efxsys solution overview

eFXSyseFXSysTMTM Solution OverviewSolution Overview

HEDGE FUND BUSINESS PLAN

Confidential – Sept 2007

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First Some DefinitionsFirst Some DefinitionsOur Online Help Files contain all detailed definitions that we use, please refer to this. In particular check out;

Modality: Different Market Characters, e.g., Trend, Range, Cyclical/Secular Bull or Bear, etc.Forecast Methods: Different techniques to predict prices, e.g., Technical Analysis, Neural Network, Fundamentals, etc.Forecast Horizons: The multi-step ahead time frame of a forecast,

Trades are Spot Transactions with three event classes (see figure next page);

“Entry Buy or Sells” are start conditions of a trade“Exit Buy or Sells” are end conditions of a trade“Hold” are trades in progress



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Entry Buy

E2Exit Buy

Hold Long

E3

E1

Entry Sell

E4 Exit Buy

Hold Short

Trade Transaction Flow Trade Transaction Flow “Events”“Events”



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Using eFXSysUsing eFXSysTM TM - Part 1- Part 1This is a simple to use system once you have mastered a few screensThe recommended strategy for trading with the system is called “Quantum Economics”, this is a technique using;

multi-agent game theory non-linear financial time series forecasting using neural networks and other proprietary technology in the field of Artificial Intelligence.

The mathematics and process flow behind the system is sophisticated and complex, but you do not need to know this to be able to use the system.



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Using eFXSysUsing eFXSysTM TM - Part 2- Part 2

Fundamentally when you see multiple “trade recommendations” for a particular currency pair all “voting” for a short or long position then we have “evidence” of an imminent movement. This evidence can be used to time your tradeThe following slides will take us through the background to this strategy and we will finish by showing some actual examples



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eFXSyseFXSysTMTM Screenshots ScreenshotsThe following pages describe the main pages common in both Lite & PRO versions, some points to note.

These screenshots are of the PRO product, the Lite Product has reduced functions for its lower cost, e.g;

Newswire feeds are not includedLimited number of screens availableLimited to one currency pair per subscription

Screenshots are in English you can toggle to other languages at log onIt’s good to have a screen resolution that is high density, e.g., minimum 1024x768 or higherFor further help and glossary of terms used please refer to online help system.You can upgrade from Lite to PRO on attractive terms!



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Trade InsightTrade InsightThis page shows you the summary of the simulated active trades (order flow) currently in the system.

The Trade Insight “Meter” gives a gauge of the sell or buy “strength” of the simulated order flowTrade Ticker of breaking news is displayed (in eFXSysTM PRO)Economic Calendar Information is available for scheduled announcementsCurrent Price Information Table with actual prices & highs/lows are presentedIntraday Actual Graphs for the Currency Pairs are charted



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TRADE INSIGHT PAGETRADE INSIGHT PAGE

Chart for Intraday Actual Prices for Currency Pair

Trade Insight Meter (Red = Sell, Green = Buy) based on Order Flow

Measurements

News Ticker for Breaking News and Economic

Calendar Button

Current Prices, including Last, Previous, Change, High, Low and Volatility

Instrument Simulated Trade / Order Flow

Insight. Shows active Entry & Exit Position, as

well as Open Holding Positions



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Alert CompositeAlert CompositeThis page shows you the simulated active trades currently in the system.

Trade Agent “Status”Short Trades are Trades in progress entered with a SellLong Trades are Trades in progress entered with a BuyHold Trades are either Long or Short trades in progress (active), waiting for an optimum exit condition (either Buy or Sell)

“Worldviews” is a term we use to describe a single row (active trade) because each trade has a different;

instrument, e.g., EURUSDtime horizon, e.g., 1 hrforecast method e.g., TAmodality, e.g., Cyclical Bear



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ALERT COMPOSITE PAGEALERT COMPOSITE PAGE

Note the "News Alert" for EURUSD

Note the Active Alert for an Entry Buy for USDJPY 1hr SDFN Trend (Entered @ 109.175, and current

time 109.205). The USDJPY is an active link that takes you to the details of this specific “Worldview” in Alert

Panel



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Trade DashboardTrade DashboardClicking on the active link “Instrument” in Alert Composite takes you to Trade Dashboard (next screenshot)This page shows you the individual Worldviews in our “Trade Dashboard”.

You can see following functions;Actual Data showing current, last day price, highs and lows etc.Trade Tracker showing win rates for past 100 simulated trades per time horizonForecast (shows 15 intervals of history as well as 15 predicted intervals forward). In this frame is also statistics for the quality of the forecast based on past 15 forecasts)Trade Meters – giving a simple display of the buy or sell recommendation per horizonIn PRO there is also a Newswire section this is not shown in Lite version



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TRADE DASHBOARDTRADE DASHBOARDBoth the Trade Tracker

and Trade Meters indicate Trade (Longs) are now active in 1 hr and 2 hr "Horizons"

You can see the CDC and MAPE (Delta) Score

here for the 2hr forecast. This is why the forecast

is in this case considered

"good"



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Dashboard – Chart Dashboard – Chart OptionsOptions

In the Trade Dashboard you can see many different charts, including;

Actuals; Intraday, Weekly, Monthly, Yearly dataTechnical Analysis (refer to TA text books for detailed explanation of use), these are selectable at different time horizons;

Bollinger Bands showing Moving Average and Upper and Lower Bands at 2 Standard Deviations from MA. Moving Average Convergence and Divergence, showing Signal and MA1 and 2 averages, signal crossover zero level indicates change in market direction.Relative Strength Indicator showing over and under sold/bought conditionsStochastic Oscillator showing slow and fast signals, crossover indicate market direction change



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DASHBOARD - ACTUALSDASHBOARD - ACTUALS

Actual Tables are recorded for past 24

hours, Week, Month and Year values



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DASHBOARD – BOLLINGER BANDDASHBOARD – BOLLINGER BAND

Bollinger Bands are

based on past 1,2,4,8,16

Hour Intervals, with upper & lower BB based on 2 SD from MA



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DASHBOARD - MACDDASHBOARD - MACD

MACD is based on

1,2,4,8,16 hr intervals



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DASHBOARD - RSIDASHBOARD - RSI

Relative Strength

Indicator is based on past 4,8,16,32,64

mins intervals



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DASHBOARD - STOCHASTICDASHBOARD - STOCHASTIC

Stochastic Oscillators

are based on 4,8,16,32,64

mins intervals



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Trade Tracker CompositeTrade Tracker CompositeThis page shows you the simulated active trade results (Trade Trackers) for the past 50, 500 and 5000 trades. These screens help users identify “hot spots” of specific Worldview winning history/track records, displaying;

Win% rates (the number of wins out of the past number of simulated trades that have either a win or loss, i.e., null trades are discarded)Avg Profit%. Gives a % of the average Profit made over the number of actual wins made in the sample.Avg Loss%. Gives a % of the average Loss made over the number of actual losses made in the sample.Note the results are the sum for all time horizons for that instrument, in PRO you can go to the Trade Tracker sub screen for individual time horizons (not available in Lite).User can select which Worldview he wishes to checkout in Trade Tracker Composite by;

instrument, e.g., EURUSD (PRO has 3 per AFD, Lite is restricted to 1)forecast method e.g., TAmodality, e.g., Cyclical Bear



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TRADE TRACKER COMPOSITETRADE TRACKER COMPOSITE

Note this screenshot of Trade Tracker Composite. This display shows the win% and profit/loss% for the

currency pairs past 50, 500 & 5000 simulated trades. User can manually “hunt” for winning

modalities and forecast methods. Clicking on the Instrument takes you to see results within each

Forecast Horizon



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““Quantum Economics”Quantum Economics”A Trading Strategy using eFXSysA Trading Strategy using eFXSysTM TM - Part 1- Part 1

This is a simple to use technique for seeing the general direction of a FX instrument, and is very useful in seeing imminent large movement, for short or long opportunity.

1. Preparation: Do your fundamental and technical analysis to select an instrument you wish to trade and the direction (short or long) 1. This is a personal judgment you should first make before

using the system, to help backup your choice and make a optimum “timing of trade” judgment

2. Please note: In Lite version you have only 1 instrument, PRO has many more to select from.

2. Open: Trade Insight Page to see overview of Order Flow and await a strong sell or buy signal in your selected instrument.

3. Open: Alert Composite Page (see next screenshot) to see detailed Worldview picture

4. Check: if majority of Worldviews are either short or long (in this case the screenshot shows a lot of shorts for USDJPY)

5. Decide: if significant number are in same direction as your personal judgment (mentioned in 1 above) consider trading in that direction.



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““QUANTUM ECONOMICS”QUANTUM ECONOMICS”

Note the situation with many “Worldviews (i.e., modalities , forecast types and horizons) all "voting" at the same time in the same direction (here they are

calling all for a “short”).

This is indicative of a feature Sigma Delphi Ltd calls a "Quantum Economic" phenomena, similar to what some Physicists interpret how certain kind of effects

are observed in nature. The so called "Many Worlds Hypothesis".

In this specific example no less than 12 “Worldviews” all agreed to short the USDJPY @ 09:37 am @ a price of 109.285. Also there where no dissenting

opinion from active trades, i.e., no “longs” present.



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““Quantum Economics”Quantum Economics”A Trading Strategy using eFXSysA Trading Strategy using eFXSysTM TM - Part 2 - Part 2

Before you trade you may wish to do some double checking and validation. This is a good practice to do beforehand, because timing is crucial. However boldly rushing to trade may be reckless. It’s an issue of risk.

1. Double check: the individual Worldviews to see if the specific simulation is giving recommendations/forecast that are credible in your personal opinion, i.e., looking for forecast shapes you “trust”

2. Validate: the Trade Tracker Composite performance to see if specific Worldviews are reliable in your personal opinion, i.e., looking for win% greater than 50%

3. Watchout: Be careful of placing your trade near Economic Calendar Events that you have not factored, these scheduled announcement can seriously effect your trade.



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““Quantum Economics”Quantum Economics”A Trading Strategy using eFXSysA Trading Strategy using eFXSysTM TM - Part 3 - Part 3

After placing your trade you need to start monitoring for optimum exit condition. Some key points;

1. Trade or hold?: Wait for Profit or Loss Risk Management to be recommended or manually override to terminate your trade if balance of shorts to longs move against your position.

2. Alerts: Watch breaking news that might effect your trade (PRO has advanced features in this respect not available in Lite). This is a crucial aspect.



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SNAPSHOT 4 HOURS LATERSNAPSHOT 4 HOURS LATER

The system recommended holding the position for a considerable time. By this timeframe (some 4 hrs later than previous screenshot) profit is now 43 pips – a

significant trade call.

efxsys solution overview

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