1.
TRADING PRINCIPLES
FIRM OVERVIEW
What is Boom Capital?
Boom Capital is a financial investments and trading firm with one discretionary trading fund that invests in
equities, options, fixed income, currencies, commodities, and futures.
Our Mission
Boom Capital strives to be a balanced and consistent investment firm for all types of investors. The main
goal of the strategies is to achieve asymmetrical capital returns uncorrelated from the public markets.
Risk
Currently, Boom Capital should be viewed as a start-up venture with binary outcomes. Therefore, only risk
capital should be committed at this time.
Discretionary Trading Philosophy
The principles of patience and discipline are at
the core of Boom Capital’s trading philosophy. We
have therefore designed our trade strategy to
adhere to these ideals in each trade. Our
foundation is that brilliance is in the process.
Strategy
Our discretionary fund uses trend-following and
technical charting strategies paired with a macro
overlay to achieve asymmetric results. We adhere
to strict risk controls. Our process is focused on
two parts: idea generation and trade
implementation.
Edge
Two factors are key to our trading success. The
first is a flexible, diverse, and patient idea
generation strategy. We can invest in any asset
class and hold trades for any time period, while
also being comfortable staying in cash at times.
The second is our disciplined but dynamic,
leveraged trade implementation strategy that
provides us with an asymmetric return profile and
allows us to control risk.
Idea Generation
Boom Capital uses a multi-factor approach to
generate trade ideas. First we formulate a
fundamental view of a given security based on
supply-demand relationship, correlation to other
assets, and/or macro trends. Second, we form a
technical view with classic charting and trend-
following techniques. Finally, we weigh our view
against the current positioning in the market,
leveraging commitment of traders data and other
sentiment indicators such as short interest and
put-call ratio.
Trade Implementation
Each trade idea has a pre-determined roadmap
for entry and exit as well as expected path. Most
importantly, each trade has a defined stop within
the risk control limits. Entry is essential to allow
for some volatility but also have clear signals for
when a trade idea is wrong and should be exited.
Each trade is scaled based on conviction and
expected volatility of the security.
Risk Controls
Any single trade with a loss of more than 5% of
equity is exited immediately. If any month
experiences more than a 10% drawdown we halt
trading and halve leverage for the following two
weeks.
BOOM

2.
SAMPLE
TRADE:
Short crude (CLZ2016) initiated 10/26/2016
Fundamental View
• OPEC rumors driving price higher while OPEC output increases
• Gasoline supply remains elevated relative to recent history (Figure 1)
• Rig count in U.S. continues to climb
• Recent supply draw mostly due to import reduction
• No significant increase in demand
• Average cost of production is likely less than $50 rather than $50-60 (Figure 2)
(Chart
from
The
Daily
Shot
–
Global
Macro
Currents)
(Chart
from
The
Wall
Street
Journal)
BOOM

3.
SAMPLE
TRADE:
Short crude (CLZ2016) initiated 10/26/2016
Technical View
• Up-trend from February in tact, providing support at $45
• Failed to reach June high
• Double-top around $52.20 (10/10 and 10/19)
• $50 key sentiment level. Broke, retested, and held resistance
• Show of character: 10/26 surprise inventory draw should have been positive for price yet
closed marginally lower
• New downtrend from second top
(Chart
created
on
TradeView.com)
BOOM

4.
SAMPLE
TRADE:
Short crude (CLZ2016) initiated 10/26/2016
Market Positioning
• Commitment of Traders data shows near extreme long positioning
• Consensus appears to be $50-60 is the new range for crude
• Although many do vocally express distrust of OPEC agreement
Trade Plan
• Entry: next test of $50 or downtrend resistance
• Risk: +$0.30 of entry, above resistance ($300 risk per contract)
• Target: $47.30 ($2,700 per contract assuming entry at $50)
• Support expected at $48.90
• Patience: Restricted entry range of $49.90-$50.08
• Discipline: Futures can only be engaged within range, options may only be used above $45.50
(Chart
from
FreeCoTData.com)
BOOM
Disclaimer:
This
is
not
a
legal
document.
This
is
not
investment
advice.