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People have been offering you advice, but you ignore it to chase systems with big returns and very little history.
Collective2 is a lesson in survivorship bias. If you take a large collection of trading systems, over the short term there will always be some small number of systems that will have excellent results from little more than chance. If you filter for excellent returns and accept short periods of time, you will find those systems. However as their returns are just an effect of luck and your selection process, they are unlikely to continue making returns into the future. So as you join them you are most likely joining precisely when their great results will end. This is not coincidence, it is the inevitable result of bad selection process.
Even filtering for longer periods of times can identify systems that have just been lucky, though there will be fewer of them. This is because the filtering process itself identifies all systems that have been doing good but doesn’t tell you if the performance was luck or skill.
As I’ve said before, there is no rush to join an apparently great strategy. A good working strategy by definition will still be working months later. If you see an interesting system put it on a watch list and give it time to further prove itself. By waiting and watching you separate your selection process (which always finds good looking systems) from the actual results of the system (which might or might not carry forward those good results). This is very similar to forward testing or out-of-sample testing when developing a system.
If you want to be even more careful wait for the strategy to operate through different market moods. If a system looks good but has only traded its underlying asset as it moves in one direction you don’t really know what it will do when the underlying turns the other direction. Very often systems are little more than leverage on the underlying and you don’t need to pay someone a fee to get that.
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chase instant high returns, and you will chase those returns right off a cliff.
but hey, martingale away…
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Fool me once, shame on you; fool me twice, shame on me.
Exactly, but I just call it coincidence because the time I get in to these systems couldn’t be any more on point of the first day they fall.
Another thing I don’t understand is why so many systems do this same mistake of shorting at support and buying near towards highs. Why is that such a common theme on a lot of these guys? I mean, I believe the statistics more so then my own discretion at times.
Edit: And some of these are good systems with very good win percentages as well!
After writing my previous post above it hit me that a great feature would be a search tool that searched and sorted systems based on stats that were some number of months old. For example if “The Grid” had a setting that allowed you to search for systems with various statistics at a point 3 months ago (or 6 months or whatever) you could see exactly what waiting for a number of months after a search shows you. It would be eye opening to most people to see all the systems that were highly rated but didn’t continue performing. And it would help identify systems that have continued to work without having a waiting period yourself.
Such a “delayed” search would still have selection bias as you would still look through the list and select out the best performing systems, but I claim such a search would give unsophisticated users a MUCH better chance at finding systems that actually worked than a search on real-time data. Subscriber success would probably increase measurably just from that one simple change.
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David,
Another excellent post.
As you say, if the system is really a good one, it should be performing fairly well months from now.
So one might list the few systems one wants to invest in, add them to your watch list, then 2 months later go to the Grid and see which ones have good 60 day returns.
[After posting this in response to your earlier post, I see in your next post that you went one step further, suggesting a way to operationalize that sort of analysis.]
[BTW, I downloaded the full Grid 30-50 days ago and plan to go back and analyze that data in a month or two.]
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Systems failing immediately after you search for the best and then join is exactly what I would expect. It is not coincidence. It’s selection bias / survivorship bias. See my post a few above on “delayed” search results for a solution.
Edit: And win percentage means almost nothing by itself. A very high win % is actually a BAD thing IMO.
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I am developing a strategy here (not yet public) and I noticed that the win % is a definite disincentive to use hedging, because if you hedge the trade fairly directly, you are faced with one losing trade for every winning trade.
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I am going to shot myself in the foot here but its for a very good reason. I started a strategy and in 4 months was up 40% and all of a sudden I got 25+ subscribers (poof!). Just like that. It encouraged me to continue in my aggressive trading and guess what we had an event in January 2016 in the oil products market and I was not using stops. I recovered and then started to get aggressive again. It happened again and I had a large drawdown. By this point they had all run off and I realised they want the returns but not expecting the risks to get those returns. I now always use stops. It means that some trades I will get stopped and would have gained but I know my system is consistent and it makes gains most months, its fine. Its that simple in my mind.
In short ask them if they use stops and if they dont then you are then fully aware of the risks.
Investors are well known to be terrible at picking stocks. Why would they be any better at picking trading systems? Fear and greed dominate other rational thoughts.
The best strategy is joining a long term successful system on a drawdown.
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Which systems have failed you? Let me know so I can exit them if I’m currently in them. My account hit a new high today. up 17% YTD.
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Perhaps he writes about my strategy Alpha and Omega.
Well, here is a bit of contrarian idea.
If you are having such a bad luck following systems; why don’t fade them and take opposite direction?
Dear author, I do not know what strategy you write, but perhaps write about Alpha and Omega.
You see a high yield. You like big income.
You see, that for a day there is a salary of $ 4000 on an account of $ 50,000.
Start to follow the system. But as soon as the deal went into minus $ 3,000, then you have a panic. And start distracting the author’s messages with the strategy.
Do you seriously think that the profit on the market is possible without losses?
I’ll tell you - it’s impossible. And to earn - you must take risks. And for a big profit you have to take risks very much.
Do not want to risk - go to work as a librarian in a rural school.
Today, while my trading position was in the red, you managed to send me 17 messages that you do not like the risk.
And do you like the profit?
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My congratulations with new high.
Offended. 
I earned today for him $ 3,407, and he was offended and unsubscribed.
How old are you?
Yesterday’s returns mean little when tomorrow adding to losers and over-leveraging blows out your account.
People don’t have infinite capital. For some the possibility of a total system blow out is nothing as it is just a portion of their capital. For others continued adding to losers would be catastrophic. Let them be their own judge of their situation.
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Might I suggest that you check the posts from:
AlexanderG on Follower guide to consistent profits
LeslieGray on Anyone follow 8 systems or more?
They have suggestions for using the trader stats provided on C2 (trade size, drawdown etc) and scale your commitment to your level of comfort. Personally, I find that this is crucial. You can always err on the side of caution and make adjustments as time goes by.
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