Clarke Capital Management, Inc. or CCM manages futures accounts for investors that want alternatives to stock and bond markets. By providing alternative investment programs, clients have a wide range of opportunities. Clarke uses trend following systems for trade that are sophisticated. It has proven track record of trading in a diverse commodities through global future exchanges.
In September 1993, Clarke Capital Management was incorporated as a Commodity Trading Advisor and in October, registered in the Commodity Futures Trading Commission. In October of the same year, it was also registered in the National Futures Association as a Commodity Trading Advisor. In 2004, it was registered as a Commodity Pool Operator. In 2007, the CPO was withdrawn since Clarke Capital Management no longer used its own commodity pools.
It received the Top Trader award from Futures Magazines in 1993, 2000 and 2007.
Goals in Investment
The goal of Clarke Capital Management is to provide alternative opportunities for investments on future accounts by managing them for its investors.
Trading is done on 27 future markets. Portfolios include meats, softs, energies, metals, currencies and interest rates.
Clarke Capital Management uses a program that is systematic, trend following and multi-modeled. It applies these strategies to a portfolio of 27 future markets. Sectors included in the portfolio are meats, softs, energies, metals, currencies and interest rates. Clarke Capital Management uses nine models that combine time frames with focus on both intermediate and long term. Each of these models uses a Fuzzy Logic Trend Filter to gain permission before any position is initiated and before risk is taken.
Michael Clarke wanted to combine his knowledge of software development with his experience in trading. He wanted to create an automated system that trades futures. He wanted to reflect his trading philosophy, developed from his long research and trades, in this system.
Even before he started trading futures, Michael was already successful in arbitraging equities. He bought options that were sensitive to volatility when their prices were low and then hedged them against options or stocks that were too high. This strategy required him to be very patient and disciplined since there were months when he constantly lost, only to have a sudden increase in premium. He got very small commissions that are also diversified.
During the late 1980s, equity options became less attractive, this is because of the contraction of options volume and also firms wanted to have personnel to trade on the firm’s own accounts. Add to these factors is the installation of NYSE trading dollars that prompted Michael to shift career into becoming a futures trader and a CTA.
Using his own strengths in trading that would generate the most money, he pursued a career as a position trader that used computers to develop entry and exit points. From Omega Research, he purchased a Systems Writer Plus package that he later found out to be insufficient for his needs.
He created his own testing platform. His invention tested various markets in long periods of time using complicated techniques. His initial outputs proved to be profitable but had a tendency to over trade and involved too much risk. From 1989 to 1992, he tested and retested his outputs and strategies and developed more software tools.
Using around 105 commodity interests, he developed a model and tested with data as far back as 1945. The model traded into all 105 markets and utilized the same set of parameters and rules. It should produce highly desirable performance on at least 90% of the markets and the market as a while. This was the only way for the model to be included in the Clarke Capital Management portfolio.
If the model becomes unstable when parameters are shifted or when the rules are altered, the model is not accepted. Some tests were no longer included because they intend to produce poor results. Michael dedicated a lot of time and effort to make each model worthy of Clarke Capital Management and these same models gave the firm the edge against other competitors.
Clarke Capital Management uses the models it has developed independent of each other and makes use of intermediate, long and very long terms for diversified futures. In aggregate trading, each of the models can enhance each other because it prevents all models from getting into one trade or getting out using same time and same exit prices. When traded in groups, models show significant decrease in length of drawdown periods. The equity curve is also smoothed.
Due to the infrequent entry signals happening in an ideal trading environment, a multi-model approach was used. Instead of the taking of large positions from these signals, Michael decided to diversify the decision making process among more than one model. With this technique, positions can be scaled in and scaled out based on a system. This approach hsd less risk, more efficient and thus more preferred.
When other models are already profitable, entry signals are added. This situation doubles as a source of another opinion for any market. Each of the models makes use of filters that can override the entry signals. Some of these filters include prevention of choppy markets from entering.
Another filter, called the Fuzzy Logic Trend Filter identifies patterns that are significant in a broad range of data. This filter makes it sure that patterns of trends are strong enough to produce desired performance in all markets. This filter can find trend, non-trend and counter-trend orientations.
All Clarke Capital Management models has a volatility based hard stop, a dollar based hard stop or a combination of both in its initial stop loss. Quick stop loss models are pegged at $300 to $600. A third of all models have this feature. Another third has $500 to $1,200 and another third for $700 to $1,500. Some cases can reach up to $2000. There are also trailing stop exits based on time, level of profits or a combination.
Each model will also have a stop that is unique based on the entry in the opposite direction. On short focused models, trailing stops are used to provide a room for adjustment especially when the position is open for profits. When it stops, the stops become stricter and less rapid based on the accumulated profits. The reason behind this strategy is Michael’s belief that a position that has shown a proven track record must be given more room to keep on winning.
Models that are long term combines tightening of trailing stops that are chart based. Two of Clarke Capital Management’s models have unique limit exits on top of the other stops. These stops activate when profits reach a certain level.
Clarke Capital Management’s systems control risk using a daily calculation across all open and new positions. The formula for the risk is the difference between the closing price and nearest adverse direction stop. All models’ stop signals are taken.
All entry signals are also taken, especially when positive direction occurs in a certain period of time. Signals are not executed when Clarke Capital Management models produces signals that prices will remain the same or relatively the same on the market. Signals are also omitted when any more exposure is deemed unnecessary.
These kinds of activities are relevant, especially in the European market where bond markets have a high degree of correlation with their other moves. Aside from bonds, currencies also have the same characteristics. Although Clarke Capital Management has yet to have a fixed ratio of risk to equity, it is being monitored and evaluated. Margin to equity is kept at a high of 20% to a low of 40% area. Some instances reach 65%
Clarke Capital Management provides a wide range of options for its investors. There are various account sizes starting from a $50,000 to a $3 million per unit.