I have to say, I dont understand how the your equity growth charts are constructed.
The Zero T trading system shows a nice equity growth curve with reasonbable drawdown.
BUT, between April 8 2016 and April 12 2016, there was a drawdown on this system of over $12k and the graph also shows that the system fully recovered by April 15
However, when I go to examine the actual trades, I see none of this activity. Are the equity growth charts not derived from the results of the trades? Are all the trades not posted? I already made sure that I was viewing ALL trades and not just the real ones.
Am I missing something?
Remember that we mark-to-market open positions. That means we include the open positions’ profit/loss in the equity curve. Positions that may have closed later, or that are still open even now, may affect the drawdown and stats.
So, are you saying that there may have been a paper loss on those dates, but the trades were not closed at the time and therefore the loss was not realised and closed later perhaps for a profit?
Right. Open positions may have caused a loss at the time in question, or - alternately - they may have caused a subsequent profit. The point is only this: If you try to confirm the profit or loss you see on the equity chart by matching the chart to the “closed trade record” you will potentially be missing a piece of the equation, which is the positions that were still open at the time in question.
Click on the link that says “Show AutoTrade data” just above the trade record and you will see more details of each trade. In particular you will see on that date that system just keeps adding more and more contracts as the market goes against the trade causing the drawdown… when the market rebounds the trade is closed for a profit. So the completed trade looks good and the % winning trades is 96% but the risk taken was extremely high. Ask yourself what if the underlying didn’t bounce? Also ask yourself how professional is a “strategy” of simply adding more and more to a trade until it bounces… couldn’t anyone do that themselves trivially? Why pay someone for such a “strategy?” Why doesn’t everyone do that if it works so well?
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Thanks David. I missed that. The strategy just looked too good to be true. Truly a high risk strategy indeed. Everything looks great until disaster strikes.
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Anything around here with a very high trade % win needs to be looked at in detail extra carefully. There are more than a few systems that just add more and more leverage to falling positions to keep their stats looking good.
Collective2 is an awesome platform but it doesn’t replace doing your own due diligence.
