 Floyd became active in the futures market during the early 1990’s
after investing in high-tech stocks and stock options while employed in the high tech
world of semiconductors. Floyd traded stock and options in Applied
Materials for example years before most people even knew who they were! Floyd's position in semiconductors provided him
with valuable insight into the high-tech world (where semiconductors are often
the center focus). During the
late eighties Floyd wrote a private report for the directors of a private
company highlighting what he believed the future
would resemble. In his report, written in 1988, Floyd said
"in the future, people will actually be able to shop from their homes
using their PC's and a modem". This was unheard of in 1988!
However, Floyd's understanding of technology enabled him to see ahead and
accurately predict what was to come. Floyd has been involved in the
present day computer revolution from as far back as the Commodore
64. During
the mid to late eighties Floyd began investing and recommending
family invest in high-tech
companies because he felt very strongly that the future was
going to be more dependent upon technology than ever before! He was
100% right about that!
During his career as a semiconductor
engineer, Floyd spent much of his spare time researching the
investment world. Floyd wanted to learn how everything worked in
the world of trading and conventional investment vehicles (i.e.
stocks, options & futures) just as he had wanted to know
everything about computers a decade earlier. Floyd
didn't stop
learning about computer hardware until he landed his dream job at
Intel working on their next generation microprocessors (i386 and
i486 processors). The microprocessors are the brains of
personal computers. The microprocessors that Floyd was helping
Intel design, develop and manufacture in the late eighties would
soon rule the world of personal computing!
Floyd's passion early in life was computers
(hardware and software). This passion along with his
education (Capital University/DeVry Institute of
Technology/Irvine Valley College) and his experience in
semiconductors have provided him with a very useful background
and capability enabling him to decipher and understand how
markets function. Floyd's programming
abilities, his experience and education in various programming
languages (he was a language programming instructor at Intel)
have provided him with the "means" to write complex computer
programs for generating his own style of price graphs.
Floyd's computer experience and programming abilities provided
him with the means to do all kinds of back-testing of market
data as well as perform various simulations. All of this eventually
led him to discover and isolate patterns in market data.
This enabled him to develop his own trading systems. He
focused on
futures markets because that is where the data indicated the trading opportunities
existed. His programming experience
and education has clearly served him well in trading and
understanding market behavior! In the early nineties
he spent much of his spare time analyzing market data using data analysis techniques adopted from semiconductor
manufacturing data analysis studies. Some
of Floyd's data analysis is derived from Six-Sigma statistical
process control methodology. Applying these types of studies to market data
initially placed Floyd light-years ahead of many other traders,
many of which (at the time) were
still using old prices
from newspapers or week old paper charts! Floyd strongly believes in data integrity.
His experience as an engineer in semiconductors has taught him the
importance of data integrity. You must know beyond all doubt that
the data you base your analysis on is clean and
uncorrupted Floyd will tell you! High quality (100%
clean) market data is not free however. Professionals know
this. Floyd has developed his entire system and family
of unique proprietary graphs, charts and individual studies from high quality
(CLEAN) market data! His graphs include indicators derived
from complex statistical formulas. These formula's are
designed to identify and alert traders to changes in market
behavior, including subtle
market changes to extreme changes in price trends.
One of
Floyd's first programs involved nothing more than 1's and 0's
(binary computer language). Floyd wanted to simplify the market's
day to day action into the simplest terms. Thus one of Floyd's first
programs broke the daily market action down into 1's (up days) and
0's (down days). Flat days were evaluated from open to close for
rise and/or fall and given either a 1 or 0 for their open to close
performance. From here Floyd used binary equations (Boolean algebra,
which is the language of microprocessors and the human brain as well
- cells are either on or off). Floyd used Boolean algebra to
identify and track various patterns made up of strings of 1's and
0's. What he found he said was truly revealing! Many of
the price patterns that Floyd relies on today were discovered via
this unique form of market analysis (derived from strings of 1's and
0's).
Eventually
this all lead to the development of an entirely unique
trading strategy that harnesses the benefits of 21st century
statistics (6-sigma statistics
and distribution analysis for example) combined with other proprietary data intensive analysis
and traditional forms of price derived technical analysis. When Floyd first
began looking at the futures markets and studying the data in the early 90's
he quickly came to the conclusion that these markets (futures) do
NOT behave the same way stocks behave. To illustrate
this lets look at the 30 year history of soybean prices (see the chart
below). After looking at this price chart of soybean futures
going back to 1969,
ask yourself, If this were a stock and you purchased it for your
portfolio in 1969 and held it to today would you be happy with the
performance over that time? Most would say NO! And
we agree. Stocks do not perform the way commodities do. They
are two entirely different markets.
Floyd found that simply studying the price history of a market (via
technical analysis of price) and developing indicators derived from
price was not enough to base an entire trading
system or trading approach on! In fact Floyd came to the logical
conclusion that price history alone could not possibly provide enough insight
and information to thoroughly understand what actually makes markets
"tick"! There's more to it than looking at one
output (price) he has often been quoted as saying. In addition, Floyd found price history
(or the analysis of price) could not provide enough insight to make
reliable projections and/or predictions on where markets were most
likely to turn (a key factor for professional position
trading). Floyd felt that looking
at old and/or recent price history for direction was like looking in the rear-view
mirror of your car as you drive (for direction). All you see
is what just happened! And that's a dangerous (if not
impossible) way to drive! But it might even be more accurate to say that you only see the
"results" of what just happened. The results could
be the smoke and debris from a sudden slamming on your car breaks
after running over something in the road. Obviously one needs to be able to "see" the road
ahead in order to be able to react to something in the road in front of
you (before you run over it)! When it shows up in the rear view
mirror its basically to late to react! This is an excellent analogy
that illustrates the disadvantages of price charts (in
relation to the markets). A price chart (price history of a
market) only shows what has happened in the past. It does not show what is about to
happen or what may be "laying in the road ahead".
You must have a "forward looking measure" to anticipate
the road ahead. If driving, there are signs for example that
may provide information about the road conditions ahead. The
same is true with trading, you just need to know where the signs are
and how to interpret them.
Just as a person cannot drive their car
looking through the rear-view mirror for direction, Floyd
concluded that one could not successfully trade the markets that way
either. However, many experts continue to believe that some
80% attempt to trade using price charts and Technical Analysis as
their only means of direction (essentially using a rear-view
mirror)! These statistics match statistics that show a high
percentage lose money trading futures (particularly among new
traders, "new" defined as those that have been trading for
less than 5 years).
All a price chart
can provide is a look at what has
recently and historically occurred, and that's all. While useful in many
ways (Floyd uses them too) they only provide so much.
They do not provide reliable insight about the road directly
ahead! You must have a forward looking method to view the road
ahead in the markets. If driving a car you look through the front
windshield to drive forward for example. For trading the
futures markets Floyd has devised a forward looking indicator (IMPA)
that provides a view of the road ahead just like the front
windshield of a car! The IMPA methodology contains indicators
and charts (proprietary graphs) that contain FORWARD LOOKING
indicators derived from data unrelated to price! That means
these indicators are NOT derived from old prices! Almost all
traditional technical analysis (of price) is done using indicators
derived from price. The fact however is that there is only so much
that can be gained from the study and analysis of old prices.
You can only look at it from so many different angles in other
words. The IMPA indicators include specific measurements and
indicators derived from the government provided commitment of
traders data (COT). Floyd's IMPA is essentially a system that
combines lagging price derived indicators with forward looking proprietary
indicators derived from the weekly commitment of traders (COT)
data. The IMPA system that Floyd as devised is one of the most
powerful trading systems around!
How's
the IMPA work? Floyd has devised powerful measures that
monitor the activity of market participants (actions of ALL traders)
combined with price structure. This careful mix can provide a
"virtual" window into the future! Monitoring the behavior
of some traders and understanding what normal
behavior is compared to abnormal behavior (among participants) is
key to the IMPA strategy. Furthermore one needs to
understand normal reactions to market fluctuations versus extraordinary reactions. Floyd found this can be
accomplished using the government provided Commitment of traders data (COT). This data enabled Floyd to
view the market in a way that not only showed where the market has
been, but also shows where it is likely to go based on the current
positions held in the market (number of shorts and longs) and
knowing who's holding the majority of positions (weak hands, strong
hands, hedgers versus speculators) and monitoring their week to week
behavior and how it relates to price fluctuations. The behavior and
reactions of the various types of participants as they
"prepare" or position themselves for certain situations
can be very revealing. Ultimately its
the participants that drive price in the futures
market. Therefore understanding participant behavior is
essential.
Floyd created an entirely new
approach to tracking the markets by combining price structure
(technical analysis) with the behavior of the market participants.
Since some participants are clearly experts in the fundamentals that
affect their business and ultimately the markets they deal in as
well, Floyd found it essential to identify and track these
participants separately. He found that by applying certain statistical
measures to their actions in the markets he could gain insight on
their views and market expectations (something the experts are paid
millions for). Floyd's unique proprietary indicators applied
to both fundamental
and technical data have the ability to identify
"normal" from "abnormal" in terms of the
overall market behavior (not just price, but participant positioning
as well). The price history can also be measured and analyzed
using distribution
analysis (something that is not done that often with traditional
technical analysis).
In the mid
nineties Floyd made another great prediction. He predicted
that soon, "trading systems and financial data would be available
to people all over the world across the information super highway or
Internet". So Floyd began work on developing a
user-friendly trading system (with color charts and graphs) that
resided on one computer and could be accessed from remote
computers. He had already developed an internal program for
Motorola that tied critical DEC VAX computers together and made them
available ALL over the world. Floyd learned this
technology through Intel in the late eighties, when he
was first introduced to the internet (in 1987). Back then the
internet was primarily used by universities, scientists and
high-tech companies (AT&T Bell Labs and others based out of
Silicon Valley). In 1990
through 1992 Floyd created his program that enabled Motorola's
Digital VAX computers to communicate with other Motorola facilities all over the
world. Soon however,
this technology would be available to everyone via the information
super highway, or "internet".
Prior to Floyd's trading career, he held a number of
engineering positions in the semiconductor industry for over ten
years. Floyd spent three years with Intel Corporation in
Arizona and New Mexico in the late eighties, seven years
with Motorola in Irvine California in the 1990's. He
also assisted Western Digital in the startup of what would
become the country's most advanced silicon wafer fabrication
plant in 1992. Floyd's specialty was data analysis,
statistics, and designing thermal processes in silicon wafer
diffusion and ion implantation.
Floyd has
been studying
mathematics, statistics and computer programming for nearly 25 years. He has a great
deal of experience in solving problems by analyzing data and presenting different
solutions or outcomes based on statistical probabilities. Floyd has put these
skills to good use. He found out early in his trading career that the commercially
available charting software and price tracking systems were not versatile nor
complex enough to get at the data at the level he felt necessary to gain an
edge in the market place. Floyd used his statistical knowledge and programming
abilities to develop and create his own charting software and proprietary indicators.
His unique approach of combining technical price data with fundamental data
yielded his IMPA.
Using his knowledge
in statistics and engineering background combined with his programming skills,
he designed his own trading system based on repeating patterns and conditions
characteristic to individual commodities. What Floyd found from computer back
testing was amazing. Floyd believes data shows an underlying order in the commodity markets not
found in the historic price movements of individual stocks! In his research
he discovered specific patterns in commodity prices unique to each market. He
found that these patterns are highly correlated to the positions held by the
participants in the commodity markets. Using fundamental information supplied
by the U.S. government (Commitment of Traders Data), he has been able to separate
the open interest for each commodity into three distinct groups. While everyone
else has been looking at prices or price structures for core indicators, Floyd
developed his proprietary trading & tracking system using the data from
the three unique groups of traders tracked by the U.S. government (Commercials,
Funds, and Small Speculators).
Today Floyd's online service provides traders with
1000's of unique graphs and studies all of which go far beyond what the average
individual
trader/investor might use (in terms of complexity and quality).
Traders who want the best in unique statistical price analysis and deep COT
analysis as well as those who really want to pursue trading in a professional
manner tend to come to Floyd and those who are serious and willing to put in the
work tend to stay with Floyd as well.
Floyd provides a
very unique service where quality and integrity are #1.
Floyd Upperman has developed some of the most
powerful 21st century position trading systems on the net today.
He has developed his own unique charting tools, and entire
charting software package. Floyd's charting program and
trading strategies are available online through this website.
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