Program Description: The Trading Program
Hamer Trading seeks capital appreciation through
speculation in commodity futures trading. There
is no representation being made that the Diversified
Systematic Program will be successful in achieving
this goal. The trading system utilized by the Manager
is proprietary and confidential. The following description
is of necessity general and is not intended to be
all-inclusive. Past results are not necessarily
indicative of future results. The of loss in trading
futures, options and off-exchange forex can be substantial.
Money managers, such as the Manager, generally rely
on either fundamental or technical analysis, or
a combination thereof, in making trading decisions
and attempting to identify price trends in a security
or commodity interest.
"Fundamental analysis" considers factors
external to the market of a particular instrument
which affects the supply and demand of that particular
instrument in order to predict future prices of
that instrument. As an example, some of the fundamental
factors which affect the supply of commodities (e.g.
agricultural products such as corn and soybeans)
include the acreage planted, weather during the
growing season, harvesting and distribution of the
commodity and the previous year's crop carryover.
The demand for such commodities is determined in
part by domestic consumption and exports and is
a product of many factors, including general world
economic conditions, exports and the cost of competing
products which might be substituted as alternate
sources of food of fiber.
is not based on the anticipated supply and demand
of the "cash" or "physical"
(i.e., actual) commodity, but is instead based on
the theory that a study of the markets themselves
(in particular, of trends established by the markets
for various instruments during selected historical
periods) provides a means of anticipating prices.
Technical analysis of the markets often includes
a study of the actual daily, weekly and monthly
price fluctuations as well as volume variations
and changes in open interest, utilizing charts and/or
computers for analysis of these items and other
technical market data. Both general methodologies
have been employed with success by traders and investors
in the past, however, neither trading method can
be assured of success in a particular interval of
Hamer Trading's Diversified Systematic Program
utilizes a systematic trend following approach trading
a diversified portfolio of markets, based primarily
on technical analysis, but utilizing fundamental
analysis when and where appropriate. The Diversified
Systematic Program seeks to capture trends in a
variety of global commodity and futures markets
using 31 broadly diversified markets covering seven
major sectors: interest rate, currency, stock index,
energy, grain, metals and softs. Average holding
period is 100 days. The program has been refined
over the past thirteen years from a multi-system
/ multi-time frame trend approach to a focus on
long term trend following with the constant goal
to provide consistent returns while reducing volatility.
This transition to a focus on long term trend following
began in 2008.
Hamer Trading intends to trade primarily in futures
and options thereon in a variety of 31 markets,
including but not limited to grain, currency, metal,
energy, financial, stock index, fiber, softs (coffee,
cocoa, sugar, and orange juice) markets.
Information: Jim Hamer
Since graduating from West Virginia University (B.S.
Forestry) in May of 1983, Jim Hamer's early career
was concentrated in the hardwood lumber industry,
where he managed sawmill operations for his family
business, The Jim C. Hamer Company. Jim built and
managed sawmills in eastern Kentucky and southern
West Virginia for his family.
Jim Hamer became interested in trading right
out of college when he began managing a small inheritance
left to him from his grandfather. After losing a
substantial amount of money during the stock market
crash of 1987, Jim Hamer's interest level in finding
better ways to invest and trade was intensified.
Jim Hamer left the family business in January 1989
and moved to Chicago to become a member of the Chicago
Mercantile Exchange, where he traded in the S&P
500 pit for his own account as a "local"
/ floor trader. Jim Hamer learned a great deal about
the impact of price movements due to: order flow,
the influence of other markets, and the actions
of "locals" in the trading pit. Although
still very interested in trading, Jim became less
interested in being a "local" for the
long-term after trading in the pits for almost a
He left Chicago in October, 1989 and returned
to the lumber business in his home state of West
Virginia. In November 1991 he started a new company
for his family, Hamer Pellet Fuel, manufacturing
wood pellets which are used for environmentally
friendly residential stoves. Jim Hamer built and
managed the pellet plant for his family in 1991.
Jim Hamer continued to educate himself through trading
books and also began subscribing to Futures Truth,
a publication that tracks publically offered trading
systems. He noticed that many of the trading systems
that were followed by the publication showed up
consistently in the rankings year after year. Jim
later purchased Tradestation, a financial modeling
software program and began testing his own trading
ideas and began experimenting with these mechanical
trading systems with his own money.
In 1996 after reading the book Market Wizards (1988)
by Jack Schwager, Jim contacted Ed Seykota, one
of the "Market Wizards" featured in the
book. In the book, Ed is credited with converting
Richard Donchian's trading methods into computer
code to back test the trading methods on historical
price data. Seykota is credited with being one of
the first to do such systematic testing. Donchian
is considered to be the "Father of Trend Following".
After much correspondence with Ed Seykota, Jim
Hamer convinced Ed Seykota to mentor him and in
March of 1997 Jim left the family businesses again
and moved to Nevada where he was able to receive
training in systematic trend following principles.
Under Ed Seykota's guidance, Jim Hamer learned trend
following basics and proper money management skills.
Ed Seykota also spent a lot of time discussing the
psychology of trading and how that impacts the trader.
Ed Seykota continues to provide training to traders
about the subconscious mind and how it influences
our actions and our trading success through his "Trading
Since that training with Ed Seykota, Jim Hamer
has devoted his full time and attention to the research
of market trends and to the management of capital
in the commodity and futures trading arena. Jim
Hamer began managing family (proprietary) accounts
in June of 1997 and became registered as an Associated
Person and Principal of Hamer Trading, Inc in August
of 1998. He continues to develop and implement new
strategies for trading using Wealth Lab, a financial
modeling software offered through Fidelity Investments.
Jim Hamer lives in Williamsburg, Virginia with his