Is Leonardo LoCricchio's Pattern Recognition Managed Program (PRMP) a Cure for a Bear Market?
by Christian Chensvold
June 2008
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We are in a unique market situation, and Leonardo LoCricchio is ready to exploit it to its fullest potential.
As a certified Commodity Trading Advisor (CTA) and principal of Europa Capital Associates, headquartered in New York City with offices on Long Island, New York, Leonardo is the creator of a proprietary pattern-recognition software program which anticipates optimal buying and selling patterns of commodity futures in the agricultural markets, energy, metals, currencies, and stock market indexes. The Pattern Recognition Managed Program (PRMP) is a commodity investor’s best friend.
As of February 2008, the program was approved for public trading by the U.S. Commodity Futures Trading Commission, and if a 200% annual rate of return sounds appealing, then have a seat and listen to the wisdom of Lenardo LoCricchio.
Commodities: A Unique Market Situation
First the scenario: "When you're in a recession, people spend less and commodities go down," he says. "But we're in a unique situation, because for many years people have been taking equity out of their homes and using it to invest. So when the market takes a downturn, and interest rates are cut, there's a lot of cash around.
And with the cuts in interest rates and the falling dollar," he continues, "this leads to inflation. That's why gold is at $1,000 an ounce, and platinum at $2,000 — everything is hitting new significant highs. On the financial news networks all they talk about is commodities, and 10 years ago you never heard anybody say anything about commodities because it was considered too high of risk."
An inflationary market may produce a rise in the price of commodities, but the contracts that are bought and sold on the market move so fast it's like trying to watch a ping-pong match.
To fully exploit the investment potential of commodities, LoCricchio spent over 10 years developing a software program that recognizes the trading pattern of each individual commodity. And while commodities tend to have a seasonal pattern of trading (corn, for example), LoCricchio's software can detect the proper trading pattern whether it occurs in three minutes or three months. Responding to trading patterns can be effective way of understanding commodity markets.
Commodity markets tend to have their own unique trading patterns due to 3 principles:
1. Properties of the commodity itself (corn planting seasons, heating oil, gasoline).
2. State of the economy which influences producers to sell and manufacturers to purchase commodities.
3. Trading patterns of commodity traders; 80% of the traders who trade specific commodities tend to buy and sell in specific patterns.
Patterns are categorized in the Pattern Recognition Managed Program according to different types of market environments, including the degree of volatility and degrees of strength and weakness, among other categories. It signals periods of greater rewards for risk taken and indicates trading opportunities that have high batting averages and are generally robust.
268% Annual Rate of Return
During testing, the program was so successful the regulating bodies didn't believe the returns generated. For the last three months of 2006, Leonardo’s software had an annual rate of return of 268%, and for the 12 months of calendar 2007 the return was 228%. "Las Vegas can't possibly keep up with the kind of money you can make in commodities," says Leonardo. "I've seen people make three or four million dollars in half an hour."
Commodities have been considered an alternative investment for years, but for the past two years, commodities have become a diversified investment which has resulted in money moving from equities into commodity futures.
Noting that "a lot of people are looking for alternative investments," LoCricchio believes he'll have $20-$30 million in assets under management by the end of his first year. And that's mostly because commodities aren't really "alternative" any more. "Normally this would be considered alternative risk, with equities as leveraged risk. But with the tremendous volatility over the past few months, money is moving from equities to commodities."
Pattern Recognition Managed Program isn't just for young investors intrepid when it comes to risk. Leonardo’s clients range in their 50’s and 60’s . "But obviously you don't put your life savings into this," he says.
He certainly hasn't put his own. Despite all the effort he's put into developing the program over the years, Leonardo maintains perfect equanimity by not investing in it himself. "Once I developed the pattern recognition, it took years to shake off human characteristics of trading. I had to be totally independent of what I was doing. That's why I don't have an account in the program. If I did, it would become a problem, because then I'd worry about it. I just focus on the signals and trade because I have faith in the system. It is completely impersonal”, Leonardo adds, “and functions equally well in both up and down markets”.
And while there are many other similar managed programs an investor could choose, Leonardo believes none can match his stellar returns. "We probably have the highest return imaginable. It is relatively noncorrelated to other benchmarks or trading platforms" he says.
Approved in February, the Pattern Recognition Managed Program (its generic name), is available to investors with a minimum of $25,000.
For more information about the Pattern Recognition Managed Program, please contact Europa Capital Associates directly:
Terriss Ohl
Commodity Trading Advisor
Europa Capital Associates
(212) 491-6373
(212) 624-5848
eurolen@optonline.net
intl@optonline.net