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   IMPA Information

IMPA (in-depth commitment of traders analysis) is our core longer-term position trading system. The IMPA stands for "Individual Market Participant Analysis".

The IMPA Position Trading System is composed of two key components.

  1. Fundamental analysis
  2. Technical analysis.


Fundamental analysis is used to select the markets that have a unique underlying fundamental condition that is either bullish or bearish. Not all of the markets will have the right fundamental conditions. Most of the time, the markets are trading in a range and are in-balance. In other words, there are no imbalances in supply and demand or any fundamental conditions that may cause a shift in either supply or demand. Our system tracks the supply and demand balance by breaking down the open interest (open positions) by individual participant and then tracking each participant's behavior (IMPA). There are three participants in futures.

  1. Public
  2. Funds
  3. Commercial hedgers


The fundamental portion of the system tracks the relationship between the three participants, by tracking and performing various statistical studies on the number of long and short positions held by each of the participants. Our proprietary fundamental indicators are derived solely from this information, and not from old prices. This is what makes the system very unique compared to 95% of all other systems. Statistical studies and surveys among traders (both small and large) show that 95% of the individual traders use technical based systems. These systems are all relatively the same, and are based on indicators that are derived from old prices (such as moving averages and oscillators). These indicators have an inherit flaw. They cannot predict the future and they produce a significant lag, which makes them extremely poor at forecasting the future. This is unfortunately how the traders use the systems and that is what they are expecting (an accurate and consistent forecast of the future). What they get is random results. Usually just enough success to keep then interested and in the business for about 6 months, or less.

We use the weekly COT data for our fundamental input, and we measure this data in a variety of ways using statistical studies and weekly proprietary measurements. All of our studies are done the same way each day and each week.

The COT data allows us to track the activity of the individual market participants. We record and measure the sum of their trading (longs, shorts and delta) on a week-to-week basis. Using a proprietary statistical formula we developed, we are able to determine when the dominant market participants (commercial institutions) are building statistically significant positions. They (commercial institutions) represent the largest single component in the futures market. They (commercial institutions) generally accumulate (scale into) large positions over a period of time (weeks to months). We track their behavior and study the many relationships between their actions and the behavior of the market as a whole.

The IMPA system identifies the markets that are most likely (high probability) of breaking out to the upside or downside and trending significantly. We do not care if the commercials are long or short, or by how much. They can actually be net-short and bullish as they have been in silver several times in the past. We also are not that concerned with how much their positions change from week to week. We do care about the size of their net-position however and how that relates to their normal size position. The normal size position is essentially a 'mean measurement' over a period of several years, weighted towards the most recent years. A 'normal' range is calculated based on a proprietary statistical formula. This formula is applied to the net-commercial position, and to the individual commercial producer and commercial consumer positions. Our proprietary IMPA analysis comes from this study. The heart of that analysis is the UCL/LCL graphs. These mark the upper commercial limit (UCL) and lower commercial limit (LCL). The UCL and LCL are proprietary indicators derived from this data (commercial positions) and they represent our core indicators.

They are true leading indicators derived from data other than price. This makes them very unique as most indicators are derived from the open, high, low, close, open interest and volume figures only. The IMPA analysis will only work when combined with the appropriate price derived 'technical' indicators. When either the LCL or UCL are triggered, it is considered statistically significant because the position is outside the normal range for that particular market. Once this component is in place, we know that the conditions are right for a significant turn in the market. It is then that we begin examining the technical conditions of the market for a potential buy or sell (based on our other criteria). We would never buy or sell based on the net-commercial position only. This is crucial to understand.

We do not have a crystal ball. No one does. Never believe anyone who claims that have a magic system, or a system that produces 99 winners out of 100 trades. Those systems are all curve fitted, which means they were created around old-data for those sole purpose of producing unbelievable results. Keep in mind that the average trader, using a technical system with a core indicator derived from old price data has an extremely low probability of achieving any kind of consistent success in the market beyond just plain old luck. What typically happens is the indicators work just about enough of the time to keep the average trader interested. Clearly, this is the path the majority takes, and it is also clearly the wrong path. A simply analysis of the data reveals this to be true.

Here is how we explain it to new traders:

Using technical analysis only to forecast future prices is very much like driving your automobile using the rear view mirror for direction! All you see is what just occurred last, and you have no idea what is directly in front of you. You might drive off a cliff or run right into a telephone pole using only your review mirror for direction.

Furthermore (additional facts)

It is also a well-known fact that approximately 90% of all individual futures traders lose money. 95% of them are using these very popular technical systems that come standard with your average software package, and can also be found on the Internet, some of them are even free. (Remember the old saying, nothing is free, at least not anything of any real value).

Our system uses a proprietary form of fundamental analysis to forecast the future. Now forecasting the future is tricky. Again, no one has a crystal ball. However, we have found that for prices to advance sharply, or decline sharply, certain fundamental conditions must be present in the market ahead of the advance or decline. These conditions are outlined in our manuals and tracked with our proprietary system. This is the heart of our system, and it is a unique proprietary concept, unlike any other system available to the smaller individual traders. Certainly the larger traders and institutional traders have access to, and use similar types of studies and systems to track and trade the futures markets successfully. This system can give you the same edge that these larger players pay millions for.



Important!
NO TRADING SYSTEM CAN GUARANTEE PROFITS

No guarantees can be made for success. Past performance is not a guarantee of future profits. Futures trading is NOT our only means of income. We also invest in stocks, real estate as well as generate income from other businesses. We have both winning trades and losing trades. We trade professionally, but not daily. We wait for what we believe to be ideal trading opportunities.

Try it for free!  

  "I can't imagine trading commodities without this data! This is the missing link"
J.T., private trader

"I don't know how you can make it (IMPA system) any better... This is the BEST system I have ever seen. "
R.K. Part-time futures trader

"Dear Floyd, Well I have read the manual and studied lots & lots of charts... all I can say is wow - I finally found it - !!! THE SYSTEM (the only system) ... Finally FA & TA in one package! Thanks, Subscribing for life now please...from way down under"

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