Realism Factor

Productive ability is a value by the standard of man’s life - and because, like all values, a course of virtue is required in order to gain and keep it. An individual is not born with the knowledge, the skills, or the imaginative ideas that give rise to greatness, or even competence in any creative and demanding field including trading/investing. He must acquire, then use, all these assets by a volitional process. At each step of this process requires effort, purpose, and the commitment to reality (rationality.) It requires all the atttibutes inherent in the development and use of the rational faculty, including conscientious focus, independent judgment, the concern with long-range goals, and the courage to remain true in action to one’s knowledge.

The ability to create material values (profit) is not a primary. It must itself be created. Its source is man’s noblest qualities.

Some jobs (like trading/investing) offer a greater intellectual challenge than others and also allow for greater achievement (some of the worlds richest men made their money exclusively by trading/investing.) But every job above plain physical labor requires for its effective performance a significant element of personal worth within the worker. A worthless person - the type who meanders semi-awake through a prescribed routine, indifferent to what he is doing and passively compliant with the rules of his tribe - is productively useless. Such a type, so far from being able to sustain his life, cannot even sort the mail or collect the garbage, as any victim of today’s unions can attest.

Turning now to a different aspect of the present virtue, productiveness is not only a necessary element of the good life, it is the good life’s central purpose ( which is the second of the “supreme and ruling values”: purpose.)

Like any value, purpose itself must be achieved by a specific course of action. If a man is to be purposeful, his goals must be interrelated. This in turn requires that they be intergrated to a central purpose.

A man with a hodgepodge of goals cannot achieve or even rationally pursue them. There is no way (besides caprice) for him to decide how to apportion his time and other assets among his concerns, or to decide how to resolve their conflicting demands in these regards. Such decisions require that one establish a hierarchy among one’s goals, a scale of relative importance, by reference to which long-range action can be initiated and daily choices guided. This kind of hierarchy is possible only if a man defines a central purpose, examples of which in our context of trading/investing may be maximizing expected value(expectancy), return/drawdown ratio, expected geometric average rate of return of the portfolio, Sharpe ratio, Profit Factor (W:L ratio), Average Trade (%), net profit, minimizing Max closed %DD, etc.

A central purpose is the long-range goal that constitutes the primary claimant on a man’s time, energy, and resources. All his other goals, however worthwhile, are secondary and must be integrated to this purpose. The others are to be pursued only when such a pursuit complements the primary, rather than detracting from it.

A central purpose is the ruling standard of a man’s daily actions. One must formulate an abstract standard of value to enable one to assess the various claimants to the title of “value.” Similarly, in daily action, one needs a specific purpose as a standard to enable one to assess the various endeavors pressing themselves upon one as “important.” The man without such a purpose has no way to tell what is important to him. However sincere he may be at the start, he has to end up as whim-ridden, erratic, directionless, i.e., as irrational. The man who defined his purpose, by contrast, knows what he wants from his time on earth. Since his concerns are hierarchically organized, his days add up to a total.

There is only one purpose that can serve as the integrating standard of a man’s life: productive work.

The activity of productive work (if approached rationally) incorporates into a man’s daily routine the values and virtues of a proper existence. It thus establishes and maintains his spiritual base, the fundamentals that are the precondition of all other concerns: the right relationship to thought, to reality, to values. A man doing productive work is a man exercising his faculty of thought in the task of perceiving reality and achieving values. Such an activity is independent of other men, in the sense that the mind is an attribute of the individual. It is also inherently long-range: each phase of creative endeavor makes possible the next, without limit. The producer moves through his days not in random circles, but in straight line - which last, is the badge of man, the straight line of …motion from goal to goal to farther goal, each leading to the next and to a single growing sum…

Nothing can replace productive work in this function, In particular, neither social relationships nor recreational pursuits can replace it.

One cannot substitue people for work. If a man defines his central purpose in terms of his relationship to others, this necessarily makes him a second-hander, no matter what form of the vice he chooses - whether he takes the path of a man who wants to be loved or of a con man who wants to deceive, of a dictator who wants to give orders or of an altruist who wants to take them. Anyone moved primarily by a social rather than a productive purpose thereby rejects reality, with everything this imples. That is why none of these types, however single-minded their behavior, qualifies as purposeful - assuming we mean by “purposeful” the value-oriented, effort-demanding existence described earlier. In fact, second-handedness in some variant is precisely what men resort to when they have dropped the discipline of purpose. Hoping to ally their anxiety and fill the void left by their own default, they have no recourse then but to run to others.

A life of purpose is an expression of the virtue of rationality. As such, it requires that one practice independence and all of its fellow virtues, productivelness included. the majority of productive careers (including trading/investing) do involve regular contacts with other men. But this does not erase the distinction between professional function and social relationships. It does not turn work into a party.

I can see that polling subscribers to determine a realism index would mean that systems without subscribers would not get a rating. Alternatively, rather than using polling to determine a realism index, use polling to see if the current RF is matching what system subscribers are experiencing with fills, partial fills, no-fills and slippage. It might be an eye opener for C2.

We do have something similar already in place. (4) Real-life AutoTrade Fills. C2 allows its customers to follow trading systems in real life and automatically place trades in a brokerage account. We measure how customers really fare in real-life versus hypothetical results, and use this data in our calculation of the Realism Factor.

It is reasonable to assume that auto-trading customers are using a more advanced and versatile trading platform with regards to fills/stops/volume of bid/ask, than what the ITM 2.0/manual trading can provide, so it can definitely be an additional honest/reliable (and therefore rational) source for the calculation of the RF.