What makes signals good or bad?
Forum on trading, automated trading systems and testing trading strategies
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Sergey Golubev, 2017.03.17 12:54
The Easy Way to Evaluate a Signal: Trading Activity, Drawdown/Load and MFE/MAE Distribution Charts
Subscribers often search for an appropriate signal by analyzing the total growth on the signal provider's account, which is not a bad idea. However, it is also important to analyze potential risks of a particular trading strategy. In this article we will show a simple and efficient way to evaluate a Trading Signal based on its performance values:
What makes a good signal and signalprovider? Many signalproviders overinflates their Return by starting With small deposits and so on.
What do you think?
I think if it's a winning signal, it's good...But if it's a losing signal, it's bad...
Would you think otherwise ?
As a matter of opinion based on my experience and knowledge, if you want a lifelong signal to follow, find a signal provider that implement good RR(at least 1:1),dont use martingale,hedging approach,no loss strategy. And do not follow high winning rate(85% or above) signals because its probably using high risk approach, realistic/sustainable strategies has winning rate 70% and below. Another thing is do not follow a signal provider that has monthly gains of above 30% or higher? why because their is a strong possibility also that in the future this particular signal will acquire a loss of this magnitude.We are talking about drawdown here, low drawdown that uses approach as mentioned above is still susceptible to big time loss that can easily wiped out your account.
In my opinion there are some factors to check the signal provider
- Profits
- Risk
- Drawdown
- Balance
- Trading strategy (Ask him how his trading style or strategy works)
- Track his signal for a while without subscription
Mohammed, I agree with the factors you quoted: Profit, Risk, Drawdown. However, I think that the author of the signal will not tell us his Trading strategy. Trading strategy is his know how, his trade secret. If you know its Trading strategy, then you will not need its signals. It is obvious.
In my opinion, first of all you need to look at how many months there is an account. The life of the account should be more than three years. Drawdown should be less than one third of the depot, that is, less than 33%. The profit of each month should be about 7-10%.
In my opinion, first of all you need to look at how many months there is an account. The life of the account should be more than three years. Drawdown should be less than one third of the depot, that is, less than 33%. The profit of each month should be about 7-10%.
It is necessary to look at the history of transactions: does the trader put a stop-loss? SL should be. Sharpe Ratio is supposed to be at least 0.1. Sharpe Ratio shows that in order to earn $1 a trader had a drawdown by equity of an average of $10. It is not necessary to see the availability of subscribers. The crowd is not always right.
Mql5.com has several articles on how to evaluate, and how to choose a trading signal:
https://www.mql5.com/en/articles/2704
https://www.mql5.com/en/articles/1838
- 2016.09.28
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What makes a good signal and signalprovider? Many signalproviders overinflates their Return by starting With small deposits and so on.
What do you think?