Spoofing involves placing bids or offers with the intent to cancel them before execution to manipulate markets for profit. A recent criminal case in the US found Michael Coscia guilty of spoofing in futures markets using computer algorithms. The document discusses how spoofing works by placing large orders to influence prices and then canceling them to profit from the resulting price movement. It notes regulators are trying to crack down on deceptive trading practices like spoofing but that traders will always look for ways to gain an advantage, similar to athletes using performance-enhancing drugs.

1. Copyright © 2015 EQS Capital Management LLC, See important disclosure on last page
All rights reserved. 1 www.eqstrading.com
SIGNALS
When you think about spoofs maybe some
classic movies come to mind such as
“Airplane!,” “Austin Powers,” “Hot Shots!,”
and “Naked Gun”, to name a few. Though
we could have some good laughs recalling
some of the good one-liners like, “stop call-
ing me Shirley”, but let’s take a deeper look
at trade spooking, not parody movies. Last
week a Chicago jury found Michael Coscia
guilty on 12 criminal counts against him as
authorities attempt to clamp down on de-
ceptive trading driven by computers.
So what is spoofing? Trade spoofing is a
disruptive algorithmic trading activity em-
ployed by traders to outpace other market
participants and to manipulate market pric-
es. Under the 2010 Dodd-Frank Act, spoof-
ing is defined as "the illegal practice of bidding or
offering with intent to cancel before execution."
Spoofing can be used with layering algorithms and
front-running, activities which are also illegal. In a nut
shell, (from Austin Powers, “Hey Look, I’m in a nut-
shell!) spoofers bid or offer with intent to cancel be-
fore the orders are filled and by doing this they can
improve entry and exit prices by manipulating orders
and thus profiting from the price movement.
In July 2013 the US Commodity Futures Trading Com-
mission and Britain's Financial Conduct Authority
brought a milestone case against spoofing and indict-
ed Panther Energy Trading and Michael Coscia, a
high-frequency trader for using a "computer algorithm
that was designed to unlawfully place and quickly
cancel orders in exchange-traded futures contracts."
They placed a "relatively small order to
sell futures that they did want to execute,
which they quickly followed with several
large buy orders at successively higher
prices that they intended to cancel. By
placing the large buy orders, Coscia and
Panther sought to give the market the
impression that there was significant
buying interest, which suggested that
prices would soon rise, raising the likeli-
hood that other market participants
would buy from the small order Coscia
and Panther were then offering to sell."
(continued on Page 2)
SPOOFING LEADS TO JAIL TIME
Difficult week in the market
last week as EQS held a
4.19% loss in WTI, and a
1.56% loss in Natural Gas.
Range bound markets pre-
sent extra challenges prior
to up or downside break-out
which makes it even more
important to have a disci-
plined strategy and stop loss
program to curb larger than
necessary losses.
I N S I D E T H I S I S S U E :
Spoofing Continued 2
Oil and Products 3
Natural Gas 4
About EQS 5
Terms and Disclosures 6
EQS TR A D E RE C O M M E N DA T I O N S
THE SOUR C E
F OR C OM M OD ITY
TR AD ING SIGN ALS
Volume 1, Issue 20 November 9, 2015
A Weekly Publication on the Commodity Markets
©

2. Copyright © 2015 EQS Capital Management LLC, See important disclosure on last page
All rights reserved. 2 www.eqstrading.com
The world of trading “bots” that use algorithmic and high-frequency trading has greatly
changed the way markets are traded, and arguments can be made on the merits of
liquidity, and the disasters of flash crashes caused by such automated trading. To
counter “bot” trading, the EQS trading model has gone through many iterations and has
a learning component that sees new trends caused by such things as high frequency
trading and spoofing. The EQS Hedge Fund uses a strategy that employs methods to
take profits and cuts losses at points that prevent “bot” trading by high-frequency and
spoofers from gaming stop losses and manipulating prices against the EQS Fund.
For example, a spoofer might dupe other traders into thinking oil prices are rising, say,
by offering to buy futures contracts at $44.45 a barrel when the market price is
$44.43. After other buyers join in with bids at that higher price, the spoofer pivots, can-
celing the buy orders and instead sells at the $44.45 price he set with the fake offer. By
doing this the spoofer was ultimately able to sell two cents higher than the true market
price. The spoofer can flip and then turn around and buy back his short positon by pre-
tending to place a sell order with the reverse operation that just took place, and repeat-
ed many times, spoofing can produce big profits. Not only does this strategy work to
get better entry and exit prices, but spoofers are able to use this method to game other
market participants stop-loss levels, and “flush” others out of their positions.
Now we have over simplified the process as the bids and the offers are placed and with-
drawn in milliseconds, and this is just one of many strategies that “bots” using algorith-
mic and high-frequency trading play to “game” the system. Anytime you have competi-
tion and money involved people are going to find ways to get ahead. Think of spoofing
as the edge used by traders that athletes use to get ahead by using performance en-
hancing drugs. Look at bicycle racing, to ride in the Tour de France you have to be a
very good racer, maybe you have seen old black and white pictures where riders used
to smoke cigarettes to “open up their lungs” as a way to get ahead, well, in hindsight
that may not have been the best idea, but the point is that competitors were and are
always looking for ways to get ahead of the competition.
Lance Armstrong was arguably one of the greatest athletes of all time, winning 7 Tour
de France races. Lance never tested positive for performance enhancing drugs while
competing, but was later banned as it was found out that he was just always one step
ahead of testing methods. The argument is that if other riders were doing the same
enhancement then it was a level playing field, and if no riders were enhancing including
Armstrong he likely would have won anyway.
Spoof trading gives an edge to a solid trade strategy, just like steroids in the hands of a
great baseball player makes him hit the ball just a bit further. There is no way that you
could take an “average Joe” off the street and give him steroids and he would instantly
be able to hit a homerun in a major league baseball game. Whether it is Lance Arm-
strong, steroids in professional baseball, or traders spoofing to front-run orders, it is
that little edge that makes others follow suit to keep up.
The case is made that cycling and baseball and other sports are “cleaner” now that
regulation has clamped down on cheating, but then again is a normal “average Joe” off
the street any more likely to win Tour de France with or without steroids? The savvy
algorithmic and high-frequency traders are always one step ahead and working to make
sure that the “average Joe” does not win.
SPOOFING…(CONTINUED)
Spoof trading gives
an edge to a solid
trade strategy, just
like steroids in the
hands of a great
baseball player
makes him hit the
ball just a bit fur-
ther.

3. Copyright © 2015 EQS Capital Management LLC, See important disclosure on last page
All rights reserved. 3 www.eqstrading.com
Oil prices remain in a tight range below $50 a barrel in recent weeks as the global oversupply of
crude, which has battered prices since last year, shows very few signs of abating. The market
made some key moves to buck the trend and breakout in a strong rally, only to see pullback from
the bears.
The big story has been the dollar, as investors are focusing on the monthly U.S. nonfarm payrolls
report, which the Federal Reserve takes into consideration when deciding when to raise interest
rates. After Friday’s surprise gain in jobs and earnings, the market is again fully expecting the U.S.
central bank to raise the rates at its meeting in December, a decision which would keep the dollar
in rally mode, and
with the dollar the
main currency for
commodities it
could kill the bulls.
Markets are also
looking for clues
about another
meeting in Decem-
ber—that of the
Organization of
the Petroleum
Exporting Coun-
tries, the 12-
nation oil cartel. Senior OPEC officials were quoted in recent days saying the bloc is unlikely to
waver from its no-cut policy unless oil producers outside the bloc, such as Russia, were also in
sync with the plan. OPEC stated that it will likely not cut output at the December meeting unless
non-OPEC oil producers follow suit.
It remains an interesting time in the global oil market as this oversupplied market has oil export-
ing countries fighting for global market share to keep oil revenue coming in. The likelihood of a
stronger dollar as a result of a Federal Reserve interest rate increase in December and the first
half of next year is a dangerous sign for these countries that depend on oil revenue to run their
economy. There however remains hope for the bulls and countries that are dependent on oil
exports as rig counts continue to decline. Last week, rig count dropped by 16 to 578, the ninth
consecutive
week of de-
clines. The
number of rigs
has fallen
sharply since oil
prices started
falling last year,
and the number
of operational
rigs has fallen
64% since a
peak of 1,609
last October.
For now the world data continues to look grim for world demand, but it looks like the American
consumer is alive and well. We will keep fighting the supply and demand battle and keep our
eyes on FED policy and changes in the dollar to flank the battle field and change the course of the
war, but for now we are cautiously bearish.
FLANKS ON THE OIL BATTLE FIELD
Oil and Refined Products
Last week, rig
count dropped
by 16 to 578,
the ninth
consecutive
week of
declines.
Bearish

4. Copyright © 2015 EQS Capital Management LLC, See important disclosure on last page
All rights reserved. 4 www.eqstrading.com
Natural gas prices rose for the second week in a
row staging a possible comeback after trading
below the psychological $2/mmbtu level last
week.
Gains accelerated after the U.S. Energy Infor-
mation Administration said producers added 52
billion cubic feet of natural gas to storage in the
week ended Oct. 30. That is 6 bcf less than the
average forecast by analysts and traders sur-
veyed. The weekly report is looked to as a leading
indicator of supply and demand, and this lower-
than-expected addition would suggest that supply
NATURAL GAS: BACK FROM THE DEAD?
Bearish
Natural Gas
was smaller or demand was larger than expec-
tations which gave the case for the rally.
Despite the rally, natural gas prices have had
problems sustaining any momentum as money
managers have been moving into near-record
bearish positions. Front-month prices have
plummeted from near $3/mmbtu in August all
the way down to nearly $2 when the November
contract expired last week. A lot of that fall
came from the weather, with unseasonably
warm forecasts for November damping expecta-
tions for heating demand. Some recent fore-
casts, though, have shown cooler weather
settling in during late November, which has
encouraged buyers in recent days, but has
not been enough to cause any major spikes
in the forward curves.
While Thursday’s storage data gives the mar-
ket some support, it may be limited. Invento-
ries as of Oct. 30 surpassed 3.9 trillion cubic
feet, 10% above levels from a year ago and
3.9% above the five-year average for the
same week. The high stockpiles are still
nearing a record. And warm weather fore-
casts suggest that we may not get the spike
in prices this fall that so many traders have
come to rely on.
The high stockpiles
are still nearing a
record. And warm
weather forecasts
suggest that we
may not get the
spike in prices this
fall that so many
traders have come
to rely on.

5. Copyright © 2015 EQS Capital Management LLC, See important disclosure on last page
All rights reserved. 5 www.eqstrading.com
Why You Need EQS
From technical to fundamentals to macroeconomics, analyzing commodi-
ty markets can be a daunting task. Let EQS do the work for you.
Through its subscription service, EQS Trading provides traders and
hedgers easy to follow trading signals for major commodity futures mar-
kets, including crude oil, natural gas, gold, silver and many others. Now,
strategies used by institutions and hedge funds are at your fingertips.
The subscription service includes both daily trading signals and the
weekly Signals Newsletter, which provides in-depth insight to the com-
modity markets.
EQS Capital Management also offers a commodity hedge fund (EQS
Commodity Fund LLC), which employs the same signals in its subscrip-
tion service in a private placement fund for accredited investors and
institutions. Because EQS uses a “long” and “short” strategy, it is de-
signed to
generate
returns,
regardless
of which
way the
market is
moving.
EQS
Commodi-
ty Fund
imbeds strict risk management principles through diversifying its portfolio
(energy, metals, and agriculture) and actively managing stop loss limits.
What is EQS?
Economic Quantitative Strategy (aka EQS) is an investment and trading
strategy that translates economic data and technical indicators into price
direction for
commodi-
ties. Be-
cause of its
quantitative
nature,
EQS has
been rigor-
ously back-
tested with
15 years of
historical
data to
ensure the
strategy works in a variety of market conditions. Furthermore, because
the global economy changes over time, EQS employs dynamic parame-
ters that evolve as the market changes.
About Us
Who is EQS?
Richard C. Rhodes
Mr. Richard C. Rhodes is the President and Founder of EQS Capital
Management LLC. Richard has a Bachelor of Science with honors in
Mechanical Engineering from Texas A&M University and an MBA
from Duke University. He brings almost 25 years of diverse energy
experience, covering all phases of the oil and natural gas value chain
from producer to end-user. Richard is a li-
censed Series 3 CTA (Commodity Trading
Advisor) with the Commodity Futures Trading
Commission and a member of the National
Futures Association.
Richard began his professional career on a
drilling rig in West Texas with Conoco Explo-
ration and Production. Richard continued his
oil and gas career with Koch Industries
(ranked as one of the largest privately-owned companies in the U.S.)
where he worked in midstream, refining, pipeline, and distribution
operations. During his eight years with Koch Industries, Richard be-
gan as an operations engineer and later found his true passion in
trading, which leveraged his professional interests in mathematics
and economics. Richard joined Duke Energy in 2002, where he spent
ten years working in the energy trading department and earned The
Pinnacle Award, the company’s highest honor. Richard then left Duke
Energy to launch EQS Capital Management in 2012.
Jonathan M. Lamb
Mr. Jonathan M. Lamb is the Director of Business Development at
EQS Trading. As a four year varsity hurdler
on the track team at Ball State University,
Jonathan earned Bachelor of Science de-
grees in Risk Management, Insurance, and
Economics, and started working on his PhD
in Economics at North Carolina State Uni-
versity before focusing on business and
trading.
As part of the first wave of Millennials to
join the work force, Jonathan started his
professional career almost 15 year ago,
joining ACES Power Marketing as an Operations Specialist, providing
demand side economics for Co-Op Power Providers before becoming
a Real-Time Electricity Power Trader. He continued his career trading
power for seven years with Progress Energy (now Duke Energy, the
largest utility in the nation) as a Senior Real Time Trader. Jonathan
then opted to become an entrepreneur and started a consulting firm
specializing in finance and economics, owning and running seven
different small businesses before joining EQS in 2015.

6. Copyright © 2015 EQS Capital Management LLC, See important disclosure on last page
All rights reserved. 6 www.eqstrading.com
EQS Trading
A Division of EQS Capital Management, LLC
8480 Honeycutt Road, Suite 200
Raleigh, NC 27615
Phone: 919.714.7453
www.EQStrading.com
E-mail: JL@EQScapital.com
Your use of this subscription is governed by these Terms and Conditions.
You may print the documents published in hard copy for internal reference purposes, but not for
any other purpose. Specifically, you may not copy, reproduce, distribute or modify the content.
The information may be changed by EQS at any time without notice. While EQS will use reason-
able efforts to ensure that the information is accurate and up to date, no representations or war-
ranties are given as to the reliability, accuracy and completeness of the information.
This material has been compiled and presented as general information, without specific regard
to the particular circumstances or risks of any company, institution, or individual. It is not intend-
ed as, nor should it be construed to be, investment advice. In no event will EQS, its affiliates,
nor any of its officers, partners or employees be liable for any loss or damage including without
limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising
from loss of data or profits arising out of it, or in any connection with, your use of the Subscrip-
tion or the failure of performance, error, omission, interruption, delay in operation or transmis-
sion.
Use of the Subscription Service shall be governed by all applicable Federal laws of the United
States of America and the laws of the State of Delaware. The user hereby acknowledges and
agrees that EQS may be harmed irreparably by any violation of this Agreement and that EQS
shall be entitled to injunctive relief to enforce this Agreement. The information contained has
been prepared solely for informational purposes and is not an offer to sell or purchase or a solici-
tation of an offer to sell or purchase any interests or shares in funds managed by EQS. Any such
offer will be made only pursuant to an offering memorandum and the documents relating thereto
describing such securities.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. HYPOTHETICAL PERFORMANCE RE-
SULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESEN-
TATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMI-
LAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPO-
THETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY
PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RE-
SULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HY-
POTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD
CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE,
THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE
OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING
RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO
THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED
FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN AD-
VERSELY AFFECT ACTUAL TRADING RESULTS.
THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THERE-
FORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FI-
NANCIAL CONDITION. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN COMMODITY
INTEREST TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD
TO LARGE LOSSES AS WELL AS GAINS.
THE REGULATIONS OF THE COMMODITY FUTURES TRADING COMMISSION ("CFTC") REQUIRE THAT
PROSPECTIVE CLIENTS OF A CTA RECEIVE A DISCLOSURE DOCUMENT WHEN THEY ARE SOLICITED TO
ENTER INTO AN AGREEMENT WHEREBY THE CTA WILL DIRECT OR GUIDE THE CLIENT'S COMMODITY
INTEREST TRADING AND THAT CERTAIN RISK FACTORS BE HIGHLIGHTED. YOU MAY REQUEST A COPY
OF THE DISCLOSURE DOCUMENT BY EMAILING EQS. THE CFTC HAS NOT PASSED UPON THE MERITS
OF PARTICIPATING IN THIS TRADING PROGRAM NOR ON THE ADEQUACY OR ACCURACY OF THE DIS-
CLOSURE DOCUMENT. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL OF THE RISKS AND OTHER SIG-
NIFICANT ASPECTS OF THE COMMODITY MARKETS. THEREFORE, YOU SHOULD PROCEED DIRECTLY TO
THE DISCLOSURE DOCUMENT AND STUDY IT CAREFULLY TO DETERMINE WHETHER SUCH TRADING IS
APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
EQS CAPITAL LLC IS A CFTC REGISTERED COMMODITY TRADING ADVISOR AND COMMODITY POOL
OPERATOR. PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION
IN CONNECTION WITH POOLS WHOSE PARTICIPANTS ARE LIMITED TO QUALIFIED ELIGIBLE PERSONS,
AN OFFERING MEMORANDUM FOR THIS POOL IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED
WITH THE COMMISSION. THE COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON
THE MERITS OF PARTICIPATING IN A FUND OR UPON THE ADEQUACY OR ACCURACY OF AN OFFERING
MEMORANDUM. CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT RE-
VIEWED OR APPROVED THIS OFFERING OR ANY OFFERING MEMORANDUM FOR THIS FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EX-
CHANGE COMMISSION (THE “SEC”) OR ANY STATE SECURITIES COMMISSION NOR HAS THE SEC OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS AS A
THE SOUR C E
F OR C OM M OD ITY
TR AD ING SIGN ALS
TERMS and DISCLOSURES