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Yield through volatility, an introduction

Updated: Apr 6, 2020

The Australian government unveiled today a second stimulus package, totalling $66 billion, to combat the economic downturn caused by the Coronavirus crisis. This would take the total Coronavirus stimulus package so far to $189 billion, which is 9.7 percent of Australia’s Gross Domestic Product (GDP).

Such a large stimulus package is in response to the devastating effect the Coronavirus is having on the global economy, a system that requires infinite growth to remain functional and which cannot thrive when consumers stop spending. Travel, tourism, hospitality and other businesses stop receiving income as social isolation is mandated in more and more countries. Businesses lay off staff or shut their doors and consumers stop spending. Financial institutions as well as individual traders respond by panic-selling their holdings on the share market, which turns the global market sentiment ever more bearish and volatile, wiping off trillions from the global economy with no signs of improvement in sight. The Foreign Exchange (Forex) market sees huge spikes in movement as people move away from exotic currencies in an attempt to seek safety in the US dollar. The Australian dollar, like many, drop in value as a result.

You would be forgiven for thinking that this would be a bad time to be trading on the market. That the huge, unpredictable market turns would make any typical strategy unreliable to implement at best, and at worst would wipe out capital very soon after opening a position, triggering a stop or a margin call through sheer volatility. And yes, you would be right for the most part this is a bad time to be trying to predict the market. Historical support and resistance lines go out the window, so do most technical indicators used to predict where a turnaround might happen. Swing and position traders might as well consult a crystal ball in times of economic crisis, as their indicators are near useless. You would be wrong to think that it’s impossible to yield profit in these conditions though. Tower Technology thrives in times of high market volatility.

That’s because we never predict the market. We implement algorithms that chose entry positions not based on indicators that suggest where the market will turn, but when it actually does turn. We build algorithms that are volume-based, that pick entries based on fluctuations and then implement advanced mathematical trade-management principles to force profit no matter what direction the market moves. We use direct-hedging techniques, active cross-market modelling and real-time dynamic variable adjustment to guide any position into a profit. This enables us to be a market-beating technology company, allowing consistent returns throughout any market, be it bullish or bear.

The team at Tower Technology are of course very concerned with both the social and economic impact of Covid 19, as family and friends lose income, superannuation and investments at what seems an unprecedented rate. Stocks will recover for the most part, as they often do after a downturn, but we at Tower can do what we can to offset loss from passive investments through an active-investment that trades best in volatile markets.

Like this one is right now.

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