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Q: How often are trades made in my account? The number of trades varies depending on the signals our system generates. It's possible to go weeks, even months, without a trade. On the other hand there could be more than one a week (but never more than one trade in any 24 hour period - we are not daytraders). Historically, a trade occurs about four times a month per index.
Q: What is the minimum account size? The current minimum account size is now $50,000. The minimum is subject to change in the future, as we anticipate this minimum will be raised.
Q: Do I pay a commission for each trade? No, there are no commissions charged for trades. There are also no fees associated with moving into or out of any of the ProFunds investments we utilize.
Q: Will I be notified of every trade made in my account? No, due to the active nature of our strategies, we cannot possibly contact each client before every trade is made. ProFunds will mail you trade confirmations for each order if you wish. You also may monitor your account positions by viewing your account online at anytime. You can also check your account positions by calling 888-PRO-FNDS. You will receive periodic status reports that will summarize performance results.
Q: How do you profit when the index you're tracking declines? If our assets are invested into the Bearish ProFunds (or a similar investment) when the corresponding index declines, and that fund meets its objective, we will profit. The Bearish ProFunds are designed to produce returns exactly opposite of the index it mirrors (Ex: if the S&P 500 goes down 10%, then the Bear Fund seeks returns of 10%).
Q: Why are your strategies so volatile? We primarily utilize leveraged index funds to implement our strategies. Unlike traditional index funds, these funds tend to produce twice the return of the underlying index on any given day. This leverage can produce rapid gains and/or losses. A high level of patience and loss tolerance is required when investing in our strategies.
Q: What about the tax consequences? We recommend that investors use our strategy in tax-deferred accounts to minimize their capital gains exposure, although tax consequences are unique to every individual and should be discussed with a tax professional.
Q: Why does my account indicate that during certain periods you are invested in a bullish fund for one index, yet a bearish fund on another? Isn't this counterintuitive? Often times the trends in each index begin and end at different times. While over the long-term the indexes tend to move with each other, in the short-term they often do not. Therefore, we may be bullish on one index, while bearish on the other.
Q: What are the limitations of using Neural Networks to trade the market? Neural Networks can only learn what they are taught. If market conditions are so radically different than they were in recent history, they may not perform well. One of the biggest challenges with using neural networks is you can't tell a story as to why the net may have produced a certain signal - and some people need a story to trade a market.
Q: Are there certain types of markets your system tends to perform better/worse in? Our net is an OB/OS (overbought/oversold) system so it performs best in volatile markets. It will not perform as well in markets that are trending without corrections, for a long period of time, say 1-2 months.
Q: Is the model ever changed? Has the same model always been used? What variables, if any, are manually adjusted? So far we have not changed the model significantly and do not ever intend to do so. Every three months minor adjustments are made depending on recent market volatility, but the fundamental model remains in tact. The model consists of hundreds of parameters that the neural net learns on its own.
Q: Do you invest your own assets in the same strategy you provide to you clients? Yes, the BTI corporation and it's owners both currently have assets invested in the strategies.
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