Just open real money account and trade on it the way you are trading now. You will understand him better 
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LOLâŚyou just described exactly how the general stock market (a âlong-term successful systemâ) worksâŚknowing that 80-90 percent of the time it is skewed upwards (long) and wise investors will buy at the occasional âdipsâ or draw down (which happens 10-20 percent of the time).
The question though for individual systems (like individual stocks from the general stock market) is knowing which ones are apparent successful systems and sticking with them or buying at their occasional dips/draw down before their expected and eventual rise up. How do you evaluate and follow those who are good at knowing how to âpick stocksâ (i.e. via their systems) if you are not good at âpicking stocksâ yourself?
The best approach is to trade a few safe systems and 1-2 high risk systems. Thatâs if youâre looking for better than average returns. Thereâs lot of people here that advice against the high risk systems but if you catch them early or catch them when they are on a hot streak then you can make money. When a system starts to go bad scale them down until they turn around or quit. That is my approach and I have done well. Sometimes you get lucky sometimes you take a hit. I joined VIX Timer about 2 weeks ago and took a hit right away.
Alpha Omega definitely helped push my account to a new high today. Event Hunter, R options has done well for me this year too.
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Same here, before I donât like Event Hunter but now, this model really help my portfolio in uncertain conditions like now. R Option mini works very well for me. This week, I got hit a lot from Vix models. Believe or not, Omega just in a couple days, really help my portfolio, if I donât have this, my portfolio will be really bad but if you canât handle risk and very limited capital, this model is not appropriate for you. Hopefully all the creators can sustain in very long periods.
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Iâd say that without a solid experience in trading and a good understanding of risk management, you donât have the tools to properly evaluate a system. It looks very easy - just browse through the systems, do an online shopping kinda thing, click here, click there and start making money. Well, as you have noticed, it takes a bit more than that.
Ask yourself - do I really know what makes a system good? If the answer is no, or ânot sureâ, then you are not ready to risk your capital either in your own trading or in someone elseâs.
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Care to answer that great point you stated? Thanks.
What makes a system good?
In my opinion:
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Mechanical only. Clear, rule based. Why? because itâs quantifiable. Instincts, gut feelings, visions of the future, opinions, arenât.
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Backtested on all the data available, with at least one year out-of-sample on paper, and then at least another year of actual trading.
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Low volatility, reasonably stable returns. This does not mean that every month needs to be a winning month. Itâs also ok that in some periods thereâll be few trades and in others more. But if most of the return come from say 10% of the time this isnât very good.
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Not sensitive to slippage or other costs.
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Accurate. This also means no martingale / averaging down. You donât need it in a system that achieves a reasonable level of accuracy.
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Risk management: rules are clearly defined in advance and adhered to in 100% of the cases. I donât use any specific numbers here regarding DD, leverage size, number of trades, max loss per trade / day / month etc, because those can be different per system / risk appetite levels etc. But they should always be present and transparent. Understand that if you are in the market enough time, and/or exposed to enough markets, the likelihood to encounter a ârareâ event is actually not very low. Risk management is not a luxury, it is a matter of survival.
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Considers black swan events, including scenarios that did not appear in the backtest period. If you do not use a stop in intraday systems this means you have a crystal ball that tells you there are no black swan events coming anytime soon. I am yet to see such a wonder. If you hold positions overnight, over the weekend, over a holiday, then leverage and size need to be more strictly limited because a stop wonât save you there.
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Never pulls stops. If you need to pull a stop it means you either canât take a loss (and eventually this leads to larger losses) or that the initial place for the stop was set without thought or clear analysis.
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The above is especially important to highly leveraged systems, short volatility systems and naked options writing.
Even a system like that can stop working at some point. The most âperfectâ system canât function when the nature of the market changes. There are systems that worked for decades and then stopped working. The developerâs job is to be able to recognize it and stop it when it happens.
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Did you find such systems here at c2?
Iâm currently looking into a few systems.
SystematicBlue SP500 (aka Drunk Uncle) - looks good on the stability and risk fronts, backtested on a large period and has enough actual trading results here.
XIV Timer - Iâm trading volatility as well and this system did better then me on most months. Itâs interesting, doesnât seems to take excessive risks but Iâd like to see a longer actual trading record before forming an opinion. Of course this is a more risky system then the first I mentioned.
R Option - It may have a place as a small part of the account. Itâs a bit expensive though if not trading it in size. Did 211.5% on 2014 but then 36.6% on 2016. $199/month takes away a lot of the return if the capital invested in it is small.
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@jcasea
Three weeks ago you wrote that you are a experienced 14 years+ Forex daytrader,
and that you are able to make 300% profit within 6 months.
https://forums.collective2.com/t/hate-to-say-it-but-will-be-creating-a-strategy-real-soon/9409
So, I donât quite understand why you are still subscribing to weak C2 systems.
Just start your own Forex system and show us how good you are.
But since you are also a professional poker playerâŚ
âŚwere you serious about your Forex skills or you just âbluffingâ ? 
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I guess 300% profit in 6 months is not enough for you? It beats pretty much everyone else here.
Why didnât you just do that with the $500k you âlostâ in 4 years?
Jcasesa, your problem is very obvious based on systems you are venting over. And somehow nobody points it. Basically you choosing potentially volatile systems (nothing bad with it) and over-trade them on scaling side (huge mistake).You cannot withstand even average DD based on strategy P/L up to date. You can invest in systems or you can gamble with them. Clearly your choosing the 2nd option.
After you pass âsurvivabilityâ, you will discover that is simply about making money.
Outside of automated trading I mainly take the rare opportunistic trade when I see something very compelling. If youâre not forcing yourself to trade everyday but keep your eyes open and your perspective clear youâll see opportunities or things that get out of whack. I generally do well in those. Over the years Iâve made more doing that than I have system trading. But itâs not anything on a regular timeline. Itâs also not always in wall street products. I made a lot from Bitcoin for example.
But if you were to sit me down and tell me to daytrade the market every day by gut feeling or whatever, I would lose money. I think everyone that does that loses. You lose to the systematic traders that are rigorous and professional and use computers and data to take money from the ordinary folks who succumb to emotions or try to play the market like a casino. Thatâs why I donât daytrade.
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Last weekend I ran some numbers on the grid that I had downloaded a month previously to see which predictors from a month ago predicted the returns actually experienced over the last 30 days.
Looking at the results, itâs easy to see why itâs so difficult to pick winners (here or anywhere).
The data are very messy, so the results are not very stable, either looking at bivariate correlations or at regression analyses. To reduce some of the noise, I did most of my analyses on strategies ranking at least 30 (out of 100) on the C2 Score a month ago (316 strategies). Still outliers may be driving some of the results.
Among strategies with at least a 30 C2 Score, the best predictor of performance over the last 30 days was subscription cost (Pearson correl. r=-.169). The lower the subscription cost (a month ago), the better the performance over the last 30 days.
The other significant predictors were:
⢠Log of (Annual Returns w Trading Costs +1): -.164; Higher annual returns as of a month ago did worse going forward 30 days
⢠Sharpe Ratio: -.140; Higher ratios did worse
⢠Annual Returns w/out fees: -.119; Higher returns did worse
⢠Last 60 days return: .118; Higher recent returns did BETTER going forward
⢠Correl. To SP500: -.117; Lower correlations did BETTER
I can understand why higher 60 day returns would be a better positive predictor than annualized returns, but why would 60 day returns be better than 90 day returns? [probably just noise]
Among the most interesting insignificant results were:
⢠Longer strategy age had a positive coefficient on 30-day returns going forward (.042);
⢠Higher drawdowns had a tiny negative coefficient (-.009);
⢠Higher winning percentage had a tiny negative coefficient (-.009).
In the regression models, which were confounded by high multicollinearity, longer strategy age (and its log) usually had a significant positive effect on returns, controlling for other variables.
When I have more data to analyze in a month or two, Iâll do a more extensive analysis.
I think that the results reflected the stalling out that the market did over the last month, and 30 days is MUCH too short to judge criteria for winning strategies. I suspect that if I had data to do the analysis going back to November, the results would be very differentâand many (or most) of the correlations would be reversed.
As they say here and elsewhere, past performance is no guarantee of future results.
BTW, Matt and Collective2 should be commended for giving us so much data with which to make better informed choices. The more time I spend here, the better I like this site.
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