Good performance. Personally I usually cut off any programs that have >20% drawdown unless the overall performance is quite good. One year performance isn't enough with a swing trading program though because it hasn't been live-tested during volatile times. Sorry, backtest is useless IMO. Seen far too many holy grain forex systems that people want to sell but NEVER seen any with similar results in a live market. There's a post on this site that proves it but I don't remember where it's at.
You Don’t Know What “Drawdown” Really Means If someone would ask me about the primary reason why people fail in trading then I’d say it is because they truly don’t understand probabilities and drawdowns. The first thing to realize is that drawdown is a normal, if undesirable part of trading. There is no such thing as a strategy or a trader that does not experience drawdown. For many traders, dealing with drawdown is a major psychological battle. This becomes most severe when the drawdown is big enough that it threatens to bust the account. So I do not use the term drawdown. Instead I use the term Maintenance. "Powerful Investments, Needs Maintenance" Just like any other investment, maintenance is important to enhance the performance and life of any system. Similarly, even the manual or automated trading strategies systems, to maintain their generation capacity and monitor its annual performance, they may need maintenance (allthough my strategy's back-tested results from 2008 to 2023, passed all Great Economic Crises with success.)(without the need of extra deposit)
How did the metrics compare in live trading vs back test. Was it still around 46% and 2.77 profit factor. How many trades were taken in live trading?
Also your back test drawdown is curve fit. 25% drawdown is too low/ optimistic for the metrics you are stating. 10 losers in a row is easily possible with a 46% system. And you must be betting big (over 5% per trade) because you only get 11 trades per year. The only way to get 65% CAGR with 11 trades per year is to bet big. So you in reality you are going to get much bigger than 25% drawdowns in real trading. Probably more like 50% to 75% drawdowns. You can lower your future trading drawdowns by reducing your position size and CAGR target to 20%.
i been out of managed acct biz for decades so i have not kept up. the most remarkable program i ever saw was rick saidenberg's day trade only cta. he only run it a couple of years and sold it to i think soundview. i say this wondering if there are any day trade only cta's as his was the only one i ever saw. even fewer have you seen any cta's with no drawdown?
I'm not the type of HNW client you would be looking for, but from what I've seen in the rich areas of Los Angeles over the years, they are people just like us, who have the means to get the very best of everything. Handling money is practically a spiritual activity, which is why many banks look just like the old Temple of Jerusalem, built by Solomon (seriously, look it up and see for yourself - the US Federal reserve building is the same design with larger "wings" on the sides). Finding an investment professional for a HNW individual is like finding a priest. What gets people into churches? Either threat of hellfire or desire for salvation. You need to look and act the part. Same with insurance and real estate - it's all about the agent. Even if you have a great strategy, if no one else is going to your church, the crowd won't want in either. Hiring an investment advisor is like finding a financial savior. Some investors choose technical traders like CTAs, some choose rockstars like Soros, and some look the returns in a catalog and choose that way. But very few will choose someone who posts on a forum. Money is ultimately spiritual, since it enables cooperations and civilized behavior (when contracts are enforced) among otherwise wildly different peoples. It is the god of this world. If you want to handle other peoples money you are taking their heart and soul into your care. Are you enough of a rock star to handle it?
Rich people (over 5 mil net worth) stay rich for a reason. Reasons most pedestrians do not comprehend enough to practice. e.g. risk management, asset allocation etc. They also know until you hit 20 mil, good professionals managers with integrity are very few and very far between. Under 20 mil it is probably best to do the asset allocation and risk management yourself, or at least understand enough to vet and approve the plans. And there are those who are un accredited investors (less than 1 mil investable assets). They usually stay there forever for a reason. E.g. scoffing a full set of possible metrics of risk management. They tend to cherry pick a few and then say stuff like, "look how good this metric is, I and you can ignore the rest". Start with risk management then look at the returns, not the other was around. What is so hard about that? If it is, there are issues lurking about. OP touts some numbers, but that is so far off from getting accredited investors interested, it is...
It's not useless at all. But it's easy to make a backtest that looks like a holy gail. What you need is to backtest the holy grail against new, out of sample, data. Because the guys likely overfitted his stuffs against a peculiar dataset. Obviously the guy has to give you the logic of the trading system. But they won't do it if it's likely to fail anything outside sample. What's useless it to buy something you can't verify yourself.
Very few because they're not scalable. Liquidity becomes a factor very quickly. Option writing CTAs can have long runs with no drawdown until they fall off a cliff ..... eventually. True, but my limit is usually 20%. You can spin it with different words like "maintenance" but it's still a drawdown. Yes, this is what I was referring to. Programmers creating a bot can use backtests effectively but backtests from someone trying to sell a trading program are usually not accurate. That being said, it's usually more a problem with daytraders/scalpers rather than swing traders as the entry/exit/spread isn't such an issue for swing/investing programs.