIT. I will invite other (DIT private trading room) members to add to this thread should they so wish.

(james.mc)
I too feel that it's a concern that people will still be buying onto this, based on the information provided on the authors website, and yet there is clear information (posted here) to the contrary based on users real experiences of the system, which unfortunately is hidden from view.

If this site is designed to highlight the performance of systems, No matter if it's good or bad, should it not be that an excerpt of the information provided in recent 'summary type posts' be posted out-with the private trading room? Maybe tack them on to the SFT official report in plain view?

best regards
soultrader

SFT Reviewteam were quite accommodating and posted the following:

james.mc - You are more than welcome to cut & paste appropriate content elsewhere on this site, we welcome the offer as we are extremely busy with ongoing reviews. In doing so, assuming it is appropriate, those wishing to get a view on any system/service we cover will of course be better informed. To this end, based on the fact they are considering spending their hard earned cash, they would read the complete public thread, thus your assistance helps us kill two birds with one stone. Thanks once again.

Some of my posted comments (not in any particular order)

(james.mc)]To see where this is all going I guess this should be all about trade summary (over periods of time) rather than day to day reports (wins or losses) which don't tell much of a story.

This is me manually counting wins losses so, if I am a bit out, it's because counting numbers over ten becomes very taxing for me

Last 28 days of recent trading data from the DIT website:
02nd Nov-08th Dec (inclusive)
15 Wins
12 Losses

Last 14 days of recent trading data from the DIT website:
19th Nov-08th Dec (inclusive)
7 Wins
7 Losses

Last 7 days of recent trading data from the DIT website:
30th Nov to 08th Dec (inclusive)
1 Win
6 Losses

(james.mc)
In light of last weeks performance (during which I did not trade) previous updates and my own results I'm now putting DIT on the back burner.

I've been using DIT since August and, after a fair crack of the whip (almost 4 months) I am no better off than break even, which is not what it's all about in my mind.

I will continue to monitor performance and if I see a marked weekly improvement I will step back in.

On a simple compound strategy one loss requires three wins to recover the loss. If you see two losses in any one week then it's a losing week overall.
On a (so called) enhanced profit strategy it has been clearly proven that whilst winnings can be enhanced.. losses can be equally as enhanced!

As noted in one of my quoted comments above I stopped trading this system at break even. Others were not so lucky.

Further comments welcome....

james.mc

We fully appreciate you taking the time and effort to carry this forward from the Trading room, as the forum grows and we are requested to conduct more reviews we do have to rely on other members of the community. This is an excellent example of what we can achieve here if we continue to work together.

Thanks once again and we will soon be posting our up to date results since our review at which stage we too will be ceasing coverage.

For anyone considering purchasing this system my advice is do not do it. I have lost money and it does not work in the current market conditions.

SC

I bought this system and returned it for a refund within the 30-day trial period. Very unimpressed.

I have been using this system since September and just broke even. Its a waste of time and money.

Hi
When these systems are marketed they should come with a 90 day money back trial, this would give you the time to try it out and see if it works.
Why is it that we see systems for sale that offer a years worth of data which looks great but as soon as they are sold to the general public they lose money, it does make you question how the previous data was calculated.
My advice is to stay well clear of this system.

Paul Smith...I am interested to see that you broke even on this - how did you manage to do that? Ive traded this every day since it was released for sale to the general public, didnt use the enhanced profits but lost money. I can only assume that you did a bit of 'tweaking' somewhere?

SC

Originally Posted by paul smith

Hi
When these systems are marketed they should come with a 90 day money back trial, this would give you the time to try it out and see if it works.
Why is it that we see systems for sale that offer a years worth of data which looks great but as soon as they are sold to the general public they lose money, it does make you question how the previous data was calculated.
My advice is to stay well clear of this system.

Most systems offer backtested results. I.e. they've created a set of parameters based on historical data. As you always see in footnotes...past performance is no guarantee of future performance.

A lot of systems are curve fitted to suit certain conditions. More systems need forward testing etc.

Hi Sarniacherie
In answer to your question I did tweak the system and at one point in december was up 15% but should have stopped at that point. I quickly stopped placing my bets on a 09:15 time frame and used the charts to time my trade, ie from 09:00 to 10:00 hrs and it worked. Scrapped Martins spread sheet and made my own. moved the profit lines until 66% returned a profit not break even. Used Stochastics to help the decision process with a sell and buy point ie above 80% sell below 20% buy. Also volumes helped. I was going to offer my data, spread sheet etc to help make more profitable trades using this system but have taken time out over Christmas and will resume trading in January to see what my results are over a 3 month period. I think the idea is good but the system data is at fault. In real terms I think you could make 5% return per month and compound the profits.
It would be great to open up this type of trade to get more people thinking on how to move forward.
Please get back to me with what you think.
Paul