As we close the books for October, our prediction a few months ago called for an uptick in volatility as we head into the fall and mid-term elections. That has certainly come to fruition as we finished the month up +3.48%.
Now, a couple things we would like to mention err…. reiterate. The algorithms that we deploy across the futures market are completely market neutral. I’ve explained this in the past, but I think it’s well worth mentioning again. The term “market neutral” essentially means we are agnostic regarding price direction. Up/Down – we don’t care as long as there is MOVEMENT (aka volatility). Our algorithms’ sole job is to detect statistical anomalies within the order flow data. With that said, whether the economy is booming or crashing, it has zero effect on our performance…. absolutely zero. The outcome of the midterm elections also has absolutely zero effect on our performance. These are all qualitative inputs and our algorithms do not operate on such data. We are purely quantitative in nature and do not stray from that. All these unknown events point in one direction and that is uncertainty. Uncertainty is our friend as it is the primary input to volatility. The greater the volatility, the greater the opportunity, the greater the probability of higher returns. Those are the inputs from which we operate.
With that said, we are down to only two months left in the year and as the saying goes, “time flies when you’re having fun!” Looking ahead, our forecast for heightened volatility heading into year end remains firmly intact and we intend to take full advantage.