When trying to analyze whether a promotional ad for an investment newsletter or a market timing investment trading system is worthy of investigation , the following questions:
Does the strategy have a track record ? Without really making you to be in the game your emotions. All of us want to believe that if someone says something it must be true. Yet the sad fact is the truth is probably the exact opposite . Most advertisements and promotions are put in print for self interests first , and everything else second . One needs to look on the web with a skeptical eye something. The minimum that an investment that should give you a track record . The longer the track record is better . Something that has worked for a matter of months is usually not long enough to be considered . Successful in the trading world Some promoters do not release their track records because they say that " past performance is no guarantee for the future." This is true, but certainly no returns are no guarantee for the future too . Some promoters do not release their track records because they saying " we used to do a track record , but subscribers got upset if the strategy lost money when they registered although it made money over an annual period . "That may be the case , but it is also part of the game . Subscribers can not expect to make money from day money one in trade a long-term strategy . This may , however, obvious record in track . And some not initiators their track records just loose because they do not have one or they have poor . it's as simple as that no matter what they say .
Is the track record that they promote in real time or was simulated in a computer based on data from the past? What does this really mean ? Real time means that the trading signals that were used to record the track results actually in the time were generated at that time. In reality . Most track records on investment websites are not real-time , even if they say they are . Even if they do not use a computer and it was done by hand , as the data from the last five years , but the website is only a year old then it can not be. Why is this so important ? Because trading is not trading as human emotions are removed . No greed , no complacency , no panic, no hysteria . Almost all computer - generated trading programs fail miserably when actually implemented or because the data was too short a period or the human factor was ignored . That is assuming that the person who input the data did it without human emotion . I once had a friend who told me he had a system that is 80 % per month for the last 6 months . He said he implemented six months in real time. I asked how much he had invested in this strategy . He said nothing because he paper trading . I said there is no such thing . He went on to tell what paper was trading me. I replied that I knew what he thought was paper trading , but it is not trade , because if you paper trade your emotions are not in the game . Human greed and ego has a way to make you believe something to be objectively without really looking at the data . But once the actual real money has drastically changed the complexion of the risk situation .
How can you tell if the job is in real -time as they lie about the fact that in real time ? This is not always easy , but there are some basic tell tale signs . If it is a short term system that very few transactions and often risking say 10-50 times a month. However, a 80-90 % commercial success rate , which is almost statistically impossible. Most day traders and position traders do well if they win 40-50 % of the time . If they risk more and do not use tight stops , then the win loss ratio goes up , but the size of drawdowns or the size of the biggest loss has to go up. Longer term trader a slightly better win loss ratio , but only if their risk is also greater . To submit a general statement the greater the income ratio is the more I would be skeptical .
What if the track record is a combination of partly historical and partly tested back signals realtime signals . How do I analyze it? The first thing to look at is if the win loss ratio is changed by the track record period drastically. For example, if a 5 year period , and the promoter claims that the trade signals went live two years ago, the win loss ratio changed dramatically just six months ago , beware . The most difficult to detect on the web when you are being scammed on a hypothetical track record , because there is no real way to tell when a track record websites removed has been edited or revised. Some websites use an independent tracking site , but there are no real ways for a consumer to know other than that .
I hope the previous ideas will help to determine fact from fiction in the world of investment newsletter promotions.
John McKeon
Rye, NH
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