Risk Disclosure
1. No mechanical system will ever be perfect for trading the markets and therefore, "The Ultimate Momentum Indicator" may also make losses. The purpose of the Signal is as an aid to the trader to find the probability of momentum changes and its direction on the basis of the daily closing prices.
2. "The Ultimate Momentum Indicator" does not consider any support / resistance and / or trend lines. It is neither optimized nor curve fitted and therefore may not be able to achieve its purpose in all kinds of markets and in case of ordinary stocks.
3. Since the system is based on a set of fixed parameters, "The Indicator" may lag in indicating momentum shifts in very fast and volatile markets.
4. It is also seen that even if the momentum signals a downward shift by signaling -50 value, in some cases, especially in strong long term bull markets, the momentum shifts again to the opposite within a very short time. In strong bear markets, the opposite may also happen.
5 In spite of the multi-layer Risk Management rules, the system may not eliminate the risk of unanticipated event risks.
6. It is advisable to run only very light positions which are fully hedged (Example : Trade which consists only of option buying) or absolutely no positions at all just before major anticipated events like general election results, central budgets etc because of the extreme event risks. (For more information on the such risks and an analysis, please read the page "Risk Analysis").
7. We, the human beings are the least equipped to trade the markets profitably because of our emotions, biases, opinions and beliefs. ( Well one may ask who else is equipped to trade the markets ! And the answer is that the mechanical systems like this one with the built in risk control measures are generally better than the discretionary trading systems). Therefore the trader is the most riskiest part of any trading system as he/she may not, in the first place, believe in the momentum shift signals as and when it happens and as a consequence may not enter in to the trades or close the existing trades. Because of this he / she may avoid the profitable trades and / or make big losses on the existing trades in spite of the system rules.
8. Not all trading systems may be suitable to all the traders. Therefore, this trading system may not be suitable to all.
Cheers and Prosperous Trading and Investing !!!
