EPIC v3 Crude Oil Trading Software Updates, A Follow-Up to Last Week’s Note on February 2nd.

RE: Software Drawdown Protocols vs Expected Returns and Oil Trade Alerts.

Good day traders,

Last weeks note (if you have not read it) can be found here;

EPIC v3 Crude Oil Code Updates: Drawdown & Short Selling Protocols $CL_F $USO #machinetrading

Since the Feb 2 note I have had some questions from our clients that I suspect others have also, so I a summarizing responses from those questions below.

Our Primary Objective

The goal in our development is now limiting draw-downs, we know the software works and that is not at issue, at issue is the size of potential draw-down.

Our primary objective is to find the range of “throttle” in the software that provides a consistent return with the least volatility in ROI.

Draw-down Protocol “Events”

The software is designed to trade on historical structures, trade set-ups, order flow and more – find details in the most recent white paper update can be found here.

Specifically to draw-down protocols, in my last note I described the change in code to be throttled 50% (limiting potential downside to 50% of what is described in the white paper). I also explained that if required we would throttle it again another 50% of its most recent setting.

Last week crude oil seemed to be basing from a technical perspective and the software (considering the chop) did well, however, we were not comfortable with the potential draw-down risk in the “event” driven chop.

At issue specifically are market “events”, such as with the recent virus event out of China. Event periods will potentially cause draw-downs, our objective is to avoid this volatility.

As of today we have done that – throttled the draw-down protocol again.

The reason is simple, our objective now is to limit unnecessary draw-down percentages to the point that we can allow the software to run without concern to draw-downs even if that limits potential returns. For now this is the case and as explained previously if we open the throttle at all we will advise our clients well in advance. 

In practical terms this means that the software size held is limited intra-day when in draw-down and the range is limited. The range is not changed from previous, being one full “quad” and/or “channel” range on the EPIC Algorithm Model but the size held is limited to near 1/10 size. The size can very from approximately 1/10 to 3/10 size but the software will “flash” in and out any adds with near zero range stops executing at each key support in a draw-down.

Oil Trade Alerts

This will at times cause the oil trade alerts feed to be very active but yet at times will be very silent as the software will only execute the highest probability trades also.

This represents the tightest throttle possible in our code.

Expected Returns vs. Draw-Down Risk

Through development we have had plateaus of code structure ranging from 20% – 150% ROI expectation and we even looked toward 300% being possible.

However, there is a volatility to potential draw-down that comes with higher expectation of ROI. This has to be balanced with account size and risk tolerance.

Our objective is to code software that has limited draw-down with highest ROI on specifically 10 contract size accounts. As explained previously, 30 contract and higher accounts this is much different. 

At the current throttle setting our estimation of returns is somewhere between 40 – 80% per year (likely closer to 40%) with very littler risk to the down-side as we have run the software in this throttle range prior for some time and this is the ROI expectation. The variance in ROI expectation (40%- 80%) is in consideration of market conditions and not how we expect the software to run.

After the software has run for a considerable time at this level of “throttle” we will look at releasing the “throttle”, but this will be only considered after some time and again I emphasize that our clients will be notified well in advance.

Being as transparent as I can, the reason for this is motivated by the fact that we have been in development for near 4 years and there is a point where returns need to be the norm and not volatility in development. We need to run a low risk environment for some time now as development has been costly. When we have recouped development costs and put some profit back in to the project we can then look at further development and associated risk. 

Our next white paper update will reflect the content of these updates notes.

Any questions please send me a note via email [email protected].

Thank you.


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Article topics; crude, oil, trading, machine trading, algorithm

Machine Learning is Changing Our World and Compound Gains are Powerful. This is a Short Story About How Machine Trading is Changing Portfolio Return, Risk and Compound Trading Expectations.

The World is Changing Fast. The Landscape of Public Markets, Risk and Portfolio Return Along With It.

A brief search on Google brings many articles about the increase in automated machine trading and the possible future forward scenarios for public markets.

I was recently interviewed about this very topic – the future is unknown, but in my basic thinking machine learning is here to stay, I have tried to compete against it and I intend to be on the right side of the ROI trajectory.

First, A Snap-Shot of Our Brief History.

When we started our trading service we demonstrated how day trading and swing trading could net good day traders consistently 100% – 400% a year with a systematic rules-based process.

We video recorded every session live, alerted the trades to our clients and documented each trade. 

The naysayer says “I seen this or that trade that didn’t work!” – the small cross-section analyst that didn’t do their homework that is. Sure, we had our losses. But what they don’t say is that over-all we proved the returns were not only possible but probable (live recorded, time stamped, live alerted) in a systematic manner if a day trader uses a sound rules-based process, has an appropriate account size to execute various trades and sizing to spread risk (as we alerted live) and protects his/her downside. Anyone can go through our live alerts and videos to determine this to be the case. And we’re not the only day trading service that has or continues to provide these results – some even more.

What’s the point?

The point is that if you take an isolated cross-section of time, or you kinda executed the processes or kind of protected your downside or didn’t start with an appropriate account size to spread your risk then your individual scenario may have been different. But over-all, an investigation in to our processes show over 100% returns over all per annum daytrading and / or swing trading.

More specifically to the point, the same principle applies to machine trade development and testing. 

When a trader reaches this level of day trading (a winning process within an appropriate account size with protected risk), he/she can then start thinking about compounding his/her gains (the holy grail for a day trader).

Or, as we did, the successful trader may chose to turn their attention to algorithmic modeling and then on to machine trading.

In our case, we started with cracking the code to and building software for trading crude oil futures contracts.

Why go in to further risk? Because I knew what my potential returns were investing (I have over three decades of experience) and I now knew what my potential returns were day trading and swing trading. The last frontier for me was machine learning and whether we could achieve better returns in automated trade with less future forward risk and effort.

My retirement years will be as a trader, the only questions for me are; what kind of trader and what are the returns?

Day trading and swing trading equities (along with trading various ETF type instruments) is much easier to master than day trading crude oil and manifold times easier than building software to trade crude oil or any other instrument.

We knew that if we mastered the code / rule-set of machine trade that higher returns were obviously possible and that we could then build software for numerous other instruments (at will) and obviously leverage our time and compound return potential far in to the future.

The EPIC v1 machine software real-world trade test was returning a projected 20% per annum, v2 40%, v3 80% and the goal for EPIC’s version 4 was 160%.

Version 4 was too aggressive and exceeded our risk tolerance so we returned to EPIC v3 and it has been running with sound stability and very low downside risk for seven weeks at approximately 90% projected annual returns. We expect this percentage to consistently increase over time (as the software learns) with little to no additional down-side risk.

Stability of Software – downside risk vs. return is key. V4 EPIC I believe could hit 800% per year or more but the volatility and subsequent risk therein was too much for us to stomach in real-world testing (real-world is also key and required – paper-trading when testing the software doesn’t cut it).

Below is the Seven Week Real-World Trading Performance YTD for EPIC v3 Crude Oil Futures Machine Trading Software.

machine trading, returns, trades, chart

For August 23, 2019 Profit & Loss Daily +$862 YTD+$11,463 Projected $89,020 or 89% Per Annum. v3 Oil Machine Trade 100k Sample Account (v4 period excluded) #OOTT $CL_F $USOIL $WTI $USO #machinetrading #oiltradealerts

Below I provide the Compound Returns Based on our Current Oil Trading Results at 90% per annum Profit Compounded Over 3 Year Period.

The sample account starts with 100,000.00 and after 3 years has a balance of 761,651.00.

compound, gains, ROI, trading

Compound Account Returns according to Current Oil Trading Results at 90% per annum profit Compounded Over a Three (3) Year Period.

And below are the Compound Account Returns according to Current Oil Trading Results at 90% per annum profit Compounded Over a Six (6) Year Period.

The sample account starts with 100,000.00 and after 6 years has a balance of 5,801.117.00.

compound, trading, gains, 6 years

Compound Account Returns according to Current Oil Trading Results 90% per annum profit Compounded Over a Six (6) Year Period.

Will We Meet The Annual Return and Compound Trade Return Projection?

Only time will tell the story.

What I know for sure is that our v3 EPIC Crude Oil Machine Trade Software is extremely stable, has near zero down-side risk and has consistent gains.

It has been running for seven weeks as of this Tuesday, which in the machine trading world is a near life-time. At the eight week mark it is almost mathematically impossible for it to fail and at the twelve week point it is something like 99.99999% sure it will meet or exceed the expectations within current ROI trajectory. 

My guess, v3 ends up performing at 100% – 150% and easily meets or exceeds the projections, I have zero doubt about its stability and ability to protect downside loss. But as I said, all return projections are yet to be seen, time will tell.

Relative to the Top Performing Hedge Funds of 2018 we are doing well, the Odey fund came out on top of the pack, generating about 53% in returns. Also relative to the best returns of all time we’re competing; The Renaissance Technologies Medallion fund is considered to be one of the most successful hedge funds ever. It has averaged a 71.8% annual return, before fees, from 1994 through mid-2014.

I always said we would never have taken this project on if we thought there was a considerable chance we would fail. We knew it would be one of the hardest things we’ll ever try and accomplish, but we believed we would get there.

In my best estimation, we have now successfully cracked the code.

Thanks for being part of and supporting our journey. 


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Article Topics; crude oil, machine trading, trading, compound, returns, ROI, $CL_F, $USOIL, $WTI, $USO, CL