I’ve researched systems on C2 for a few weeks, looking for a good system with which to dip my toe into autotrading.
One of my contenders is sikago2. This system looks great on paper, none of the stats are setting off warning bells. Average loss is greater than average win, but the system is 95% winners on 300 trades.
So, what’s the catch? Am I throwing my money away if I subscribe to this system?
OK. Here is my take on this system.
1. First, the maximum drawdown for this system is over 50%, and has been around only 7 months. So, assume that between now and the end of the year, you see another 50% max drawdown. Can you handle that?
2. Extremely high win percent systems come about 1 of 3 ways - either the person is a great predictor (which no one is - sorry Curtis!), they scalp for little profits and occasional killer losers, or when a trade goes against them, they keep adding to the position until it turns around. Sik uses that last method.
3. Adding to losers has its place and time. If you were infinitely wealthy, you’d never lose with this method. But, you are not, and that means that eventually you will lose trading this way.
Take a look at other systems that crashed because of adding to losers - Easy Button comes to mind. But there are a ton of others.
But, do not take my word for it. Run it for a month or two in a simulator, and see if you still like it. You might find out why many people are ignoring it.
I don’t know about that system. The most important stat I’d want to see is the max trade drawdown or MAE. This is more important for me then max system drawdown. Even if a system has a 50% drawdown you can always choose to turn it off before it gets there but if the max trade drawdown is, for example, 50% then that is more troubling. I’d want to see that and the maximum trade loss.
Adding to losers multiplies and compounds risk of a system. But it can be appropriate in a discretionary system where one is not adding to losers but trading in the same direction on a shorter or multiple time frames.
You have to be careful setting too many rules though because it limits one from finding the optimal system. I.e looking for an extreme high win rate. 70% is a good solid win rate.
Most systems here and this is what they wont tell you. Don’t work but some of the time. The good systems survive the bad times and do better in good times. This is a lot different then the bar I set for myself.
I can’t spot any money management. (specific number of contracts in relation to capital, volatility,… ) Fixed numbers (50,100, 200) mostly are a giveway. I guess 100 lots is a lot for a $100.000 account too. (depends on time frame) Noticed an intratrade DD of 8%. .
I’m not saying this system is dangerous but you wouldn’t be the first here to go for a high win % system and finally have his account go down the drain in matter of days. (all those systems looked pretty much the same)
Be very wary about high win%. Keeping high win % up is way harder than keeping avg loss down.
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"70% is a good solid win rate. "
win rate is irrelevant, except to newbies. it is simply a function of someone who pursues larger losses and smaller wins.
