LONG-TERM ELLIOTT WAVE ANALYSIS HYPOTHESIS OF THE NASDAQ INDEX(MARCH 13, 2025;)

IN THIS SECTION YOU WILL BE GIVEN QUARTERLY REAL RESULTS

FROM THE RELEVANT MINIMUM OF WAVE 2/3/3 OF THE ELLIOTT WAVE ANALYSIS.(Next real results on June 30, 2025)

GRAPHS AND STATISTICS:

FIVE YEAR ALGORITHM WITHOUT MONEY MANAGEMENT (1€/PIP)

DEFCON 3 (color) VS. Nasdaq Index (black) +18484€

FIVE YEAR ALGORITHM WITH MONEY MANAGEMENT (0.5€/PIP in progression)

DEFCON 3 (color) VS. Nasdaq Index (black) +480322€

TECHNICAL OVERVIEW

The DEFCON 3 algorithm is a fully automated, long–short trading system developed to operate on the Nasdaq 100 index (NDX) using the ProRealTime platform. It executes both bullish and bearish trades using trend-based filters and adaptive exit logic, designed to capture medium- to long-term directional impulses.

Completed on October 20, 2022, this third-generation system departs from the long-only structure of its predecessors and introduces bidirectional execution, allowing it to take advantage of both upward and downward market phases. It runs on a daily timeframe, favoring precision and high-conviction setups, and supports dual-mode deployment (with and without money management), making it suitable for both conservative and aggressive capital growth profiles.

TECHNICAL SPECIFICATIONS

• Algorithm Name: DEFCON 3

• Target Market: Nasdaq 100 (US Tech 100 Cash)

• Position Type: Long and Short (bullish and bearish trades)

• Timeframe: Daily candles

• Platform: ProRealTime

• Programming Language: ProBuilder

• Trading Hours: UTC +1

• Trade Frequency: Low–Moderate (2–4 trades per week)

STRATEGY PARAMETERS

• Stop Loss: ~1.00% (direction-adjusted)

• Take Profit: ~7.00% for bullish trades; variable for bearish positions

• Break-even Activation: At approximately +2.00%

• Trailing Stop: Enabled, with adaptive trailing logic

• Entry Conditions: Trend strength, retracement zones, volatility confirmation

• Money Management:

  • Without MM: Fixed size (1 €/pip for €2,000 capital)

  • With MM: Progressive pip sizing from 0.5 €/pip based on equity expansion (starting at €2,000)

PERFORMANCE COMPARISON

Starting capital: €2,000

MONTECARLO SIMULATION RESULTS

Methodology: 100,000 randomized permutations of historical trades

Probability of Profit

Average Profit

Additional Metrics

• Projected Max Drawdown (VaR 99%): -6.2% | -14.4%

• Standard Deviation of Equity Curves: €4,800 | €230,000

EXTENDED TECHNICAL CONCLUSION

The DEFCON 3 algorithm expands the DEFCON framework by integrating short-side logic, transforming it into a true bidirectional trading system. While its predecessors focused exclusively on bullish momentum, DEFCON 3 captures value during both upward and downward market movements, enhancing its adaptability across full market cycles.

The non-managed version (without money management) provides robust and consistent results ideal for smaller or static capital accounts. Its high hit rate, balanced drawdown profile, and stable risk-reward dynamics make it a strong candidate for evaluation environments such as prop firm challenges or swing portfolios with limited exposure.

The money-managed version introduces a pip-scaling mechanism that accelerates returns via equity-based size growth. Although drawdowns increase proportionally, the compounded equity curve grows substantially faster, as confirmed by Monte Carlo modeling.

What differentiates DEFCON 3 is its daily timeframe orientation and directional versatility—features that enable it to remain effective in trending, reversing, or sideways conditions. It has been successfully stress-tested under a range of volatility regimes, inverse trade orders, and slippage simulations.

Overall, the DEFCON 3 algorithm is designed for:

• Adaptive trend following in both bullish and bearish environments

• Capital scaling through fixed or progressive sizing models

• Swing traders seeking fewer but higher-quality trade setups

• Long-term equity curve growth validated by statistical simulation

• Traders looking to diversify bias exposure within a portfolio of systems

Its modular architecture supports seamless integration with other strategies in the ProRealTime ecosystem, and its consistent capital trajectory makes it well-suited as both a core system and a tactical diversification tool.

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