bassicaly tittle, but what % DD /%gain / leverage, you would be okay with,realistically. What an Trade leader should present to attract you as an investor
It’s hard to answer that question.
There are plenty of systems with 50% or even 100% drawdown that still attract paying subscribers.
And there are systems that produce a solid 20% ROI with 10% drawdown and yet they get little or no attention.
Go figure why.
A system that:
-Doesn’t use insane leverage.
-Doesn’t martingale or triple up on losers.
-Has stop losses in place.
-Is an automated or rules-based system, not qualitative random calls.
-Can perform in good and bad markets.
-Doesn’t come on the forum every day talking about how great their system is or what amazing risk management they have.
Drawdowns happen. But a truly good system will take them in stride and keep on ticking. Prefer those futures systems that simply trade one contract at a time, or forex systems that use a set amount of contracts at a time and do it well over time.
What DogZebra said. ^^^^
@DogZebra_Investing makes extremely good points for a futures or forex strategy. I would only add that a detailed description of the strategy and trades that match the strategy’s description is also something I would look for. I’m amazed at how many strategies have a blank description or a simple line or two.
Very simple… a system that:
- Trades mostly intra-day and closes all trades by EOM on Friday - No exceptions. If its not a 23 hour market (certain futures), then it closes all trades at EOM daily.
- Utilizes hard stops upon trade entry, so no more than 5% DD on any one trade.
- Aims for 2% gain per month and tightens up entry rules once it attains that (e.g., reaches goal during 1st week, so utilizes tighter entry criteria the rest of that month to increase winner probability).
- Does not guess when opening trades. I manually trade some systems because their entries are terrible; they’re right about eventual market direction, but their entry is too early and causes needless drawdown.
- As far as leverage, it depends on the instrument (I only trade futures) and CME rules. Compute maximum shares based on leaving at least 30% cash reserve when opening or adding to a position.
- It’s okay if the system adds to a winning trade or uses staggered entries, but it should not add to a losing trade in order to average out its entry price, unless doing so will not violate the 5% max DD rule. It should also not Martingale or even hint of it. Get out of bad trades; don’t increase position size against the trend.