An interview with Charles J. Tanti B.Sc.(Eng)
John Gallwas intro. Thank you for this opportunity to interview you for the May 2004 Futures Truth Magazine as well as the Striker Report. As you know, as a part of our “no-conflict” format we do not have any financial relationship with any system vendor nor does Striker have any internal systems that compete. Moreover, as a mater of policy, we do not try to “enhance” any vendor's system by “tampering” with any part of the system. The intention of this interview is for educational purposes only and should not be considered an endorsement or solicitation of any kind.
Striker: Is it correct to introduce you as President of Advanced Trading Systems Inc. (“ATS”), a Canadian corporation and futures trading systems vendor that, because it does not render investment advice, is not required to be registered with any U.S. Regulatory agency?
Charles Tanti: Yes, ATS is a Canadian corporation who is solely in the development of futures trading systems. The company licenses the software to private traders, who deal with their own brokers or advisors. In April of 2003 the CFTC trough the Ontario Securities Commission investigated the affairs of the company and they were found to be in order.
Striker: I notice that you have a Bachelor of Science degree in Engineering. Was there anything special in your educational or experience background that led you to being a system developer?
Charles Tanti: I was always extremely interested in mathematics and science, therefore I studied mechanical engineering at university. However my favorite subject was always pure mathematics, because I like to think and solve difficult problems. When I want something really bad, I keep trying until I succeed. After years of trading with limited success, developing a top trading system like the ATS-3200 became almost an obsession and my dream and ambition finally came true because in 2003 the system went to #2 in the Top Ten lists, at Futures Truth, and, someday it will be #1.
Striker: Tell us about your early trading experiences, the development of your trading rules, and how you adapted those rules into algorithms which were then computerized.
Charles Tanti: I started trading in 1980, when gold was going crazy, managed to loose $5,000 in one day and, and went back to my normal business. In 1985 I went back to trading, this time with a plan. My broker suggested I trade T-Bonds, because of the good liquidity. Before I started I asked the broker to give me the daily printouts of the last 6 months of trading. After I spent a couple of weeks studying the daily price charts, I figured I was ready. I still remember my first day trading the bonds. I had to go and see my doctor, but I could not wait to get to my broker. I took a cab, and rushed to the office. It was in the afternoon. I looked at the screen and told everybody in the room: "This market is going to go up". It was May 1985. I went long and placed a sell stop 5 ticks lower. The bonds came down, stopped me out by just one tick, and over the next several months the market went up over $30,000. I will never forget that first trade.
After that I kept day trading for about 2 years with limited success. Actually when I totaled my trades, I did manage to make a small profit from trading, but at the time the commissions were too high, so overall I ended up with a net loss.
I cannot remember exactly when I switched over from daily charts to weekly charts, but as soon as I did so, I immediately started to see the potential. The data was cleaner, less noise. The major trend was more evident. The standard stochastic I was using at the time, became overbought or over sold in a much orderly fashion, with fewer false reversals. Immediately I saw the potential.
In the summer of 1992, I started to write the ATS-3200. I started using weekly data. At first the system consisted of a stochastic and a simple filter. With time I started to see patterns in the numbers, but since this is not an exact science, but more of an art, it is hard to automate. My big break came after I read about genetic algorithms and neural networks.
When I first wrote the system, I was only taking the signal from sign changes in the stochastic. A stochastic lags the market and misses too much from the top or the bottom; it also makes too many false reversals. I had to come up with a better system, if I was going to make any money in trading. After months of studying the reports, I developed the adaptive "V-Filters" for the system. I was literally amazed how a few simple rules applied to the data substantially improved the system's performance.
My next big step in designing the system came, when I started to design and build the genetic algorithms of the system. The secret behind the algorithms is that although each algorithm tracks a single indicator, it only generates a "BUY" or a "SELL" signal, if the trade signal can be verified by other indicators. This makes the algorithms in the system very powerful and although not perfect, they are about 80% accurate.
I started trading with the ATS-3200 system in October of 1993. My first trading results are included with the demos and systems for all to see. Over the last 10 years, I continued to improve the system, with better filters, better algorithms and added functions to reduce risk, drawdowns and the number of losing trades.
Striker: How would you classify the ATS systems and what markets do they trade?
Charles Tanti: The company has 2 systems, The ATS-3200 and the ATS-6400. Both are long term trading system, with the average trade lasting about 3 months. The 3200 trades the 30 year T-Bonds, and the 6400 trades the 10 year T-Notes. Although these markets are correlated, the 2 systems, however compliment each other, because sometimes one system can catch a trade right at the top or the bottom of the market, while the other system may miss it. For this reason most of my customers feel it pays to acquire both systems not to miss any good trading opportunities.
Striker: When did ATS start to offer these systems to traders?
Charles Tanti: The ATS-3200 system, as it is today, was first offered to the public in June of 2000. In April of 2001 I cloned the ATS-6400 from the ATS-3200. When I first passed the notes price data through the logic of the ATS-3200, the initial success was complete, and this confirmed my confidence in the system. You see after one has used these 2 systems for some time, you will know when to expect a "SELL" or a "BUY" signal, simply by watching the various indicators building up to it. Therefore when the signal comes it is no surprise, and if you have both systems, but one misses the trade, the other one will always alert you to it.
Striker: What are the special features about the ATS systems our readers should know?
Charles Tanti: I believe that one of the special features that make these systems different, is the fact that each system specializes in just one market. Each market trades differently, and is traded by different traders who react differently to fundamental news. For example even though the bonds market and the notes market are correlated, they are still different. The notes are not as volatile as the bonds; therefore certain functions in the systems have to be set with different parameters, e.g. the Stop Loss Function, and the Trailing Stop Function. You simply cannot trade these 2 markets with the same parameters.
The other special features of the systems are:
- Reading the weekly price data to reduce market noise.
- Using a long term stochastic to find the major trend.
- Uses an adaptive filter to stay with the trend.
- Uses more filtering algorithms to improve the performance.
- Uses genetic algorithms to generate "BUY" signals near the bottom,
and "SELL" signals near the top.
- Uses functions to keep risk to a minimum, limit drawdown and reduce
the number of losing trades.
Striker: Do you personally trade any of the ATS systems?
Charles Tanti: I have traded the ATS-3200 almost continuously since October of 1993. The results of my first 6 months of trading are included with the ATS-3200 demo and the ATS-3200 system.
Striker: Are the ATS systems designed to "self-adjust" to changing market conditions?
Charles Tanti: Yes. Most of the indicators and functions in both systems are adaptive. The indicators and functions adapt themselves with market conditions, e.g. volatility or if a market is moving sideways. Some indicators and filters also adjust themselves when the market becomes either over bought or over sold. This improves the overall performance of both systems. Almost all of the genetic algorithms are formulated, which means that all the indicators inside an algorithm are combined together into a single formula with one parameter as the result. This makes the algorithm independent of specific market conditions, and is less likely to miss a good trade in the future.
Striker: Your system currently at over $7,000 winning trade at Striker(as of April 15th) and was recently ranked the top bond program at Futures Truth. How can investors learn about you and your systems?
Charles Tanti: I believe that confidence in a trading system comes from knowledge, and for this reason I want to expand my customer education program, therefore every Sunday I start a new Trading Seminar, on the POWER of LONG TERM TRADING. To learn more please visit: www.ats3200.com.
Striker: We thank you for your comments and we wish you the very best in the future.
John Gallwas, 47-year Veteran of
futures and securities industry.
President & Founder, Striker,
headquartered, Chicago Board of Trade Building
Striker members: NFA, NASD, MFA & SIPC since 1991.