Firm Disclosure:
The Diversified Program uses a long-term trend following system for 64 different commodities from the following groups: foreign currencies, metals, interest rate instruments, meat complexes, grain complexes, food and fiber and oil products. This system is a technical system, which has been computer generated. For any individual commodity, this system will be long about 1/3 of the time, short about 1/3 of the time and flat about 1/3 of the time.
Quicksilver Trading principals include: Richard Whited and John Pullman.
Sixty-Four Markets and What True Diversification Looks Like
Trading 64 markets across seven distinct sector groups is a specific structural choice, not a default. Most systematic CTAs trade a smaller universe and accept the concentration that comes with it. Quicksilver’s approach spreads exposure across foreign currencies, metals, interest rate instruments, meat complexes, grain complexes, food and fiber, and oil products. Those seven sectors respond to different macroeconomic drivers. A trend in energy markets may have no relationship to a trend in agricultural markets. A trend in interest rates may be running in the opposite direction from a trend in metals. When all seven sectors are included in a single portfolio, the aggregate return stream is driven by whichever sectors happen to be trending at any point in time, rather than by the fortunes of any single commodity group.
The TurtleTrader rules were built on the same diversification principle. Dennis and Eckhardt trained the Turtles to trade a broad portfolio of markets because no one could predict which markets would produce the year’s best trends. The solution to that unpredictability was breadth: be in enough markets that the ones that trend will pull the portfolio forward regardless of which ones stay flat or reverse.
The One-Third Rule: Long, Short, Flat
The disclosure’s statement that the system will be long, short, or flat each commodity about one-third of the time is one of the most transparent descriptions of systematic trend following mechanics available in any CTA disclosure document. Most disclosures describe what the system does in general terms. This one quantifies the distribution of states.
What does equal time in each state mean? It means the system has no directional bias. It does not assume markets go up over time. It does not default to a long-only posture. It waits for a signal and goes in whichever direction the signal indicates. When no signal is present, it stays flat. The three states of long, short, and flat each occupying about one-third of the time reflects a system that responds to price rather than anticipating it, exits when the trend ends, and waits without a position rather than forcing a trade where no trend exists.
The flat state is as important as the long and short states. A system that forces continuous exposure generates losses in trendless periods and accumulates drawdowns that erode capital. A system that goes flat when conditions do not support a trend preserves capital for the periods when trends appear. The willingness to hold no position is the discipline that makes the long and short positions profitable over time.
Computer-Generated and Long-Term
The disclosure identifies the system as computer-generated and long-term. Both terms carry weight. Computer-generated means no discretionary overrides. The rules are programmed, the signals are calculated, and the trades are executed without human judgment applied to individual decisions. This removes the psychological failure modes that destroy most discretionary traders: the tendency to exit profitable positions too early, to hold losing positions too long, and to override rules when markets behave in unexpected ways.
Long-term means the system is designed to capture multi-month or multi-year directional moves, not short-term fluctuations. A long-term system will generate more false signals in choppy markets than a shorter-term system, but will capture larger moves when they develop. The disclosure’s commitment to long-term trend following across 64 markets reflects a design philosophy that prioritises the capture of major sustained price moves over the reduction of short-term drawdowns.
Frequently Asked Questions About Quicksilver Trading
What is Quicksilver Trading?
Quicksilver Trading is a systematic trend following CTA run by principals Richard Whited and John Pullman. The firm’s Diversified Program trades 64 commodities across seven sector groups using a computer-generated long-term trend following system. The system is designed to be long, short, or flat each market about one-third of the time.
What markets does Quicksilver trade?
Quicksilver’s Diversified Program trades across seven sector groups: foreign currencies, metals, interest rate instruments, meat complexes, grain complexes, food and fiber, and oil products. The 64-market universe spans all major commodity and financial futures sectors, giving the portfolio exposure to trends wherever they develop across the global futures markets.
Why is being flat one-third of the time important?
Because trendless periods are a feature of all markets, and a system that forces continuous exposure loses money during them. Holding no position preserves capital for use when a genuine trend signal appears. The flat state is the system’s equivalent of patience: it does not generate returns, but it also does not generate losses. The discipline to stay flat when conditions do not support a trade is what allows the long and short positions to be profitable over a full market cycle. See the TurtleTrader rules for the same principle applied to the original systematic trend following framework.
How many markets do most systematic trend following CTAs trade?
Practices vary across the industry. Some firms trade fewer than 20 markets; others trade more than 100. Quicksilver’s 64-market universe places it in the broadly diversified range. The trade-off at either end of the spectrum is real: fewer markets mean larger positions in each, which amplifies both gains and losses when any single market moves; more markets mean smaller positions, which smooths the return stream but may dilute the contribution of the largest individual moves.
Trend Following Systems
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