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Program Description: Trading Methods and Strategies
Salem A. Abraham
is employed by Abraham Trading Company and is the sole person
responsible for overseeing Abraham Trading Company’s trading
decisions. Abraham Trading Company’s trading approach
draws upon Salem Abraham's judgment, experience and his
knowledge of the technical factors affecting various commodity
markets and attempts to identify optimal trading opportunities.
The approach is primarily guided by trading systems which have
been developed by Salem Abraham and Abraham Trading Company’s
research team and are owned by Salem Abraham but are licensed
to Abraham Trading Company. These trading systems are the result
of exhaustive research based on classical technical analysis
and combine long-term trend following, short-term trend-following,
short-term momentum and mean reversion strategies.
premise of Abraham Trading Company’s trading approach
is that commodity interests will, from time to time, enter into
periods of major price change to either a higher or lower level.
These price changes can be identified and predicted, albeit
with limited reliability. Even though this predictability is
limited there is still ample opportunity for an experienced
trader to get the odds in his favor. This fact has been observed
and recorded since the beginning of market history. There is
every reason to believe that in free markets these price movements
will continue to be identified and exploited for profit. Abraham
Trading Company’s trading systems are designed to potentially
capitalize on these facts and uncover trading opportunities.
Abraham Trading Company’s trading approach also relies
heavily on the disciplined management of risk. In evaluating
the various factors which make up a trading decision, the systems
pay close attention to each trade's risk-reward potential,
how it fits into the risk profile of the entire portfolio, and
whether it adheres to the program's overall trading goals.
Abraham may refine or change Abraham Trading Company’s
trading approach (including enhancements or changes to his trading
systems which are licensed to Abraham Trading Company or the
addition or deletion of commodity interests traded) at any time
without prior notice to or approval by its customers. There
can be no assurance that Abraham Trading Company's approach
to trading the commodities markets will yield the same results
that have been achieved in the past. Past results are
not necessarily indicative of future results. The risk
of loss in trading futures, options and off-exchange forex can
Program Description: Goal of Trading / Markets Employed
approach employed by Abraham Trading Company in trading customer
accounts uses technical analysis to anticipate movements in
prices. Technical analysis is based on the theory that the study
of the commodities markets themselves provides a means of anticipating
the external factors that affect the supply and demand of a
particular commodity in order to predict future prices. Technical
analysis operates on the theory that market prices at any given
point in time reflect all known factors affecting supply and
demand for a particular commodity; consequently, only a detailed
analysis of, among other things, actual daily, weekly and monthly
price fluctuations, volume variations and changes in open interest
are of predictive value when determining the future course of
price movements. In general, trading recommendations may be
based on computer-generated signals, chart interpretation, mathematical
measurements or a combination of such items.
analysis is of particular concern in the timing of entry and
exit positions and in evaluating the extent to which the market
price reflects the underlying value. Abraham Trading Company's
evaluation of the technical position of the market can thus
help in determining the direction of prices and is also used
as a tool in risk control. Abraham Trading Company believes
that the confluence of technical signals gives it optimal risk/reward
evaluation of the markets, Abraham Trading Company will generally
utilize a systematic approach blending long-term trend following,
short-term trend following, short-term momentum and mean reversion
strategies in an effort to reduce volatility without sacrificing
performance. Each strategy is further divided into sub-systems
to facilitate smoother entries and exits. In some strategies,
Abraham also implements certain techniques to identify trades
with adverse risk/reward characteristics in order to avoid them.
While the goal of these techniques is to capture profits, their
selectiveness allows the system to enter markets only during
periods when the risk/reward of a trade is heavily in the trade’s
favor. It is even possible that if unacceptable risk characteristics
exist, these techniques could avoid trades with positive profit
expectations. The desired result is a trading method that provides
exceptional returns with low correlation to stock and bond investments.
trading strategy will seldom direct market entry or exit at
the most favorable price in the particular market movement.
Rather, this type of trading method seeks to close out losing
positions and to hold portions of profitable positions for as
long as the system determines that the particular market action
continues to exist. However, there can be no assurance that
profitable positions can be liquidated at the most favorable
price in a particular trade. As a result, the number of losing
transactions may exceed the number of profitable transactions.
However, if the approach is successful, these losses should
be small and should be more than offset by a few large gains.
Abraham Trading Company's trading systems seek to identify
certain market actions and initiate a position until a neutral
or opposite signal is generated. The position is then closed
out or reversed. The strategies do not always result in a position
being held in every commodity traded.
Trading Company’s Diversified Program presently monitors
and trades 59 markets including 33 commodity interests and 26
financial futures markets: Wheat; Kansas City Wheat; Corn; Soybeans;
Soybean Oil; Soybean Meal; Canola; British Pound; Canadian Dollar;
Swiss Franc; Euro; Japanese Yen; Mexican Peso; Euro/Japanese
Yen Cross Rate; Australian Dollar; Euro/British Pound Cross
Rate; Silver; Platinum; Copper; Gold; Aluminum; Zinc; Nickel;
U.S. Treasury Notes; U.S. Treasury Bonds; Australian Bonds;
Japanese Bonds; German Bunds; British Gilts; Canadian Bonds;
EuroDollar; Australian Bank Bills; Euribor; Crude Oil; Brent
Crude; Heating Oil; London Gas Oil; Gasoline Blendstock; Natural
Gas; Cotton; Sugar; London Sugar; Coffee; London Robusta Coffee;
Cocoa; London Cocoa; Orange Juice; Lumber; Milk; Live Cattle;
Feeder Cattle; Lean Hogs; S&P 500 Mini; Russell 2000 Mini;
FTSE 100; Euro Stoxx 50; Hang Seng Index; Nikkei 225; Australian
SPI 200 Index.
Information: Salem A. Abraham
Salem A. Abraham
is the sole person responsible for making trading decisions
on behalf of Abraham Trading Company. Salem Abraham is registered
with the CFTC and is listed as a Principal and Associated Person
of Abraham Trading Company and is an associate member of the
Abraham attended the University of Notre Dame from August 1984
until December 1987 when he graduated cum laude with a B.A.
degree in Finance. His interest in commodity trading began while
still in college, and it was during the spring and summer of
1987 that he developed his present trading strategy. During
this time, he did extensive research in the technical and methodological
aspects of commodities trading. Combining the information he
had gathered with ideas that he had developed during his research,
he began the task of back-testing the profitability of numerous
trading theories in an effort to establish the relative validity
of those theories. This testing was accomplished by running
computer simulations using historical data and/or by manually
studying historical charts. Through this process many long-venerated
trading strategies were shown to be unviable in changing market
conditions, while other strategies were modified in order to
maximize their profitability. This research led Salem Abraham
to develop a trend-following trading system, and in August 1987,
while still in college, he began to test that approach by trading
commodity interests for his own account. In January 1988, he
began to manage customer accounts using his systematic approach,
initially through a joint account with three of his relatives.
He became registered as a Commodity Trading Advisor in October
1988 and organized Abraham Trading Company in August 1990 to
act as Commodity Trading Advisor for all customer accounts.
Salem Abraham continues to conduct research on trading strategies.
above are from the manager’s disclosure document.