Profitable system with a trackrecord: Who got it?
Q1: What's your motive? To find a talent or to find a system? Or to get encouraged to believe robust systems do exist?
Q2: RE "Market conditions can change over time, and a trading system that was once profitable may no longer be effective"I can bet if you see good-looking upsloping 5yrs+ track-record (live on real) - you will still have a doubt whether it can stay effective any longer. True?
Q3: RE "independently audited"
-- what's quality criteria?
-- what's objective evaluation method?
-- what's the target and acceptance criteria?
-- what audit is for? (mql5 portal belongs to RETAIL 99%)
Q4: Say you found track-record of your dream, what's next?
Hey peeps,
There are several reasons why there may be relatively few track records of profitable trading systems available:
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Many traders and trading systems operate in private: Many traders, especially professional traders, operate in private and do not publicly disclose their trading activities or the performance of their trading systems. This means that it is difficult to obtain track records of their trading performance.
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Track records may not be representative of future performance: It is important to keep in mind that past performance is not necessarily indicative of future results. Just because a trading system has a good track record in the past does not guarantee that it will continue to be profitable in the future. Market conditions can change over time, and a trading system that was once profitable may no longer be effective.
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Track records may be difficult to verify: Some track records may be difficult to verify, especially if they are not transparently disclosed or independently audited. This can make it difficult to determine the accuracy and reliability of a track record.
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The "survivorship bias": Many of the track records that are available may be biased due to the "survivorship bias," which refers to the tendency for unsuccessful trading systems or traders to go out of business or stop disclosing their performance, while successful systems or traders continue to operate and disclose their performance. This can lead to a skewed representation of the overall performance of trading systems.
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Many traders and trading systems operate in private: Many traders, especially professional traders, operate in private and do not publicly disclose their trading activities or the performance of their trading systems. This means that it is difficult to obtain track records of their trading performance.
I think the reason why professional and successful traders do not publicly disclose their trading activities is obvious and understandable because an outsider can basically reverse engineer his strategy and system, but professional and institutional traders, especially hedge funds, do publish their performances since they depend on client money to stay in business. Disclosing a good performance is their #1 method to raise funds. Every other client acquisition boils down to empty rhetoric.
Nico Schirrmacher:
2. Market conditions can change over time, and a trading system that was once profitable may no longer be effective.
Exactly. That is why you either need a reliable repository of solid trading systems, or a smart AI that learns and adapts to present conditions.
Nico Schirrmacher:
3. Track records may be difficult to verify: Some track records may be difficult to verify, especially if they are not transparently disclosed or independently audited. This can make it difficult to determine the accuracy and reliability of a track record.
Independent audits cost anywhere between $2000 - $3000 for small companies and self-employed individuals. That's why you don't see retail traders do that, simply because it's not economical for them.
Nico Schirrmacher:
4. The "survivorship bias": Many of the track records that are available may be biased due to the "survivorship bias," which refers to the tendency for unsuccessful trading systems or traders to go out of business or stop disclosing their performance, while successful systems or traders continue to operate and disclose their performance. This can lead to a skewed representation of the overall performance of trading systems.
The reason why some of those traders go under is because of a) bad money management and/or b) bad trading systems to begin with. The same principle applies to any business. If you have a good, workeable business plan and on top of that you take care of the soundness of your capital structure on your balance sheet, you will very likely be and remain successful. The problem with retail traders most of the time isn't even their strategy, it's the fact that they have horrible money management. If you trade with 10% of your capital, it takes only 10 consecutive losses to wipe you out and this is what regularly happens during market reorientation. By the time you have figured out what strategy works best in the new market environment, your account is already under the water. But if you use only 1% of your capital, it takes 100 trades to loose everything! Such a scenario is highly unlikely because you have enough time to adapt without loosing too much money in the process. Take care of the risks and the profits will take care of themselves. There is a good book I recommend everyone here to read, it's called "The most important thing" by Howard Marks. Especially the chapters 4, 5, 6 (all about risk) and chapter 14. It's written for investors, but traders can implement the underlying principles in the FX market and benefit from that.
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There are several reasons why there may be relatively few track records of profitable trading systems available:
Many traders and trading systems operate in private: Many traders, especially professional traders, operate in private and do not publicly disclose their trading activities or the performance of their trading systems. This means that it is difficult to obtain track records of their trading performance.
Track records may not be representative of future performance: It is important to keep in mind that past performance is not necessarily indicative of future results. Just because a trading system has a good track record in the past does not guarantee that it will continue to be profitable in the future. Market conditions can change over time, and a trading system that was once profitable may no longer be effective.
Track records may be difficult to verify: Some track records may be difficult to verify, especially if they are not transparently disclosed or independently audited. This can make it difficult to determine the accuracy and reliability of a track record.
The "survivorship bias": Many of the track records that are available may be biased due to the "survivorship bias," which refers to the tendency for unsuccessful trading systems or traders to go out of business or stop disclosing their performance, while successful systems or traders continue to operate and disclose their performance. This can lead to a skewed representation of the overall performance of trading systems.