History of the Nirvana Club

Back in 1987, I had studied Technical Analysis for five years, and was convinced that profitable trading could be 100% automated.  It was that conviction that led me to form my company, Nirvana Systems, Inc.  But, rather than re-create my own Technical Analysis software, I decided to create a software robot that could run the other software, from the outside, to achieve this goal.  

That is, rather than write a Technical Analysis program from scratch, I planned to use existing programs like MetaStock™, TBSP™, AIQ™ and CompuTrac™ to harness their analysis power. In other words, use those programs to find signals and then automate everything else.

You may remember the T.B.S.P. ads, saying, "You could have turned $6,000 into $8 Million trading index options using our software."  There were similar ads for other programs. With my software robot,  I could automate and test the heck out of them.  If one didn't work, I'd find another that did.   I was very excited. 

KLATU is Born

We spent about two years developing KLATU™ - named after a science fiction character in the movie, "The Day the Earth Stood Still." We added a telephony speech device from Texas Instruments so KLATU could call up a trader when conditions were met, and verbally inform him or her of a signal, such as, "The S&P just hit an MACD intraday buy signal on heavy volume."  The trader could answer back, "Buy 2 contracts at market" and KLATU would reply, "Acknowledged.  Two at market...  Fill confirmed.."

It worked!  We placed KLATU with a number of traders who began engaging the market with it.  In 1989, Frank Taucher, author of The SuperTrader’s Almanac, conferred his "Product of the Year Award" for  our creation, because he could see the enormous potential of it.  The feat accomplished by KLATU has never been duplicated by any other software company.

But there was a problem. The trading software we were driving wasn’t powerful enough. I automated and tested programs like T.B.S.P., AIQ, MetaStock, Telescan (and others) and quickly discovered that they would not generate consistent profits in mechanical trading. 

I tried writing my own systems using CompuTrac.  But I quickly realized that indicators don’t work very well across a wide range of market conditions. Writing a purely mechanical trading system using ANY toolbox program was extremely difficult, if not impossible.

The Director Series

In order to keep the company viable, we created automation products using this new software robot technology. In 1991 we wrote and released specific utilities for MetaStock, Telescan, and AIQ... The Director Series.  These products gave customers the ability to run massive tests on these programs (which they thought was great!) and enabled us to grow the company from 5 staff members to about 25. 

While this was going on, I continued looking for that "magic" trading software that would really do the job. Our new utilities helped us a great deal, because we could mechanically back test lots of other software.  And we did.  But, nothing emerged with enough power for automated trading.

I began to realize we had to create our own system, because none of the existing packages automated the really important technical methods, such as Chart Patterns. Not to mention the fact that they were all based on fixed indicators and tools, and did not adapt to changing markets, which I decided was essential.

OmniTrader Development

In late 1992, we started the OmniTrader Project.  We began the task of writing a Windows trading program with automated analysis, built-in portfolio, Trading Game, and fully-automated signals based on the "voting" ideas embedded in our Director utilities. 

A key component of OmniTrader’s original design was the Adaptive Reasoning Model, or ARM for short. The ARM approach is the method of adapting trading systems to markets, which is achieved in OmniTrader through the use of a back test on each trading system. 

The benefit of this method is you never have to select which systems to apply – OmniTrader does it for you, automatically.  We continue to get letters from customers who are amazed at how much it does, and how little we charge for it!

The Club is Launched

Still, I needed more accuracy in the Signals. In mid-1995, I discovered that by applying specific market measurements to trading signals, it was possible to measure the probability of a given signal being "correct". The approach was a big challenge, because it would involve billions of measurements and certainly many experiments before seeing any real results.

We could clearly see the research path to get to the next level of performance. But once again, our development had been slow because our programmers had to concentrate on the next version of OmniTrader to stay competitive. Venture Capital was expensive and time-consuming.

The answer came to me when I realized that our customers would enjoy participating in this development, and certainly would enjoy using the resulting products. Such a partnership would allow us to provide meaningful focus on Adaptive Reasoning Model 2.  And, we could offer tremendous value for those customers who participated.

So, in 1996, we launched The Nirvana Club – and over 350 members joined on the initial announcement! This gave us the capital we needed to move forward with our research. We hired more programmers, got bigger, faster computers, and began crunching numbers.

ARM2 is Released

The rest is history.  The method I devised for combining Market Factors using Artificial Intelligence was very successful.  Each year since the Club was launched, we have been developing and releasing ARM technology to members.  Our first big milestone was hitting my initial goal of 70% signal accuracy in ARM2 Release 2 in 1998. 

For ARM2 Release 3, we applied a commercial Neural Network to existing signals, providing a further boost in performance.  For ARM2 Release 4, we worked on a specific pattern recognition project to produce VTL-B  (valid trend line breaks), which again boosted performance.  You can see charts from these older versions of ARM on the technology section of this web site.

ARM3 - the Next Generation

Nirvana Club memberships have advanced Club products AND OmniTrader's development.  In 2003 we developed Strategy Builder in OmniTrader.   This new approach enabled us to build "components" in our Strategies. 

One of the first components we deployed was a new version of ARM, called Adaptive Reasoning Model 3, or ARM3 for short.  ARM3 includes a Neural Network (or NN) component and a Genetic Algorithm (GA) component.  Because they are building blocks, members can now perform their own experiments.  They can add Neural Networks to their Strategies.  Or, they can train them on their own measurements.  This has led to an avalanche of development within the Club itself, adding even more to the value of memberships.

Members are discovering new combinations of Market Factors that generate astounding results.  And, they freely share their work by uploading their ARM3 strategies to the Nirvana Club web site. 

Mechanical Strategies  (and the Automation to Run Them!)

In 2005, we released several new products to members - ARM3 on Chart Patterns, Intelligent Exits in Trade Plans.  We also completed the first version of OmniTrader Professional powered by OmniPilot.   And in July we held our first robotic trading competition - RoboCon - for members.  The winning Strategy made an annual equivalent gain of 160%!

Before RoboCon, our ARM2 and ARM3 releases generated great Signals but were not mechanically tradeable.  In 2006 we began using real exits in our Strategies, using Trade Plans.  And in 2007 we began providing profitable, Mechanical Strategies to members. 

Nirvana Club Members now have access to Strategies like NSP-31 NN and NN Channel - Strategies which have held up over long periods of time.  And they also have access to OmniTrader Professional and OmniPilot to automate them!  There is no other organization on earth with trading technology like this.

The Benefits of Membership

I started the Club to fund development of The Ultimate Trading Machine.  But a wonderful outcome of doing this was the creation of a community of OmniTrader customers who understand and support our mission.   I continue to get letters from members with great new ideas and insights into how they are trading and how we can improve the software.  And members share information with each other, too.  The open interaction on the Club Forum is  fabulous!

The Club is a savvy organization of traders from all over the world who are dedicated to our mission. Many of them have been staunch supporters of Nirvana since "the early days".   All members gain access to the Nirvana Club Membership Directory and Forum.  You will enjoy the opportunity to network with these members, who freely share their insights on the private site.

The Club has greatly enhanced the development process here at Nirvana. We regularly post products for testing and solicit feedback from members through our Forums, where we discuss current research and features for upcoming versions of ARM2, OmniTrader and VisualTrader. 

Now, let's talk about tangible benefits.  When you join the Club, you receive the ARM3 technology that matches your membership plan  (Funds, Stocks, Futures).  Stocks level members get the Stocks AND Funds Knowledge Bases we have build here at Nirvana, and Futures level members get all three.  These Knowledge Bases have been specifically created to trade the given markets.

You ALSO get NSP-31, the Neural Network (ARM3) version of NSP-31, OmniTrader Professional and OmniPilot.  In essence, you get everything needed to establish an automated trading regimen. 

Finally, it is important to mention that ARM3 is an OPEN Strategy Development System.  Members are using the same tools we use.  Many of them are applying their knowledge to develop their own "killer" Strategies  AND sharing their findings with other members.

The Ultimate Trading Machine Mission

The Ultimate Trading Machine is the "end goal" of The Nirvana Club.  The original definition of UTM was "a machine that is so accurate it can trade the market automatically."  When we launched the Club, we refined it as "any mechanical Strategy that generates 80% accuracy and a 3-to-1 Reward:Risk ratio (average profit divided by average loss greater than 3.)"  Assuming trades last 1 week and the average win is 3% (average loss 1%)  this performance will grow an account about 200% a year without using margin. 

One of the Nirvana Club covenants, in the Nirvana Club Agreement, states that if and when we create a Strategy with this level of performance, only Nirvana Club Members will have access to it.  The good news is, we are now seeing MECHANICAL TRADING PERFORMANCE that beats the Accuracy Requirement and the Reward:Risk ratio in separate Strategies.  We believe it is now only a matter of time before we improve performance to the point where we have one or more Strategies that hit our UTM performance goal.

The good news is, we've have already achieved my original goal.  It is now possible for Members to automate our ARM3 Strategies using OmniPilot!  We have been looking forward to handing out buttons that say,

I don't work… my computer supports me!

And, at BASH 2007, we did!

Thanks for being a Nirvana customer. As an OmniTrader user, I know you already understand where I’m going with our products, and I appreciate your support. I want to encourage you to join our group of Nirvana Club traders. A Nirvana Club Membership is an investment that will pay dividends for years to come.

Thanks again…

Ed Downs
CEO & Founder
Nirvana Systems, Inc.