Yes You Can... Cash In On Chaos!




July 10, 1996

Dear Fellow Trader,

I am writing you to inform you of an opportunity. A year ago I shared a similar opportunity with a select list of my long time clients. That sharing of my Face of God course was a hard decision for me. Part of me said, "Do not share your findings. Just trade them." But another voice kept saying, "Share the Face of God with 36 people." I did, and the rewards to me have far exceeded the money raised. The profound thanks from the recipients has been heart warming. But an even greater benefit to me has been the increased help I have gotten in my work - help from a force much greater than any of us.

Let me tell you a brief story.

As a researcher, I constantly think, ponder, and theorize about why markets move the way they do. Over the years, I have learned more and more about the mysterious forces that move markets, ourselves, and the universe. One of the problems I have pondered is "How predictable are markets?" Many say markets cannot be predicted at all. That is the random walk theory. Some have claimed that they could perfectly predict markets. That's the deterministic theory.

I have found that neither works. What does work is chaos theory. It says that markets can be partially predicted, but not always. Chaos theory says that markets operate in "domains" of behavior. Within those domains, their behavior can be predicted relatively well. But at the boundaries between domains, the behavior is not predictable. Imagine a ball balanced on the point where two bowls touch at their razor thin rims. This perfectly balanced ball is at the boundary point between two domains, the two bowls. A slight breath of air can tip the ball into either bowl. No one can predict which bowl. But once the ball falls into a bowl, its motion can be computed very accurately. Markets behave this way.

So another question I have pondered long and hard is "How can markets be predicted within a domain of behavior?" My approach has been to seek out the physical laws that move prices, similar to the laws of physics that move balls dropped in bowls. Through painstaking research I have found that there are forces that move prices, physical forces. The source and patterns of these forces were revealed in the Face Of God course. That was a major step forward. I could see the forces operating and the resulting behavior, but still I pondered.

I asked "What is the mathematical relationship between those forces and price action?" If I could find the answer to that question, I could predict future price action, at least within domains.

Earlier this year, I got some unexpected help. Let me explain.

I've learned to listen to what some call an inner voice. But the voice is not inside me. It comes from the universe. Some call it the Universal Mind. Dr. Albert Einstein, discoverer of the theory of relativity, put it this way:

"Ideas come from God. You cannot command the idea to come, it will come when it is good and ready."

That is how the theory of relativity came to him in the spring of 1905. Banesh Hoffman gives this account,

"Einstein said his basic discovery came on waking one morning, when he suddenly saw the idea. This had been going around and around at the back of his mind for years, and suddenly it wanted to thrust itself forward into his conscious mind. "

( from Einstein, A Life, by Denis Brian)

Such an insight came to me the morning of January 23rd, 1996. As I awoke, an idea came that said,

"It's energy absorbion. Compute the energy being absorbed from the universe, and it will tell you where prices are going, for prices are energy."

It was just before 5 AM. I normally sleep later. But I felt compelled to test this new idea. In an hour, I had the program working.

I named the program XGO, because for any market X, it computes where that market will GO. Incredibly, it computes this from only one piece of information - the date of first trade. Price energy is computed for any future date after that. No past prices are ever used. None are needed. Just one formula. Very simple.

At first it may seem incredible that this can be done. But it is really not. If one understands the equations of motion of a ballistic body, such as an arrow shot into the air, one can compute its flight path. One simply needs the formula, and the launch data, such as weight of the arrow, the initial angle, the velocity, and the acceleration. From there it is "plug in the numbers and turn the crank." XGO, in a similar manner, computes the "energy flight path" of a market launched into the universe.

The XGO formula captures the harmony of energy flow from the universe into a stock, a commodity, or a person. It translates the graphical beauty and power seen in The Face of God pattern into a number. That number represents the energy that moves price. It shows the direction of motion, the relative magnitude, and the dates of turns.

XGO is based on my own original theory of the behavior of the universal energy field. The theory led to the equation, like Einstein's theory of relativity led him to the famous equation E=MC 2. Einstein's theory predicted that light passing the sun would be bent by the hugh mass of the sun. He had to wait over a decade for experimental confirmation of such light bending. When it came, it validated his theory.

I have not had to wait a decade. My theory predicts prices bending up and down, not light. So to validate my theory, I have only had to watch the markets. The results are very encouraging.

You missed a great chart!

Figure 1 is a chart of the Swiss Franc and its XGO forecast. The thin line is the XGO forecast. Notice how accurately it drew the price line in advance. Note the day to day detail. And the fine timing of highs and lows. Pretty impressive, huh? Almost perfect.

Not statistically perfect. Just good. There is a statistical measure of how well a forecast matches reality, called the correlation coefficient. A perfect forecast is 1.0. A total failure is 0. Most forecasts fall in between. Experience in evaluating intraday neural net forecasts used in real trading has led to the following interpretation of the correlation coefficient:

below .3 - useless for trading
.4 - helpful
.5 - decent
.6 - good
.7 - great
over .8 - excellent

We have found that the correlation coefficient is a very harsh judge of forecasts. The 10 billion neuron neural net (brain) between a trader's ears picks up things from the forecast that are not reflected in the correlation coefficient. Traders using technical analysis and a .5 or better forecast consistently make money. One trader I've worked with uses intraday forecasts that average .45. He wins on every 2 out of 3 trades, and makes $1.83 for every $1.00 he loses. So even a decent forecast can give one an edge in the markets.

So how good is that Swiss Franc XGO forecast? It computes to .61 , a solid GOOD. Not bad for something using no price data. Such is the power of a fundamental theoretical approach.

XGO is not a perfect model of prices. It only computes the energy input to a market. The market uses that input and its own internal properties to produce the price output. For example, there are points in time when a market is at a chaos balance point. The ball is on the rim between the bowls.

At those points, a sharp break may occur and prices move much further that XGO predicts. This is a "quantum shift", or "band gap jump." Such energy transitions are fundamental to the behavior of the chips that run our computers, phones, radios, and TV's.

Such breaks may temporarily give XGO a bad correlation coefficient, but the trading value of the forecast continues. After the quantum shift, prices return to following the XGO curve if it is simply shifted up or down. Figure 2 shows this situation.

You missed a great chart!

One area in which XGO really helps is in finding the date of turns. Even when the shape of the price curve does not match the shape of the XGO forecast (this gives a low correlation coefficient), the dates of turn tend to remain fairly accurate. Using small time windows about these dates to filter signals improves trading results. Also, we compute the correlation coefficients using just the closing price. On days of sharp highs or lows in the XGO, the daily trading range is usually much larger than normal. Even though XGO is not for intraday use, this property helps select which days might be good for intraday trading.

Everyone wants to know about the stock market. Where is it going? Figure 3 shows the S&P 500 XGO forecast for the first part of 1996. Notice how well it has forecast the turns, especially those spike lows. For years I have worked on annual forecast methods. XGO tops them all. From February to early July, that forecast is a .614, a solid GOOD.

You missed a great chart!

Since the discovery of XGO, I have seen the value of these forecasts in real time. They have helped me improve my trading, and my hotline. I even used XGO to write up a Swiss Franc trade 30 days in advance for the April issue of Commodity Trader's Consumer Report. That trade made $2000.

I recently added XGO to my newsletter, and sent out many faxes. As others began to see the results, I frequently heard, "That's incredible." One week on the hotline we scored big gains in several markets. This prompted one hotline user to call and ask "Are you always this good?" Not always, but doing better and better, thanks to XGO.

Professional trader, author, and teacher Larry Pesavento wrote,

"Your XGO is impressive. It will prove to be of great value. Congratulations."

The man who got me started in markets, John Sullivan, writes,

"Yahoo looks even better now. You've really got something there!"

That's high praise from John, who has over 40 years market experience. He couldn't believe there was any way to predict a new issue, such as YAHOO, of Internet fame. Figure 4 shows the first eight weeks of the Yahoo prediction. Note how it made one quantum shift. Accounting for that, it is a .701 forecast - a GREAT. No other technology can predict prices for new issues without data.

You missed a great chart!

However, one must expect these quantum shifts, or chaos breaks. Chaos breaks are domain shifts, so traders must use the XGO (or any other forecast) as a possibility, not a promise. The technique we use is to use XGO to position both entry and exit stops.

I still marvel at the fact that there does exist a single formula which can predict prices at all - for any date in the future - without data. Even though I could see it working, it has taken me five months to fully accept this equation as absolutely valid. Something this profound does not get internalized overnight! XGO does what many said could not be done.

I am reminded of the Wright brothers, inventors of the airplane. Wilbur Wright, in How We Invented the Airplane, tells how scientific experts had "proven" that heavier than air machines could never fly. But they ignored this "expert" opinion, developed the theory of aerodynamics, and the equations for lift on an airfoil. They profoundly changed the world of travel. It took them a while to realize what they had done. Maybe in my old age I'll look back on XGO in this manner, but right now my focus is to use it effectively.

Of course, I have had to learn more about XGO. I learned that some markets delay their input (XGO) in producing their output (price). I initially was not impressed with the forecast for gold. After delaying the XGO of gold 12 days, Figure 5 was the result. It has a correlation coefficient of .440 (USEFUL to DECENT) for the entire chart, .783 (EXCELLENT) for January, and .668 (GREAT) for the past two months. So much for the experts who hold that markets can not be predicted.

You missed a great chart!

I recently had a visit from an expert in statistical trading. He had discovered, like I have, that the statistical distributions of prices are not what would be expected from a pure random walk. He has successfully exploited this property of chaotic markets in trading. But he still used the assumption, based on random walk theory, that prices cannot be predicted.

When I showed him XGO he pointed out I am predicting the prices from something fundamental - the universal energy field. So he says I have not disproved the claim that past prices cannot be used to predict future prices. I'm not sure I agree. It may just be semantics. But he was impressed that prediction was possible, however I did it. He left wondering how XGO would improve his system.

Maybe he is right, that predicting prices from the physics of the universe is the most fundamental of all fundamental analysis approaches. I am talking fundamental cause and effect here.

I'm not too interested in debating these labels, just in making my trading better. My focus is to learn all I can about how to use XGO. In the last few months I have come far.

I have learned how important it is to use the correct starting date with XGO. This is logical since that is the only input XGO uses. I originally used the 1958 date of incorporation for the modern IBM. It gave poor results. When I changed to using the date of first trade, Figure 6 shows the result. IBM first traded February 14th, 1924. It is incredible that XGO, using just that date as input, can predict the turns this well, 72 years later. The correlation coefficient from 4/1/96 to 7/1/96 is .61 (GOOD) and 5/15/96 to 7/1/96 is .839 (EXCELLENT).

You missed a great chart!

However, in complete agreement with chaos theory, there are times when the XGO forecast does not work well. From 12/1/95 to 12/25/95, IBM went down, when the forecast went up. The Correlation coefficient was -.734. Actually, that's GREAT, just the wrong way. From 12/26/96 to 1/15/96 the correlation is .306, barely USEFUL.

So I have learned that markets can be predicted, at least within the limits of chaos theory. XGO has been a valuable addition to my trading toolbox. Used carefully, it can give one a trading edge. Over the 5 months since it came to me, I have learned that XGO is real. The equation is valid. It works. It is not perfect, but it is excellent. It is on the cutting edge. XGO is the state of the art.

You have seen how well it works from the charts. Keep in mind that the XGO lines were not "curve fit" to the data. No data was used. The forecasts were all computed with no knowledge of price. The only adjustments are to scale the range of XGO, and to slide it up and down. XGO is not the theory of relativity. I am not Dr. Albert Einstein. But XGO is a fine trading tool.

I promised to tell you about an opportunity. This is it:

I have decided to sell 36 copies of my XGO program for $3600, but only to individual, private traders. The program computes XGO for anything for which you have a starting date. The formula is not revealed. To do so would increase the price greatly. In fact, the formula is literally priceless. But you don't need the formula, just the calculations produced by it. The XGO program makes those calculations for you.

The program is protected with a hardware key. That keeps the formula safe while giving you free use of its power. The output is an ASCII data file, which can be read into a spread sheet or into your charting software. I will provide conversion routines for whatever ASCII input your software needs. You can simply add XGO to your charts and use it, or develop more sophisticated trading systems. You still need good money management, discipline, and patience, but trading is easier with XGO. It gives you a unique edge.

There are many ways to use XGO. Here is just one idea. Compute the XGO's for the 500 stocks in the S&P. Constantly compute the correlation coefficient (easy in a spreadsheet, like EXCEL), selecting those stocks that are (1) following the XGO forecasts the best, (2) approaching a turning point, and (3) show a significant move after the turning point. One can compute a reward to risk ratio for every trade, and "pick the cherries".

Here's another possibility. If you have a favorite indicator or chart pattern, you could "run it in advance", looking for the trade signal before it happens. That would allow you to use XGO to filter your signals, improving results.

Option strategies are another promising use of XGO. The possibilities are almost endless. XGO is not a canned trading system. It is a tool which you can use to develop your own system - one you will use.

Of course, I am pursuing these and other ideas to use XGO. But it will take time to do them. Meanwhile, you have the opportunity to use it yourself, if you choose to do so. Further, if I make any improvements in XGO in the future, you will get a free update program.

This is my way of sharing another discovery with those who have appreciated, supported, and encouraged my work in the past. Orders will be filled on a first come, first served basis. Once 36 programs have been sold, no orders will be filled.

Also, as I did with the Face Of God course, I will permit a buyer to hold a copy on layaway and make ten payments of $360 per month for ten months. That's so serious traders on limited budgets are not excluded.

You do not need to sign a non-disclosure contract, but I do require that you sign a statement that you (1) will not use XGO to manage money for others, and (2) that you will use the XGO forecasts for your own trading, and not sell the forecasts or pass them on to others.

Why am I doing this? First, I deeply believe in sharing my work, at least in a limited way. I am here to help others. I shared the Face of God; in return Nature showed me the secret of XGO. Nature gives up her secrets grudgingly. If she gives you one, you need to share it. What goes around comes around.

Second, I believe that my success depends on the contributions I make to the success of others. As I help others succeed, I succeed as well. I realize that I have been blessed, so I want to pass those blessings on to a few people of good character.

I believe that one key to an improved world are independent individuals of good character. I believe that XGO can help you become financially independent. People of financial means tend to help others. There are crying needs in this world, so if you succeed, some of your riches may go to good causes. I hope they do.

I cannot promise that you will ever become rich. But the markets offer the opportunity. I know that XGO forecasts are about as good as theoretically possible. Prices are "piecewise predictable." So look at the charts and ask yourself, "Could I have traded better with XGO?" All you have to do is trade one stock or commodity well. XGO can help you.

Money is not a big motivator for me. In the final analysis, I am making this offer because a formula like this should not be held too tightly by one man. XGO is a joy to behold. Like a fine painting, it should not be locked in a closet. There has never been, to my knowledge, such a formula. It came from the universe. It's value should spread back to the universe. You can be a conduit. You can be one of the few to ever own this unique program. Act now, and save all regrets. You can Cash In On XGO.


Dr. Hans Hannula, PhD, RSA, CTA


Yes, Hans, I would like to have the XGO program. I certify that I will use it for my own trading, and not for managing other people's money. I will not sell or give the XGO forecasts to others.

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[ ] charge first layaway payment to above card for $360

To order, print this page, fill out the agreement, and fax it or mail it. You can order online, but we still need your faxed or mailed agreement.

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or fax to 303 457 9871

Questions? Call Hans at 303 452 5566

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Commodities trading is risky. You can loose more than your initial investment. Past performance is no guarantee of future performance.