Yes and no, you would have to break-down the strategy, not just look at the biggest drawdown. Take a guy that started in 2004 selling way OTM options on the equity markets, levered to the max. For three years he may not have had one losing trade and had solid returns. Then 2008 hit...
Good point. To me though, if I saw a guy who did not have one losing day in 15 months, it would set off red flags big time. No real trading firm/hedge fund would hire a guy like that. The firms I worked for/know of want to see what happens to a trader when he takes losses. A guy that hasn't taken a loss in that long a period either is a huge scale down trader, or is holding any losing trades as open trades/refusing to get out. Either way they are a disaster waiting to happen.
I am very sure that during the course of the 2 years of "no loss", a significant number of traders in his room will get wiped out, however it is still the minority, and like any service, there will be ppl who make money and ppl who don't, so the ppl who make money continue to promote him. Also, it is easy for many ppl who has been with him so long to think that "This guy actually has the holy grail. This is how u shud trade, markets mean revert and this guy knows where it will bounce".. I mean, after seeing him take no loss for so long, it is very easy for many newbies to just wanto follow him blindly.. LOLOL
I know several cases first hand. They get imprinted like ducks after winning for maybe 2 or 3 years. Leeson went through several billion that way too. It's a waste of time explaining it to them. They can and do win 90-95% of the time. In fact 99% of the time can be built too, still loser at the end.
A pure arb'er or a guy using multiple strategies across multiple instruments can have this kind of results, but a mentor trading a mainstream overcrowded contract like TF, no way...I would be interested to know how consistent the best TF traders are. I suspect they may still lose one day per week or so.
Fair enough, but during the 87' crash some of the index arbs took a big hit and during summer 07' and throughout 08' a number of the big stat arb guys suffered big losses. (although the latter aren't pure arbs) Even the most advanced quant funds can show profit day-after-day for years and suffer a blow-up. If MIT PHDs can blow-up what chance does a guy in a chat room averaging down have?
My point exactly. These firms have at least legitimate steady gains even if they may blow up in some rare events. This guy averaging down had just a short term loan to the market.