Nice talking points Jeff and I agree with most of them. You can't do what they do and expect success. I think someone else lost quite a bit of money following their trades. There is no "edge" and this is evident from all the crying callers that phone in for the team to rescue them from their current spreads that they've been rolling for month(s)/year(s). Sometimes you just are wrong and it's best to admit it rather than rolling until you are successful. In the latter, the only winner is the broker via commissions. They are hypocrites and condemn a lot of trading styles that they employ or are employed by other hosts on their show. How can they convince others if they can't even convince their own team? I've tried the crowd trading deal and hate it. Best to trade alone and think through things myself.
The reason 95% of traders fail isn't because of backtesting. It's because of inadequate or incorrect backtesting + not being disciplined traders and sticking to the system going forward. Also a backtest is only as good as the person scrutinizing and analyzing the results. Returns aren't what's important, but unfortunately that's what most people try to do when backtesting. Build a curve fitted system that returned the most in the past. Well yeah that sucks, but that's not what all traders do, just the bad ones. For traders who trade systematically based on a set of signals, backtesting is an absolutely vital part of building a trade system. The only part that assumes perfect entry and exit is fill prices, but this balances out in the real world because you sometimes get better fills and sometimes worse fills. In the long run it averages out and a proper back test will account for slippage and commissions. But for traders who trade systematically based on X Y Z variables and A B C market conditions, a long-term back test through various different types of market cycles can be very telling on the expected future performance. From there it's about discipline and sticking to the system and always being mindful of how and when markets might be moving towards less favourable conditions. But to say "backtests are nonsense," I don't know my friend. That doesn't sound like something a real trader would say. Nobody I know in the business would ever utter that statement. But then again, maybe you're a directional go with your gut trader, and in that sense sure they aren't very useful. But those types of traders are a dime a dozen and disappear with a busted account very quickly anyway... But if you're talking to successful long term systematic traders, try saying that and not getting weird looks
I've been profitable for 16 years and found backtesting simply an exercise in endowment theory-the best back test is to try and break your system. I have beta tested several systems developed by others so I have years of real world experience-if backtesting even remotely worked we'd see thousands of millionaire traders, rather than the actuality of a few hundred. The banksters have such a rigged game there are few avenues to make a profit but I'm comfortable with what I do-yes I could trade better and bigger, but it annoys me to see so many wide eyed hopefuls get trashed because they built their methods on false hope. Trading is not like anything else-the markets are dynamic so rules only apply to a degree- it's like being a musician who is expected to play along with someone's iPod when the playlist is random. I could give many examples of events that in back testing occurred 95% of the time-until I traded with real money- so thanks for the back tests and all those 'systems' that work <40% of the time-there is a website that tests commercially available systems-they all got busted
Well the fact remains, the vast majority of successful traders wildly disagree with you. So whether YOU personally think they are useless, that is certainly your prerogative. But to say that backtests don't even remotely work and they are nonsense, THAT's what's nonsense... Really can't stand traders who say dumb shit, then try to pass it off as ok because they "have been trading for 16 years" Like these clowns who say the option greeks are useless, or these guys who say backtests are worthless. I don't know where this guys come from, but I would imagine their returns don't beat a monkey throwing darts at a dart board of the S&P 500. And yes we know, you're an oh so special case with amazing returns blah blah blah. Yeah, I'm sure...
Hey fellow traders. Agreed, VIXTrader, backtesting is essential. Ebolamonkey, I have to disagree with you regarding your view on tastytrade. They are not hypocrites. I was just on the show last Monday, the Rising Star segment. It was great to meet them and the rest of the gang in the office. What you see is what you get. Matter of fact, everyone who works there except for one cameraman trades. Some even fade Tom's Bob app trades. He laughs about it. At lunch time (too bad we ran out of time on the show portion which freak'in flew by) I even told him that I disagreed with his directional "core" positions; he scalps /ES minis. My core is purely high probability strategies (ie. straddles and strangles). He agreed that his approach was less profitable, but he said he is just too stubborn to change. Some guys at the table laughed and said, yeah, he can do it as his account size is a little larger than ours. True. Overall, these guys are't there to tell the news like CNBC but to get us to wake up and think for ourselves using strategies to grow our accounts. Do not follow them blindly. Heck, don't follow anyone. If you can gain just one takeaway from tastytrade, then it was worth watching it. If you can't, well, you'll be the first. Congrats!
"Overall, these guys are't there to tell the news like CNBC but to get us to wake up and think for ourselves using strategies to grow our accounts." Absolutely agree. I've never got the impression anyone on the show is trying to tell anyone the best way to trade, or how to do it like them, or even that they themselves are very good. They are simply trying to get people to break away from the usual trappings of the investment industry and start to create your own systems. Yes those systems have to be based on certain basic fundamentals, and backtesting can help you form new strategies, but basically they just want regular people to get over their fears and start trading their own accounts and start seeing real returns as opposed to the traditional portfolio management techniques that are completely broken. Tasty Trade is primarily for entertainment, and as a secondary purpose to teach people how to get over their fears of option trading. As far as verifiable returns, I've been trading circles around these guys for nearly 2 decades as I'm sure many other people have as well, but that doesn't mean I don't appreciate what they do, and they can absolutely help a lot more people than I or anyone else here can. They have a platform, they are entertaining, and their intentions are coming from a good place. I love what they do.
The whole Rising Star concept is BS. They take a snapshot in time where some guy is doing well. Big deal, a six month decent run. I wonder why they never revisit the previous Rising Stars and see how they've done since their episode aired. No I don't, I have a pretty good idea why they don't do it.