Following up on my last post, I want to start sharing some information from websites around the web and show you the fallacy that is “sum of the trades”. There is a website… uh, let’s call it MrDayTrade… that publishes incredible returns. Just look at these results and I think you’ll agree they’re remarkable, even rivaling CalculatedReturns… or do they.
And now for the fine print. The first clue that there is something amiss can be found in the FAQ document. There is a question that addresses the precise issue we’re after:
I won’t restate this, you can read it for yourself, but I will translate. In order to get a return equal to the published results you would have committed 100% of your portfolio value to each trade. It’s not really possible, logical, or safe to do this, yet that’s what you’re signing up for here.
Now let’s drill down a little. If I pick the 2011 year (118.51%) I can see the actual trades… follow along in the video and I’ll explain a bit more:
I’m not picking on this particular site (well, okay I am a little). There are MANY like this. I’m simply stressing that it’s important to do your homework on any of these subscription services when evaluating system performance. In Part 3 I will share some thoughts about the CalculatedReturns systems some of the pitfalls there.
Good Trading…
And now for the fine print. The first clue that there is something amiss can be found in the FAQ document. There is a question that addresses the precise issue we’re after:
I won’t restate this, you can read it for yourself, but I will translate. In order to get a return equal to the published results you would have committed 100% of your portfolio value to each trade. It’s not really possible, logical, or safe to do this, yet that’s what you’re signing up for here.
Now let’s drill down a little. If I pick the 2011 year (118.51%) I can see the actual trades… follow along in the video and I’ll explain a bit more:
Sum of the trades video
I’m not picking on this particular site (well, okay I am a little). There are MANY like this. I’m simply stressing that it’s important to do your homework on any of these subscription services when evaluating system performance. In Part 3 I will share some thoughts about the CalculatedReturns systems some of the pitfalls there.
Good Trading…
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