ACE Strategies

Dynamic Dollar Cost Averaging Using Stock Index Futures (DDCA)

This strategy is designed to invest in growth stocks through the use of Nasdaq 100 futures contracts and uses our proprietary dollar cost averaging method. The strategy was designed after thorough consideration of several key factors including the intermediate term political and economic outlook, both globally and domestically. Fundamental evaluations were made to conclude that recoveries would likely continue from the worldwide economic spasms of 1998 through 2002. And they are happening, particularly in North America, South America and Asia. Even if shifts in economic growth should occur over the next few years and we see further confirmations that we are continuing in a secular bear market, we believe there will be sufficient upside movement in financial markets to return significant wealth to investors with the appropriate strategy.

In this strategy we use dollar cost averaging of price intervals on the Nasdaq 100 futures index. We believe using the optimum growth vehicle is key because stock markets are not likely to move upward without strong representations of stocks in the technology sectors. We prefer a growth index rather than trying to select, track and manage the ups and downs of individual growth stocks. The Nasdaq 100 was chosen primarily for its heavy concentration of technology and other growth stocks. In addition, more than other stock indices, it performs with the requisite volatility, trending, and retracement qualities so important to this strategy. We use the "mini" version of this index, which, at one-fifth the cost of the "full" index, facilitates money management and protection in extreme volatility situations.

The trading process begins by taking a long position in the mini-Nasdaq 100 future. If the market rises to a designated interval, a profit is taken. Should the market sink to a predetermined interval to the downside, positions are added. If the market continues down to the next interval more positions are added and so on, upwards and down-wards, until one of two following events occur. The held positions are all sold at a profit, in which case, the process can start over after a review of all the critical factors. Or, if the market establishes a compelling trend to the downside, the regimen will be closed or, the process reversed to take profits on short positions.

The familiar practice of dollar-cost-averaging (making regularly timed purchases of the same amount so as to accumulate more assets at low prices and fewer at high prices) was popularized years ago by the mutual fund industry. Our approach in this strategy is rather more dynamic. We buy and sell positions at discrete, pre-planned, and proprietary price intervals to the upside and the downside, substituting price driven decisions for regular, timed investments. Intervals may be adjusted based upon market dynamics. The prescribed intervals are key to the success of the process and, as said, are dynamic and proprietary. Another important distinction of this strategy is that it is designed to take profits as earned, rather than hold them until retirement.

In summary, this strategy focuses on the leading growth sectors (technology, bio-technology, health-care and others), enjoys the benefit of one hundred different stocks traded as one, as opposed to a smaller number of individuals stocks, makes good use of leverage and volatility, and takes profits along the way. The goal is to outperform the Nasdaq 100 futures index to the upside and undertake less risk to the downside.

We have two programs in this strategy, as well, Regular and Institutional. Both follow the identical process but the larger principle required for the Institutional program (see below) affords that program greater trading flexibility.

Dynamic Dollar Cost Averaging - Minimum Starting Value Required*
Regular Program $50,000
 

Lesser amounts may be accepted solely at the discretion of the Advisor.
*Stated minimums are net of any front-end fees.

THERE IS SUBSTANTIAL RISK OF LOSS IN TRADING FUTURES AND OPTIONS.  ONE MUST BE AWARE THAT THE POSSIBILITY OF UNLIMITED LOSS EXISTS IN WRITING OPTIONS.  PEOPLE CAN AND DO LOSE MONEY.