The trading strategy employed by MAJESTIC is robust and incorporates rigorous quantitative risk management rules. A robust method is a method that MAJESTIC expects to remain valid over an extended period of time, essentially weathering the many economic cycles and market phases. Highly robust techniques are based on what MAJESTIC believes to be very general, successful trading principles and as such are non-optimized and rarely exactly fit to any specific market situation. MAJESTIC capitalizes on human emotions: by following its trading approaches in a consistent, disciplined manner, MAJESTIC believes that its portfolio management strategies will achieve a positive mathematical edge over the long run in the market place. Every trading decision is thus based on a rational evaluation of market price fluctuations rather than on personal predictions or emotions.
MAJESTIC relies on market diversification across various market sectors and on the combination of multiple uncorrelated strategies in order to limit a portfolio’s volatility. Furthermore, MAJESTIC applies strict risk management procedures that take into account the price, size, volatility, liquidity, and inter-relationship of the traded markets. This is designed to maximize a portfolio’s return while diminishing its volatility. Market risk exposure is monitored on a daily basis to achieve a desirable standard deviation of monthly returns. MAJESTIC’s trading models are designed to withstand significant price shocks and are built to preserve capital during volatile periods.
