NOTES & RISKS:
There are several risks to account value using the Market Listener signals. The following risks are some of those which are identified for your education in using the Market Listener (ML) trading approach.

Volatility Risk: Extreme volatility (erratic, wild swings in prices) can cause the ML signals to calculate high stop (exit) levels of 6% or more as it would have done back in 2001-2002. A 6% stop/exit, calculated from a recent closing price, could impact your account your account value by 12% or more if the stop is reached or exceeded. This is because we use leveraged funds (+200% and -200%). Our system maximizes its effectiveness over the buy-and-hold approach to investing when multiple low volatility rallies and declines of 7-10% occur of the course of a year.


Compounding Risk: Any fund, whether leveraged or not, is subject to compounding risk. For example; consider the result of a $1000 investment made at the close on day 1. On day 2 the investment gains 1% and the investment is now worth $1010. On day 3 the investment loses 1%. That 1% loss amounts to $10.10. The resulting account value is $999.90. Do you see that in this simple example where the value rose by 1% one day and declined by 1% the next day, left us with a net loss of $0.10. This simple example can be further aggravated by the use of leverage and extreme market oscillations with no defined trend. The only ways to reduce compounding risk is to have more winning trades than losing trades and larger trade gains than losses.

Indexing Risk: Our system primarily follows the price of the Nasdaq 100 (cash market). Mutual funds, leveraged funds or ETF’s which are indexed to the NDX may have small daily differences with the actual results of the NDX. Our results assume that these deviations are, and will be minor.

Technical, Signal and Price Communications Risk:The efficiency of our trading system depends on being able to generate signals before the market close so that orders can be placed before the close of fund trading times. A lot of technology is required to generate signals in advance of the market close and get any new signal to subscribers before the cutoff of trading times. Any hiccup in the receipt of internet data, generating a signal and communication of the signal via email can hamper the results or cause deviation from the ML results due to missed signals.


The above results differ somewhat from the early days of the Market Listener commentary. Some of the 2004 trades are different (4) from those published in the early volumes of the Market Listener and the table above includes an expanded list of trades for all of 2004. Also the “Cash” call from Monday March 7, 2005 was deleted since that trade was not consistent with the current cash stop calculations now in place which would have prevented going to cash on that date. The impact of deleting that cash signal on current returns is about +7%. All other trades since March 2005 are “go live” public trades.


The listed trades and calculations are believed to be an accurate reflection of the current Market Listener trading methods and are based on a systematized process and “walk-forward” analysis from late December 2003 thru December 2004.

Because the Market Listener approach is a discretionary system, and we are not financial advisers, we recommend that readers and subscribers understand that any published historical returns are definitely NOT indicative of future gains. However, we believe that, should YOU decide to familiarize yourself with our techniques in your own trading, in most cases, you can improve your returns over a buy and hold approach.


If, in the future, we find errors in our calculations, we reserve the right to modify these results. To the best of our knowledge, our calculations are correct.


Respectfully submitted,
Greg Miller
The Market Listener

Listening Partners, LLC