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The Pawlewski System

|Includes: SPDR S&P 500 Trust ETF (SPY)

Marek Pawlewski is UK based expert in software engineering and statistical analysis. 5 years ago, initially as an academic exercise, Pawlewski commenced a research project to establish whether statistical analysis could be utilised to predict future stock price movements with a high degree of success and reliability. The project, to be deemed successful had to both stand up to the highest levels of academic scrutiny and provide low volatility and reliable returns.

In the early years of the project a broad range of well known technical strategies were identified and tested. Most failed to perform consistently. Many of these flawed strategies are the base for aggressively marketed trading systems widely available today. A few more intelligent strategies were occasionally competent yet proved unreliable and loss making during periods of higher volatility and fast changing markets. Gradually technical strategies were removed from the project until only one survived. This surviving process was disected, analysed and improved for some years, via real-time trading and 15 years of back-testing. A set of parameters were identified that maximised risk-adjusted returns through all stages of the economic cycle and at all levels of volatility.

The end product is a logical, intellectually robust and proven stock trading system that uses sophisticated statistical modelling techniques, but provides simple regular signals that make intuitive sense to new or experienced traders.

Pawlewski was kind enough to meet with me and considering his background as an academic surprised me greatly with his practical understanding of the frustrations traders feel when faced with the failings of the 'conventional wisdom' of the popular Technical Analysis techniques. I think the empathy comes from years of checking numerous ’off-the-shelf’ strategies which only seem to work some of the time, and where for every example of a bullish signal giving a successul trade, you can find a similar signal where the trade fails.

Pawlewski, pleasingly is willing to share his findings with traders and I felt he is as keen to gain recognition as a ground-breaker in the art of technical analysis, as he is in monetizing the Pawlewski System, for personal gain.

In an industry so rife with hype and aggressive marketing, Pawlewski clearly abhors slick pay-now results-later marketing processes and customer recruitment techniques. Whilst he is naturally keen to protect his intellectual property he is willing to share trading signals with interested parties over a prolonged period so traders can reflect on the process and digest a reasonable time-frame of results.

The essence of Pawlewski's system is that it is able to distinguish between appreciating stocks that are experiencing a short term pull back and stocks that are falling and will continue to do so with near uninterrutped momentum. Using statistical analysis he can identify long trade candidates, which he would typically hold for an average of 10 days. Similarly, by using ‘reverse’ statistical analysis the system proposes short positions. The exact details of how the process works are confidential, but my interpretation following a day with Pawlewski is that stock charts do have a ‘genetic’ code which under analysis by the Pawlewski system provides information regarding the future direction and pace of a stock’s movement.

The system has been robustly tested on the S&P 500 constituents and it is those stocks that we will be providing trade signals on for the next 3 months or so, via TradingHelpDesk.

If you would like to see the trade signals they will be posted on live, with each Pawlewski blog entry logged with a stock ticker, trade direction, trade time and date so you can audit the results going forward.