How to evaluate a trading system?
Jan 27, 2014 at 07:32
1,302Lượt xem
10 Replies
Tham gia từ Jan 14, 2014
386bài viết
Jan 27, 2014 at 07:32
According to my personal opinion, before going into analysis a trading system/strategy/account ... then we should consider several criteria as following:
1. System/strategy/accounts ... are trading on which broker (how long broker operate/how big broker/reputable broker or not)?
2. System/strategy/accounts... are trading by an organization/company they must trade on a variety of different brokers. This prevents someone wants to 'showing off' a perfect performance.
3. Must be open most of the state especially history (which may cover open/pending orders) on accounts which show a transparent. Folk have a saying: 'Good showing off, bad cover'.
4. History must update (mandatory) to the present. If you find it is not continuous but lacks a few weeks/months until now (BIG question?). Very likely it was burnt in the vacant period.
5. The minimum the better of DD (make sure it’s <20%).
Note:
1. Real or Demo account is not important; important is the way how it’s trading!?
2. When the above is not satisfactory/unsatisfactory then ... don’t waste your time for study, comments!
3. If the organization/company that hints or force you to open account at this broker only (showing on myfxbook). BIG question again? :)
Take care!
Tham gia từ May 02, 2013
90bài viết
Jan 27, 2014 at 09:56
1. System/strategy/accounts ... are trading on which broker (how long broker operate/how big broker/reputable broker or not)?
Agree
2. System/strategy/accounts... are trading by an organization/company they must trade on a variety of different brokers. This prevents someone wants to 'showing off' a perfect performance.
Agree
3. Must be open most of the state especially history (which may cover open/pending orders) on accounts which show a transparent. Folk have a saying: 'Good showing off, bad cover'.
Disagree. If account is verified with a reputable broker, history is not necessary. The important stats are what matters. Avg Win/Avg Loss. Win Rate and Drawdown. How does seeing the history of the trades help?
4. History must update (mandatory) to the present. If you find it is not continuous but lacks a few weeks/months until now (BIG question?). Very likely it was burnt in the vacant period.
Agree
5. The minimum the better of DD (make sure it’s <20%).
Agree But if return is exceptional then higher Drawdown is acceptable but definitely nothing higher than 30%. If a system can return 150% annually then 30% is acceptable, but can your emotions handle that sort of drawdown with a large account.
1. Real or Demo account is not important; important is the way how it’s trading!?
You're kidding right? Demo has a place but not important? Can't agree, real account with reasonable time and reasonable volume necessary to be able to evaluate a system.
Agree
2. System/strategy/accounts... are trading by an organization/company they must trade on a variety of different brokers. This prevents someone wants to 'showing off' a perfect performance.
Agree
3. Must be open most of the state especially history (which may cover open/pending orders) on accounts which show a transparent. Folk have a saying: 'Good showing off, bad cover'.
Disagree. If account is verified with a reputable broker, history is not necessary. The important stats are what matters. Avg Win/Avg Loss. Win Rate and Drawdown. How does seeing the history of the trades help?
4. History must update (mandatory) to the present. If you find it is not continuous but lacks a few weeks/months until now (BIG question?). Very likely it was burnt in the vacant period.
Agree
5. The minimum the better of DD (make sure it’s <20%).
Agree But if return is exceptional then higher Drawdown is acceptable but definitely nothing higher than 30%. If a system can return 150% annually then 30% is acceptable, but can your emotions handle that sort of drawdown with a large account.
1. Real or Demo account is not important; important is the way how it’s trading!?
You're kidding right? Demo has a place but not important? Can't agree, real account with reasonable time and reasonable volume necessary to be able to evaluate a system.
Hate your losers more than you like your winners
Tham gia từ Jan 14, 2014
386bài viết
Jan 27, 2014 at 11:36
Donex posted:
3. Must be open most of the state especially history (which may cover open/pending orders) on accounts which show a transparent. Folk have a saying: 'Good showing off, bad cover'.
Disagree. If account is verified with a reputable broker, history is not necessary. The important stats are what matters. Avg Win/Avg Loss. Win Rate and Drawdown. How does seeing the history of the trades help?
Some traders are let loss run and cut profits :) or if everything is clear why need to hide history?
Donex posted:
5. The minimum the better of DD (make sure it’s <20%).
Agree But if return is exceptional then higher Drawdown is acceptable but definitely nothing higher than 30%. If a system can return 150% annually then 30% is acceptable, but can your emotions handle that sort of drawdown with a large account.
If a system can return 150% annually and then in first day you follow it makes 30% DD, would you fill safety and comfortable?
Donex posted:
1. Real or Demo account is not important; important is the way how it’s trading!?
You're kidding right? Demo has a place but not important? Can't agree, real account with reasonable time and reasonable volume necessary to be able to evaluate a system.
I'd rather follow a good trading demo account than a scalping, martingale and/or grid trading real account!
Thanks for your comments,
Tham gia từ May 02, 2013
90bài viết
Jan 27, 2014 at 13:23
ProTradersGroup posted:
Some traders are let loss run and cut profits :) or if everything is clear why need to hide history?
It that happens you will see that in the equity curve and in the results. We are talking about a system with a reasonable sample size, if so then that sort of strategy will eventually catch up and you will see it not only in the equity worm but in the results, so no need to see the history.
ProTradersGroup posted:No I wouldn't feel comfortable at all. I would hate it and probably not sleep. But this is FOREX, not blue chips stocks. FOREX by nature is high risk, risk tolerance needs to be broadened but within reason. Totally my opinion, and if your risk tolerance is low then fair enough.
If a system can return 150% annually and then in first day you follow it makes 30% DD, would you fill safety and comfortable?
ProTradersGroup posted:
I'd rather follow a good trading demo account than a scalping, martingale and/or grid trading real account!
Ok to each their own, but I don't give any credence to demos except to see if the strategy is viable. If it can't profit in demo then it surely won't profit with real.
Good trading to ya.
Hate your losers more than you like your winners
Tham gia từ May 21, 2011
50bài viết
Sep 04, 2014 at 10:00
Donex, history is important. I recently found out that drawdown can be manipulated. If a trader is in drawdown he just has to add funds to his account to reduce that drawdown. So I now always look at balance to see if it has been added, and if so was the account in drawdown at the time. If the account has balance made private then I will either eliminate it straight away or there has to be very compelling reasons to continue investigating it.
Case in point: https://www.myfxbook.com/members/Pureprofitfx/pureprofitnorisk/942758
I followed this as a signal. It wasnt until I was in drawdown in August that I discovered that the balance had been added to whilst the account had been in drawdown previously. That along with some incongruencies between what the signal provider had said and what he was actually doing made me start to sweat... especially considering he was breaking his own rule of closing out at 25% or so drawdown. I eventually couldnt trust that he would ever close out so ended up closing myself at 34% drawdown. A couple of days later the signal provider eventually closed out on a bounce at 30% drawdown. I wont be using him again as he has lost my trust.
https://www.myfxbook.com/members/juham/pureprofitnorisk/966706
I also dont trust demos. They give an idea of how an EA will behave but need to see live real account performance ideally for 6months or more.
Happy trading :)
Case in point: https://www.myfxbook.com/members/Pureprofitfx/pureprofitnorisk/942758
I followed this as a signal. It wasnt until I was in drawdown in August that I discovered that the balance had been added to whilst the account had been in drawdown previously. That along with some incongruencies between what the signal provider had said and what he was actually doing made me start to sweat... especially considering he was breaking his own rule of closing out at 25% or so drawdown. I eventually couldnt trust that he would ever close out so ended up closing myself at 34% drawdown. A couple of days later the signal provider eventually closed out on a bounce at 30% drawdown. I wont be using him again as he has lost my trust.
https://www.myfxbook.com/members/juham/pureprofitnorisk/966706
I also dont trust demos. They give an idea of how an EA will behave but need to see live real account performance ideally for 6months or more.
Happy trading :)
Tham gia từ Jul 16, 2013
92bài viết
Sep 06, 2014 at 11:40
Demo accounts can be very useful in a testing environment. If a strategy preforms exelent in a demo account then there is a chance it will preform good in a live account as well. Would you trust a strategy preforming bad in a demo account and going live with it? No, but I fully agree that a demo account is just that and it don't prove much other then as a testing ground for different strategies and it also gives you the info of what has happened by studying the history and all the risk and money management information given in the account.
" Lock in the profit and minimize the draw down "
Tham gia từ May 21, 2011
50bài viết
Sep 07, 2014 at 06:47
Agreed Kricka :)
Tham gia từ Aug 26, 2014
25bài viết
Sep 08, 2014 at 06:47
I only trust real accounts. Still have to keep an eye additional deposits. Sometimes folks will add funds to offset drawdown. My account has Been destroyed many times because I just didnt know what to look for.
Be Relentless
Tham gia từ May 21, 2011
50bài viết
Sep 08, 2014 at 08:15
Is there anything else you would look for? I always check deposit nowadays. Still fairly blind as to the other tricks.
Tham gia từ Aug 09, 2014
80bài viết
Sep 17, 2014 at 14:12
This is my opinion:
1 : You have to look at reputable brokers where you fund the account
2 : You have to see the AUM of the fund, is a 1.000$ account or a 100 Millions account, this is an important factor also.
3 : Usually Pamm performs better than signals, less technical problems like trades not copied or slippage that have a big impact in the strategy.
4 : Do not look only at the profit : In general grid or martingale systems seems they gain a lot, but one day ( without advice you ) the account is destroyed totally
5 : Be realistic with yourself : If the best Hedge fund traders make 30-50% a year how can you pretend more? You can have more if your risk is incredible high!
6 : Strategy : The best strategy most of the time are FLAT. So they are very selective, you do not have to stay always with open positions in the market.
7 : I like HFT trading, but this is my choice. Some brokers and funds manage them and invested millions, so is not an EA of 50$.
8 : Try to not follow the mass... the most popular strategies have drawdown of 50% and more... and the mass, the 95% of people lose money in this game.
1 : You have to look at reputable brokers where you fund the account
2 : You have to see the AUM of the fund, is a 1.000$ account or a 100 Millions account, this is an important factor also.
3 : Usually Pamm performs better than signals, less technical problems like trades not copied or slippage that have a big impact in the strategy.
4 : Do not look only at the profit : In general grid or martingale systems seems they gain a lot, but one day ( without advice you ) the account is destroyed totally
5 : Be realistic with yourself : If the best Hedge fund traders make 30-50% a year how can you pretend more? You can have more if your risk is incredible high!
6 : Strategy : The best strategy most of the time are FLAT. So they are very selective, you do not have to stay always with open positions in the market.
7 : I like HFT trading, but this is my choice. Some brokers and funds manage them and invested millions, so is not an EA of 50$.
8 : Try to not follow the mass... the most popular strategies have drawdown of 50% and more... and the mass, the 95% of people lose money in this game.
Be an investor, not a gambler!
Sep 29, 2014 at 06:47
alexlowrisk posted:
This is my opinion:
1 : You have to look at reputable brokers where you fund the account
2 : You have to see the AUM of the fund, is a 1.000$ account or a 100 Millions account, this is an important factor also.
3 : Usually Pamm performs better than signals, less technical problems like trades not copied or slippage that have a big impact in the strategy.
4 : Do not look only at the profit : In general grid or martingale systems seems they gain a lot, but one day ( without advice you ) the account is destroyed totally
5 : Be realistic with yourself : If the best Hedge fund traders make 30-50% a year how can you pretend more? You can have more if your risk is incredible high!
6 : Strategy : The best strategy most of the time are FLAT. So they are very selective, you do not have to stay always with open positions in the market.
7 : I like HFT trading, but this is my choice. Some brokers and funds manage them and invested millions, so is not an EA of 50$.
8 : Try to not follow the mass... the most popular strategies have drawdown of 50% and more... and the mass, the 95% of people lose money in this game.
Agreed Alex
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