Key questions to ask a system creator

What are the key questions a potential subscriber needs to ask a system creator about a system prior to subscribing? Questions that can’t be aswered by looking at the trade record alone.

  1. Do you use stop losses and take profit targets?
  2. Do you add to losing positions?
  3. How long will you hold a losing position before closing it and accepting a loss?
  4. What is your strategy for preventing a large drawdown?
  5. Is your system purely algorithmic and automated, discretionary only, or some mix of the two?
  6. I can’t see your currently open trades. How many winning positions do you currently have open? How many losing positions? What is the drawdown on those losing positions?
  7. Do you have a backtest? If so, are you willing to send it to me?
  8. What is the minimum recommended amount I should have in my account to be able to trade this system?
  9. Is this system appropriate for someone trading manually? Why?
  10. I see your system is not TOS certified. Why is that?
  11. Do you trade the same number of lots with each trade or does it change for every trade? If it is different for each trade, how do you determine what number of lots are traded? Is it a measure of the confidence of the trade?

Please add to the list any questions you think should be part of the interview process.


These are good questions. I will incorporate answers in the System Description. I am amazed how few trial subscribers ask any of these questions. However, even if a developer were to disclose all facets of his strategy, few subscribers are qualified to make a judgement. Performance is the ultimate judge, and the longer record the better.

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These are indeed excellent questions. Couldn’t have put it better myself.

I like these questions. Actually (looking on system descriptions) I think that C2 have to make standardized strategy description which will cover all these questions (and more others). And filling of this description should be mandatory for signal providers. This will help subscribers to clarify what to expect and also help providers to make their strategies clearer. Maybe even for themselves. :wink:

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that is a good idea, should make mandatory for all systems

In addition to many of your questions I usually ask the following as well, tailored to either stock or futures systems:

  1. Is the system discretionary, partially discretionary, or is it fully mechanical and algorithm based?
  2. When are signals sent to subscribers?
  3. Is the system easy to manually trade the system or is auto trading best?
  4. Are trade orders entered as market, limit, or stop orders?
  5. Are target prices to sell given for each trade?
  6. Are stop losses given for each trade?
  7. Is the system suitable for a retirement account?
  8. Does the system utilize margin and if so how much, i.e. X1.5, X1.75, etc?
  9. How is position sizing determined, i.e. is it one contract per $XXX in equity?
  10. Will the number of contracts or positions per trade increase as system equity increases?

I often thought that on the system page or in the system description there could be a checklist where the developers could indicate much of this information which would save time for subscribers and developers alike.


Charles & CoreyR has good points. Thanks for sharing.
I think Collective2 should make all these question part of Description / Strategy Detail. So every developer has to disclose these information. Will make it easier for developer and subscriber.

These are all legitimate questions. However, developers should avoid being too specific in some answers, lest a disgruntled subscriber wants to start a class action suit. There are also proprietary issues.

The answers to most of the questions are neither right nor wrong. There are no simple rules in this game that are always true. Stops or no stops? Add on strength or add on weakness? One contract or variable position sizes? Everything works at one time or another.

The reality is that most subscribers are not financially or emotionally qualified for trading. They hope to catch the “hot hand” and make a big score, and then panic on the first drawdown. Perhaps a potential subscriber should make a list of questions for himself as well.


Wugot has nothing to hide and can answer all of the questions if someone is serious. However, I plan to spend more time on trading and analyzing the market than answering questions.We believe in profit target and stop loss. We know that no one can win the market all the time on a long run basic. We can’t trade the same number of lots all the time; the lots vary depending on our account size. It is up to the trader to set up their own trade size.A good $10000 minimum is needed , but the higher is always better.We trade manually using technical indicators combined with our 8 years experience along with what may be the outcome of some news reported on forexfactory.To prevent draw down, we make sure we use stop loss and keep an eye on our trades.
It is appropriate for anyone and I even sell my trading strategy along with the indicator on ebay, youtube so people who know how to use mt4 can use the indicators.
From now on, I keep 1 or 2 position open, but mostly one at a time.
Having followers is a good thing, but wugot is a networking company as well which also have many other ways to have traffic and create its own followers.

I hope those answers can help.

Lejeune Bauvil for Wugot strategy.