If  you have been following what is going on in the various financial markets,  you already know things have been pretty crazy and if you have an account traded with Galleon you may have witnessed a good size draw down over the last few weeks as well.

The core of our currently implemented strategies are predominately trending strategies which from our trading experience as well as back testing hang in there at least 80% of the time.  What we've recently experienced is market conditions better described as choppy, whip sawing and counter trending with no clear sustaining trends.  Conditions no exactly favorable to the core of our currently trading strategies. 

In  anticipation of such times, we have actually been perfecting some counter trending strategies that are performing phenomenal on a new pair we'll be introducing, which is the cross pair,  EUR/CHF. Left alone our current predominantly trending strategies will recover but with the help of the additional counter trend strategies expected to be implemented by Monday August 13th, we should see an even faster recovery.

But, before we go farther with our solutions to our current situation, let's back up a bit and explain in more detail what we've been witnessing in the currency markets.

Current market conditions, somewhat typical of  the middle of summer are choppy and range bound, with the EURUSD moving from from 1.3600 to 1.3850.  

That being said, the current summer draw down has been instructive. It pointed out to us to that we needed to add strategies to our current mix that can profit from the whipsaws of the market.  
Up till now we had been focusing on the primary European currencies, EUR/USD and USD/CHF, and our strategies on these two pair have been predominately trend-based.
 
Yet when we looked at the cross-pair of the above two currencies, the EUR/CHF, we noticed that a good counter-trend strategy can profit from the predominate sideways (or whipsaw) nature of this market.
 
It was thus that we developed two very powerful counter-trend strategies that can profit from sideways market conditions, entering in at an oversold/overbought point in the market and capturing profit based on the range of the last 30 bars. We noticed that these can profitably be applied to the EUR/CHF on 3 time frames: 240 minute, 960 minute and Daily. We have the outstanding results based on 17 years back testing (1990 to present).
 
If these strategies were applied to a 75K account since 1990, it would have grown approximately 2M in profit (non-compounding), or 130% additional yearly return, on these strategies alone (not including the strategies we have already). Applied to the last four months, our managed fund would have profited 35% (see monthly returns in the report below). It would have provided a 18% profit in July and August alone, which would have effectively taken us out of our current drawdown.
 
Below you will see the hypothedical results from Jan 2007 up until the first week of August.  As you will see, these strategies alone, could have not only kept us out of a draw down, but actually put us into profit potentially each of the last 3 months.

Counter Trend Strategies 

It is also worth noting that during this entire 2007 period these strategies do not contribute to any significant losses either.  So, the net affect from adding these strategies to the mix of current ones should only bring us more profit, protection and smooths our our equity curves even further.

Hypothetical Results are no guarantee of future performace but using such back testing to validate our strategies has proved very accurate in forward testing. 

If this this model continues to hold up, when applied to the previous 17 years, these new counter trending strategies would have produced the returns you see below.  This is based on a $75,000 account which is not compounding.

In conclusion,  we expect there be some draw down months like we have recently experienced, but what sets Galleon apart from all the rest is how we continue to learn and improve on our systems,  and with each improvement comes the potential for better overall performance as we go forward.  Our systems are designed for the long term and draw downs such as we recently experienced give us chances to improve things even more.  We are very excited to be implementing these new complimentary strategies as we see them being an integral part of a quick recovery if the market choppiness continues.

A summary of all statistical data from these new counter trending strategies is now included below. You can also download the full PDF with more details here.