Poor Results when Testing

Discussion in 'Automated Trading' started by Spectra, Jan 13, 2007.

  1. A user who’d been back testing a trading strategy contacted me today. He was very distraught because his strategy only produced $1,200 a month with 3 YM contracts. That’s $400 per month on one set of rules.


    Strange thing about money and percentages and the perception of reality……


    Greed
    Let’s just look at the so called puny results described at making $400.00 per month.

    Say you told someone who wanted to start a fully stocked computer store business after he told you he only had $5,000.

    You might laugh at him. You might say, “are you nuts. No one can start a business for only $5,000.”

    On the other hand look at a very conservative person who keeps his money in a bank. My bank right now is paying .75% on deposited funds. So that $5,000. in my bank would pay our investor $3.13 per month. And the investor would not start screaming at his bank.

    So what is $400.00 per month worth? Let me ask you. How much would you like to replace your recent bad trading experiences, all the winning and losing trades with just $400.00 for each month that you traded?

    Also, there is no law that says an investor is not allowed to commit about $15,000 to trading this plan and take out about $1,200.00 per month. That pays many people’s rent or mortgage.

    So perhaps the view that $400.00 per month is not a good return on an investment might come from one having a too greedy and unrealistic assumption of what trading is all about? Perhaps that person still expects some kind of magic beanstalk formula that bring untold riches without any risk?

    Just a thought.
    Alex L. Wasilewski
    Co-Founder & Head Trader
    Trades That Work
    http://www.puretick.com
     
  2. August

    August

    Spectra, you really ought to put your money into etrade, you can get like 5.05%.... wait did I miss the point?

    :) Seriously though, if that were really money being played forward, sign me up, I'll take it. 400 on 5000 per month? i'm yours.