As a subscriber, do you invest in Demo Account trading signals? - page 11

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The process to bring a product to market is: back test, trade in demo account, move to trade a real account, and make adjustments as needed. This is a logical progression. The back testing against historic market data produces results that would have been the same if traded on that same market data. Since the back test is on historic data, the questions is, will the market move the same in the future? According to all disclosures, you can not depend on past performance to be the same in the future market. Why? Because the market is dynamic and changes all the time. When you move your trading strategy to a demo account, the same disclosure still applies, and, you need to consider how the connections of your trading terminal, the brokers trading computers, the banks price feeds, all other electronic connections, the order fills, price feed slippage, broker honesty and integrity, exchange status, and other factors may effect the system in a live market trading account. Then you move your strategy to a live trading account to trade real money in Forex, or stocks, or whatever asset base you have chosen, and monitor it. You are obviously, hoping it will produce the same results you saw in the back test, and the demo. But we know the market moves in similar fashion creating moving averages, cycles, and trends, ect. But not exactly the same as it did in the past. Since we are creatures of habit, we re-create a similar market momentum. The proof is, the four year up cycle, followed by a down cycle in our economy, and in the market. It has done it for many years. It is somewhat dependable to happen in similar dynamics again. The use of computers to make trading decisions, which are coded to trade according to historic dynamics of the market, assuming that the market will likely react the same to, for example, a moving average cross over, then a similar market is re-created again, with that process. So since the strategy is coded to trade according to the dynamics of the market, such as a moving average cross over, or a RSI setting, or a MACD cross over, what ever dynamic that is set, then the auto-trading robot, or EA Expert, will place trades, as the set of dynamics presents itself in the financial market. Historic data then serves as a way to test a dynamic system, not to prove any future result. The demo account serves as a strategy testing environment with live data feeds, but no execution of order fills, and to demonstration how the strategy takes advantage of the dynamics within the market, but not proof that it will produce real profit. All things considered, It is logical that, if the software,Trading Algo, Expert, EA expert, or whatever you want to call the trading system, produces a dependable result when back tested against the historic dynamics of the market using your special strategy, then it is as dependable, as a demo account would show, because when you move to a real market, it is different than the demo account feed. The only real test is in the real executed market. Since the market changes by the nano-second. The best you can do, is code the strategy to react to the dynamic price action, and hope the trade opportunity is found so trades will be placed and make you money as desired. To sum it up, It boils down to the software being used. Is the testing environment dependable? Will the code and software, perform in the live market as it did in the test. It is not the strategy, because the strategy is based on the dynamics of the market and reacts dynamically with the market. If results in a live account are not the same, as in the back test, I think you need to look at the testing environment. It's like this: If you design a windmill that reacts to the wind. You test it with a fan blowing air at it. Then find you put it up in the real world and it does not perform the same as it did when you blew the fan at it. Then it is the testing tools and environment you need to improve. So that the test is dependable.

Bottom line... a back test, a strategy in a demo account, and a strategy in a live account are all an example of what could happen. None are any better at predicting the future than the other. So all have the same potential as the past results have been, which can not be depended upon. So you either to take a risk to find out or you do not. No venture/ no gain, no risk, no loss, and no reward.

If someone needs a guarantee, trading, and investing, is not for them. If a person will not take the risk, that person will not grow in wealth, success, career, or even life. Some people say."You are either growing or dieing." That is true in business for sure. Maintaining is not good enough, the cost of living increases, and so growth has to out pace it, at the least. IMHO, Be faithful, be informed, always move forward, and be blessed. Take the risk, control the risk, and live an exciting life.

Documentation on MQL5: Standard Constants, Enumerations and Structures / Environment State / Account Properties
Documentation on MQL5: Standard Constants, Enumerations and Structures / Environment State / Account Properties
  • www.mql5.com
Standard Constants, Enumerations and Structures / Environment State / Account Properties - Documentation on MQL5
 
RaptorUK:
A strategy that will turn $1m into $100m is also capable of turning $100 into $10,000  or $1,000 into $100,000
Maybe, maybe not. If your EA is coded to use a balance of $1,000, it will perform differently than using a balance of $1M. If you were to approach a billion dollar fund manager, your $1,000 model, or even $10,000 model is not enough. They might consider a record with $100K or $500k.
 
angevoyageur:

It's a fact that demo accounts, or free signal are popular and have a lot of subscribers. But it's also a fact that most people who subscribes to a signal don't know anything about risk, they are attracted by big numbers for growth percentage. I can't probably blame someone (a provider) who want to win money relatively easily taking advantage of the ignorance of subscribers.

Still I don't understand why Metaquotes allow in his Signals service to subscribe with real account to a provider with demo account. I am probably very naive.

I think all investors look for higher returns. They want the best and why not. Depending upon the amount of risk funds, and the threshold to risk they are willing to take, they make decisions. A demo account, can be used as a demonstration of the performance of a product,(EA). If someone using s demo account, can out perform what the investor, or trader currently makes, then why not offer it out. They will try it. All opportunities are .. well...opportunities. A missed opportunity is a lost one. When subscribing to signals, one must know the market dynamics to determine how a signal may perform live, compared to the test. So knowledge is needed. If the subscriber lacks the needed knowledge to perform a proper due diligence, then more information is needed before subscribing. So a free test is provided to perform due diligence. If some is naive, they need to be better informed before investing. Would you start a business without knowing how to run one, or without the knowledge of your industry, and competition,,ect. If you did, you would likely fail. Same thing goes here. Get informed, and make informed decisions. That is how to control risk and avoid loss.
Documentation on MQL5: Standard Constants, Enumerations and Structures / Environment State / Account Properties
Documentation on MQL5: Standard Constants, Enumerations and Structures / Environment State / Account Properties
  • www.mql5.com
Standard Constants, Enumerations and Structures / Environment State / Account Properties - Documentation on MQL5
 
KenMcCormick:
Maybe, maybe not. If your EA is coded to use a balance of $1,000, it will perform differently than using a balance of $1M. 
Really ?  why is that ?
 
TheMoneyWizz:

Why wouldn't one subscribe to signals that have only functioned on DEMO accounts ?  It's all about the results in the end !

However, I feel that signals with a proven history on a REAL account give me much more confidence than those only tested on a demo account, since when trading your own hard earned money for real, makes you trade in the best possible conditions, whereas in a demo account, the signal provider may well have been a bit less stringent in dealing with losses.  But as I said : in the end, the results are the proof !

A coded trading strategy is designed to trade according to the dynamics of the market. Like moving average cross overs, MACD, levels ect. So testing it in past market, determines how it will perform according to those dynamics. So when it goes live in the market, it trades in reaction to the dynamically moving market. In other words when the averages cross, it trades. A live account trading system, a demo account trading system, as well as the back test, all have the same potential to perform in the future. It must be coded according to a prediction of variences related to actual order fills, bad connections, slippage, other unknown events, ect, which points back to historic moving averages. What is the average return over a period of time. Its like picking a fund that has a three year earnings growth rate of 12%, you can somewhat depend on expecting a 12% return and doubling your balance every five years. Assuming the fund will perform at it's historic average.
 
RaptorUK:
Really ?  why is that ?
It handles the money management aspects differently. I have read in this forum, it might be best to pick a signal designed for the balance you will use. If you are placing $1,000 balance, you should use a signal designed for a $1,000 balance. I have read that there are problems with the lot size it calculates, and such, when not matched properly, producing different results. I do not totally understand this software, but that is what I have read. If that is so then there will be a difference. Also look at what flash trading systems have caused. High frequency, with large amounts of money perform much differently than placing small positions, even when using the same strategy against the dynamics of the market. Computing systems can freeze according the amount of computing it must do. The more complicated the computation, the more opportunity for error. I have caused my computer to completely crash by putting too much demand on the processing of data. I am sure others have had this experience.
 
Ubzen:

@figurelli: 

Given your experience with signals, I'll like to ask some questions.

Per your heading "As a subscriber, do you invest in Demo Account trading signals?". Looking at your "comparative analysis" did you factor subscribers who are looking for freebie_signals? By "invest in Demo" were you including the freebies? I wonder how your "comparative analysis" would look if freebies were excluded? [thats if you haven't already].

With so_many people offering signals free which produces performances comparable with those of paid signals; what's your recommendation for a provider looking to profit off the service? How would this provider differentiate himself? [ apart from running heavy ads ].

One approach is to offer a free subscription (test), then change it to a paid service. If a signal produces net profit, it has value. Price it competitively, and you should get subscriptions. The better the signal(product) the more income it will produce for you. Be the best.
 
KenMcCormick:
It handles the money management aspects differently. I have read in this forum, it might be best to pick a signal designed for the balance you will use. If you are placing $1,000 balance, you should use a signal designed for a $1,000 balance. I have read that there are problems with the lot size it calculates, and such, when not matched properly, producing different results. I do not totally understand this software, but that is what I have read. If that is so then there will be a difference. Also look at what flash trading systems have caused. High frequency, with large amounts of money perform much differently than placing small positions, even when using the same strategy against the dynamics of the market. Computing systems can freeze according the amount of computing it must do. The more complicated the computation, the more opportunity for error. I have caused my computer to completely crash by putting too much demand on the processing of data. I am sure others have had this experience.
You seem to be chopping and changing the subject . . . we have gone from Signals,  to My EA, to a Strategy for a Fund manager and now back to a Signal. A well written EA must be able to adapt to the account it is running on,  why trade the same position size for all account balances ?  it makes no sense . . . 

If you caused your PC to crash by running the CPU at 100% then it's about time you cleaned it,  any well maintained and configured PC should be able to run at 100% CPU for an extended period of time without any issues.
Documentation on MQL5: Standard Constants, Enumerations and Structures / Environment State / Account Properties
Documentation on MQL5: Standard Constants, Enumerations and Structures / Environment State / Account Properties
  • www.mql5.com
Standard Constants, Enumerations and Structures / Environment State / Account Properties - Documentation on MQL5
 
RaptorUK:
You seem to be chopping and changing the subject . . . we have gone from Signals,  to My EA, to a Strategy for a Fund manager and now back to a Signal. A well written EA must be able to adapt to the account it is running on,  why trade the same position size for all account balances ?  it makes no sense . . . 

If you caused your PC to crash by running the CPU at 100% then it's about time you cleaned it,  any well maintained and configured PC should be able to run at 100% CPU for an extended period of time without any issues.

I am referring to what I read about the software, written here in this forum. I agree, all software/trading robots should be adaptable.

I will look into my computer issues..thanks

 
figurelli:

Contributing to the comparative analysis of signals based on demo accounts and real, which has shown interesting arguments from all sides, I decided measure some real facts from MQL5 social trading platform.

The idea was to compare the number of subscribers using the top five signals from MT4 and MT5 (i.e., 20 signals in total).

In this research, I found 3,888 subscribers (an average of 194 subscribers per trading signal).

Comparing the amount of subscribers across platforms, MT4 is the absolute leader with 3,082 (79%) subscribers against 806 (21%) of MT5.

But the most important fact for this topic is that, from this total, 2,314 (60%) are Demo accounts subscribers and just 1,574 (40%) subscribes to Real accounts.

In this pool, 44% of the voters at this moment prefer Real accounts, i.e., a number very near of the 40% quantitative research above.

My conclusion is that, although there are still many critics of the Demo signals, the reality is that this signals attract more subscribers here (and probably any other marketplace or social trading platform), maybe explained by its higher past performance.

Critics are necessary to encourage improvement processes. When too many critics (depending on who they are), give bad reviews, or negative opinions, the product may need to be improved to gain a higher market share. Similar to the Facebook like. The more likes, the better the public opinion, which should result in more sales.
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