About engulfing

How this platform reads the market

The rules behind what the pages show: which instruments are covered, how risk is treated, and what each analysis horizon is allowed to conclude. Where an exposure is not derived from recorded analysis, this page says so instead of showing a number.

Manifesto
  • Our spectrum of underlyings which we care about for investing and trading includes:
    • Major Indices, Commodities, Bonds, Currencies, Precious Metals and Cash/Moneymarket
  • Risk management comes first. For all our positionning we think about the exit strategy before entering a position.
  • We make investment and trading decisions exclusively on the basis of quantifiable metrics, which should be as independent as possible from opinion-dependent and biased assumptions.
Risk Management
  • We are even more disciplined about risk management than about our investment decisions. For all our positionning we think about the exit strategy before entering a position.
  • Decisioning requires metrics to be perfectly uptodate according to the related timeframe. Questionable or missing metric assumptions do not allow any investment or trading decisions.
  • We do not relax risk management exit decisions retrospectively. Changes about the exit strategy can be only hardeing.
  • We are even more disciplined about risk management. For all our positionning we think about the exit strategy before entering a position.
  • Leverage of investment must not exceed the following thresholds:
    1. 1x for longterm investments
    2. 4x for mediumterm trading
    3. 10x for shortterm trading
    4. 20x for intraday trading
Longterm Investment Decisioning
  • Investment requires a minimum holding period of three months, as relevant entry decisions are based on quarterly updated/reviewed metrics which must not be questioned in between. There is no maxium holding period.
  • Decisioning is done based on quarterly updated/reviewd metrics.
  • The investment implementation process includes the following steps:
    1. Based on the quantifiable longterm perspective, we first define our asset allocation.
    2. Depending on the global macro situation, we define our geographical exposure.
    3. Timing for entry/exit decision needs to be derived from medium term perspective.
Asset exposure

The recorded assessment per exposure node — a level and a stated direction, not a weight or a target.

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Geographical exposure

Reported only where it is derived from the impact graph.

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Mediumterm Trading Decisioning
  • Mediumterm trading should consider a minimum holding period of one month, as metrics relevant for entry decisions are based on monthly updated/reviewed metrics which must not be questioned in between. Minimum holding period of one month can be violated if
    1. Stop limit is breached
    2. entry assumption happens to be not valid anymore
    There is no maxium holding period.
  • Decisioning is done based on monthly updated/reviewd metrics.
  • Assess the longterm investment metrics. Mediumterm trading decisions must not contradictionary to longterm stance.
  • Exposure must not exceed 10% of longterm investment exposure.
  • The trading implementation process includes the following steps:
    1. Assess the longterm investment metrics. Mediumterm trading decisions must not contradictionary to longterm stance.
    2. Assess the long- and mediumterm trend situation. We do not take a position against the pre-dominating trend. Positioning against the pre-dominant trend must be done only in case of a clear and highly progressed top- or bottoming-process.
    3. Based on the quantifiable mediumterm perspective, we first define our asset allocation.
    4. Depending on the global macro situation, we define our geographical exposure.
    5. Timing for entry/exit decision needs to be derived from short term perspective.
Shortterm Trading Decisioning
  • Shortterm trading should consider a minimum holding period of one day, as metrics relevant for entry decisions are based on daily updated/reviewed metrics which must not be questioned in between. Minimum holding period of one day can be violated if
    1. Stop limit is breached
    2. entry assumption happens to be not valid anymore
    There is a maxium holding period, which is defined before entering the position.
  • Decisioning is done based on daily updated/reviewd metrics.
  • Assess the mediumterm trading metrics. Shortterm trading decisions must not contradictionary to mediumterm stance.
  • Exposure must not exceed 20% of mediumterm trading exposure.
  • The trading implementation process includes the following steps:
    1. Based on the quantifiable shortterm perspective, we first define our asset allocation.
    2. Depending on the global macro situation, we define our geographical exposure.
Intraday Trading Decisioning
  • Intraday trading involves no minimum holding period. There is a maxium holding period defined by the market's closing time, as overnight holdings must be avoided without exceptions.
  • Decisioning is done based on realtime updated/reviewd technical metrics.
  • Assess the shortterm trading metrics. Intraday trading decisions must not be contradictionary to shortterm stance.
  • Exposure must not exceed 20% of shortterm trading exposure.
  • The trading implementation process includes the following steps:
    1. Based on the quantifiable shortterm perspective, we first define our asset allocation.
    2. Depending on the global macro situation, we define our geographical exposure.