How It Works

A Portfolio of Investment Strategies

by Ed Downs

Over 25 years at Nirvana Systems, we have engaged in the relentless pursuit of automated Trading Systems that have steady, reliable performance in all market conditions. OmniVest is the outcome of this research. It’s a new kind of technology that is destined to change the way investors approach the market.

The Best Investment Strategy Software In The World

We have at our disposal some incredible tools that simply aren’t available any place else. It is as a result of applying these tools that we have been able to create a powerful new service for our customers.

OmniTrader is the only software in the world that is designed to facilitate advanced Strategy development through a “building block” approach. This software has made it possible to develop some very powerful Strategies. Strategy Wizard enables us to search combinations of Filters, Confirmers, and Trade Plan options to find robust sets of parameters that have an exceptionally high probability of success. This is truly the golden age of Strategy development at Nirvana Systems.

In Pursuit of the Perfect Investment Strategy

For many years, our research has centered around building Strategies that generate solid performance statistics. We then bring these Strategies to market for our customers. What we are ALWAYS striving for is a Trading Strategy that generates a steadily growing equity curve, with sufficient safeguards so that we have a low likelihood of encountering a large drawdown in our account.

Our investing strategies beat the S&P by a huge margin Market Corrections of 20% or more since 2000.

Above is a chart of SPY (representing the S&P 500 index). Our Advanced Strategies have consistently beat the S&P by a huge margin. Look at the equity curve for NSP-41 on the next page over the same time. It performed famously through the bear markets of 2000-2002 and 2008-2009 – generating outstanding gains while the market was going down.

However, we found that NSP-41 did experience a drawdown in the Credit Downgrade of 2011. What we would normally do is start testing filters and applying other techniques to eliminate that problem. But that introduces another problem. The more filters you add, the fewer Signals are generated.

Strategy “B” is heavily filtered. It did well or (at least) did not give up gains in all of the different markets, but it trades rarely. Another approach is to develop NEW Strategies that perform well in specific markets. Strategy “C” (also shown on the next page) runs on lists of weak stocks and only goes Short. Look how well it did in all three bear markets.

The Portfolio of Strategies Concept

investing strategies:NSP-412, great strategy, hit drawdown in 2011, investing strategy B, consistant winner, but fewer trades(made less money), investing strategy C, superb preformance in all three bear markets, The composite equity curve equalled outstanding gains with low drawdownsThe Portfolio of Strategies concept is based on the fact that you don’t have to trade just one or two Strategies. You can trade many good Strategies at the same time. That way, you can take advantage of the strengths of each Strategy while compensating for their weaknesses.

You can further diversify by running the Strategies on different lists. NSP-41 was run on the S&P 100, while Strategy “B” and Strategy “C” were run on lists that have minimum overlap with the S&P 100.

Now, imagine combining all three. What you would end up with is the composite equity curve shown. By diversifying with all 3 Strategies, we gained a significant advantage. What if we had even more really good Strategies and could divide our account among them? Would that further reduce risk and improve returns?

This is the beauty of the Portfolio of Strategies concept – diversifying our trading across multiple Strategies to reduce risk and improve returns.

Introducing OmniVest

The goal of OmniVest is simple: To provide a way for customers to easily engage a Portfolio of Investment Strategies to achieve steady growth in their trading account while managing risk.

In addition to web and automated trading platform technology, we have been hard at work creating new Premier Investment Strategies for use by OmniVest – Investment Strategies that are designed to take advantage of specific market conditions and be integrated with other Strategies.

We also provide a way to automatically manage the trades – a new automated trading platform called The Trade Processor. All of this advanced technology leverages everything we have built over these past 25 years.

Targeted Portfolios of Strategies

Most of our current Strategies take advantage of the Reversion to Mean concept. Others that are being tested employ traditional Swing methods or are Trend-Following in nature. As we upload Strategies to the site, we will identify which ones are conducive to a particular kind of trading and assign them to these various Categories. Our goal is to build and test a wide array of Strategies using different, proven techniques.

The list used with a Strategy is just as important as the Strategy itself. In order to ensure that the Strategies aren’t generating similar signals on similar stocks, we sub-divide indexes like the Russell 1000 into smaller lists (e.g., Russell-1, Russell-2, etc.) providing yet another level of diversification.

The end result of this work will be a collection of Strategies that are sufficiently powerful to provide the ultimate in diversification and steady gains when combined into a single trading approach.

Strategy Performance

Here are simulated performance numbers for some of our current Investment Strategies. Again, the power of this approach is you have not one but multiple Investment Strategies aggregated into a single account, providing a powerful diversification strategy algorithm across the different techniques.

investing strategies performance chartSimulated Investment Strategy Performance displayed on OmniVest.

We upload the trades generated by these Strategies to the website, which in turn generates equity curves and performance statistics, such Simulated Investment Strategy Performance displayed on OmniVest as Worst Drawdown, Profit per Trade, Accuracy, Compound Annual Growth Rate and additional statistics that indicate how well each Investment Strategy is working. We expect to have well over 100 active Investment Strategies on the site when we launch.

We will end up with hundreds of finely-tuned Strategies that take advantage of all sorts of market conditions. Normally, we would sell Strategies of this caliber for $1,000 to $3,000 each as we have in the past. But given the fact that most of our customers are individual investors with average account sizes, they couldn’t afford to pay $100,000 to $200,000 to purchase the Strategies. Fortunately, they don’t have to.

The Bottom Line: We are providing hundreds of thousands of dollars worth of Strategy research for a fraction of the cost by distributing the trades to our customers in a subscription model. And we’ve developed a simple and effective way to deliver the firepower of the Strategies to our users called The Trade Processor - learn more.

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