Why most of the system metrics are useless numbers

Discussion in 'Strategy Building' started by traderum, Dec 19, 2009.

  1. Hey, shouldn't you be trading while the market is closed? Didn't you have a special frequent flyer pass to trade on the weekend?
     
    #21     Dec 19, 2009
  2. Redneck

    Redneck

    Regardless what your opinion of the OP may be - This is fact


    RN
     
    #22     Dec 20, 2009
  3. This is not a fact because it ignores the "risk" that was taken to get from point A to point B and the probability of a "high-risk" trader of blowing up in the future.

    If you turn $10,000 into $1,000,000 trading in one year and someone else does the same by purchasing 10,000 lottery ticks, it doesn't mean that the lottery trader made a great investment when risk is taken into consideration. In fact, the decision to purchase 10,000 is a moronic act, regardless of the outcome.

    My job in performing due diligence on a trader is not to find the "lucky ones" who have been successful taking ridiculous risks, but to find the ones who us a combination of skill/talent and risk control and who have the best probability of surviving over the long run.
     
    #23     Dec 20, 2009
  4. Redneck

    Redneck

    The only reason to trade is to make money – period

    One’s PnL ultimately reflects whether one is trading properly – or not


    Risk is never ignored - it must be managed - always

    If one is assuming too much risk – it will bite them in the ass and their PnL will suffer - significantly, if not completely


    eta - I do not believe in luck - ever

    RN
     
    #24     Dec 20, 2009
  5. You are not even in a position to attest to whether you are organic or not.
     
    #25     Dec 20, 2009
  6. Quote from traderum:
    This is old news, that thread is closed long ago.

    Yes, but your clueless and feckless nature goes on...

    to discredit me. This tells a lot about yourself...

    You are a self-discrediting organism. The more you say...
     
    #26     Dec 20, 2009
  7. Redneck

    Redneck


    Give em hell TZ:p

    Take Care
    RN
     
    #27     Dec 20, 2009
  8. Good one! LOL!
     
    #28     Dec 20, 2009
  9. I agree 100% with you; but there must be a way to measure how good a trader is - and it is defintely not by who has the largest P&L. You also have to take into consideration the length of time a trader has been going at it and, most importantly, how much RISK a trader took to generate his P&L.

    If you have two traders who have track records of the same length and...

    Trader A's P&L = X and their Risk = Y and...

    Trader B's P&L = X and their Risk > Y, then Trader A is better.

    You need to compare apples to apples. It's not as simply as just taking the largest P&L.
     
    #29     Dec 20, 2009
  10. danger and TZ are absolutely right. The OP needs more education and experience to understand what metrics actually measure, how they are used and what their caveats are. Until understanding of the above issues (as well as survivorship bias) arrives, it's beyond silly to keep insisting that everyone out there is a total idiot.
     
    #30     Dec 20, 2009