Matthew,
I have two fairly similar systems, in terms of always using market orders and the timing of when trades are entered. I just looked and my second system now has a realism factor of 69+??? Both systems were cruising along with a realism factor of 99.8.
What gives? Again, market orders are used and the timing of trades are similar…
Matthew,
If possible can you give me an update on this? I am getting questions regarding the realism factor and no longer being 98.
Thank you for your feedback.
Brian
You write on your System Description page:
Nov 23 2005 Update: Getting an update on why the realism factor which was 98 from the start of the system is now set to 69 within a day. This system does not uses market orders for entry and exit, and does not scalp 10 lots for 60 seconds (examples of potential unrealistic). Will update here.
Actually, the use of market orders improves your Realism Factor (RF). It is the use of limit orders which decreases it. RF is particularly affected when you use a limit order that is "just touched."
Example:
You enter a trade BTO 5 @ESZ5 at LIMIT 1201.50
Then the price goes down to 1201.50, just briefly, and then goes back up.
In this case, your RF will suffer because there is a probability that some of your subscribers would not receive that same fill that C2 gave you credit for. How high a probability? How much does your RF suffer? This depends on the volume that changes hands at the limit price in question, and the moment in time in question.
Remember that the RF algorithm is a work in progress. The math is a bit complicated, but at a minimum it’s important that you understand the big picture: and, in this case, the big picture is that use of limit order will degrade your RF in certain cases, not improve it.
FInally, don’t sweat it too much. It’s just a number, and it gets updated (almost) once per week. As you add new trades, your number will change.
Matthew
