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  • Safe traders more risky than risky ones?

    When it comes to copying a signal I often like to see one making at least 10% per month with no losses on a month to month basis. From being a part of watching other signals both on and away from this site I have noticed that at any time your account could be blown overnight or over a week.

    So when I go for a signal lets say I put in $10,000. My hope is within 1 year maximum that $10,000 or whatever value I put in will be doubled so I can withdraw my initial capital and have in my eyes "no risk" or no loss of money I have earned myself.

    At any point in that year though all the money could disappear forever, I've seen it happen! That's why the moment you can withdraw your initial deposit I personally would do so. So when I look at a signal I think "How many months will it be before I can withdraw my initial deposit?" before anything else. The second thing I look at is the max historical drawdown.

    The issue I find with a "safe" trader only making 1% per month is that they can still lose money. Thats why I feel safer with a risky trader as I want my real money out of the system as fast as possible because it seems that one day all signals eventually take a huge loss and I don't want my money in there when that happens.

    My question to you guys is: Would you feel safer with a trader that makes 10% per month with a max drawdown of 30% or safer with a trader that makes 1% per month with a 5% max drawdown? Which trader would you choose to follow out of the two?

    I would go with the 10% per month trader since I want my money out of there as fast as possible. I've seen a trader called A75 who made around 20% a month for 2 years straight then blew it over a one week period. A similar situation has happened with Day Fox on this site so it's definitly something that can happen.

  • #2
    Originally posted by 12padams View Post

    My question to you guys is: Would you feel safer with a trader that makes 10% per month with a max drawdown of 30% or safer with a trader that makes 1% per month with a 5% max drawdown? Which trader would you choose to follow out of the two?
    What if the moment you started to follow a 10% per month trader, then the shit the fan and blew your account? You're out of the game fast and furious.

    Everyone has different risk tolerant, you decide what is the best for you that if worse scenario happens, you won't be crying, sobbing and *****ing all week.

    Cheers,

    Comment


    • #3
      Originally posted by 12padams View Post
      When it comes to copying a signal I often like to see one making at least 10% per month with no losses on a month to month basis. From being a part of watching other signals both on and away from this site I have noticed that at any time your account could be blown overnight or over a week.

      So when I go for a signal lets say I put in $10,000. My hope is within 1 year maximum that $10,000 or whatever value I put in will be doubled so I can withdraw my initial capital and have in my eyes "no risk" or no loss of money I have earned myself.

      At any point in that year though all the money could disappear forever, I've seen it happen! That's why the moment you can withdraw your initial deposit I personally would do so. So when I look at a signal I think "How many months will it be before I can withdraw my initial deposit?" before anything else. The second thing I look at is the max historical drawdown.

      The issue I find with a "safe" trader only making 1% per month is that they can still lose money. Thats why I feel safer with a risky trader as I want my real money out of the system as fast as possible because it seems that one day all signals eventually take a huge loss and I don't want my money in there when that happens.

      My question to you guys is: Would you feel safer with a trader that makes 10% per month with a max drawdown of 30% or safer with a trader that makes 1% per month with a 5% max drawdown? Which trader would you choose to follow out of the two?

      I would go with the 10% per month trader since I want my money out of there as fast as possible. I've seen a trader called A75 who made around 20% a month for 2 years straight then blew it over a one week period. A similar situation has happened with Day Fox on this site so it's definitly something that can happen.
      Interesting question Adams. There has actually been a bit of research done on this exact subject by RAPA Cap Intro.

      The results were that it's better to increase the risk on a conservative strategy rather than reduce the risk on a risky one. What you'll find is that when a risky strategy is pushed to it's limits the amount of stress placed on the trader/manager is substantial and often effects their trading, however a conservative trader will continue to chug along as they have always done, improving the likelihood of recovery and continued success.

      I personally don't believe anyone should be shooting for 20% per month unless you're happy with the high probability of going bust, in which case you'll likely be trading it on a small account.

      I have a fair bit of personal experience with this from running the site. I have never seen a high risk trader recover after a devastating loss, even after topping up their account. Conversely I've jacked up the risk on Viper a few times on small accounts and find that it's a constant roller coaster of growth, bust and recovery.
      Would you like free lifetime access to our forex trading room?

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      Comment


      • #4
        Originally posted by 12padams View Post

        My question to you guys is: Would you feel safer with a trader that makes 10% per month with a max drawdown of 30% or safer with a trader that makes 1% per month with a 5% max drawdown? Which trader would you choose to follow out of the two?
        Its not about 10% and 30% and 1% and 5%. You can always scale up or down as you follow signals. right? in this scenario you can normalize both the traders. If you follow the second one at 10x, he gives 10% per month with a DD of 50%. So obviously your choice has to be the first trader. If you want to take less risk, turn down your risk with respect to him. You need to concentrate on the risk reward ratios
        Trade the market, not the trader

        Comment


        • #5
          I'd also take the first trader. Run it at 0.5x risk and even if he blows his whole account you lose 50%. Run the second trader at 5x risk and max historical DD would be 25%. Except when he trader asks for a bit of "wiggle room" to get out of his trades and that 25% turns to 50-60% and you're wondering what's the way out...

          Comment


          • #6
            Looking for a trader that targets 10% a month plus is dangerous, traders need to take what the market gives and if some months its only 3% that's fine. Other months could well exceed 10%, all depends if the conditions suit them.

            Don't just look at the MAX DD, look at how often the trader goes into that drawdown. IF a trader has hit 30% area once in a year and pulled himself out with taking too much risk that's fine.
            Everyone will go through a period of DD, just hope you lucky enough to build some equity before the DD comes.
            If hes a trader that visits the 15% plus DD on a regular basis, you looking for trouble.
            There is really no need for going into regular drawdown to achieve the 5 - 10% mark.
            DD is either your edge is not working in that specific market condition, and you need to cut risk until it passes.
            Or your risk is not under control, in this case the DD will have regular spikes.
            Be wary of traders that excessively engage the market to make a few percent.

            As an example the signal (censored) has engaged the market 5700 times to make 30% in 7 months. Which is fantastic if you collecting rebates, but as the investor with exposed capital, every trade exposes you to loss. In comparison Viper has only engaged the market 950 times in 19 months

            You don't want to be in the market all the time, get in and get out. Sure you can ride the trend, but that needs to be a positive trade, not having red day trades turn into long term investments on a regular basis.
            We talking on average here, we all have the odd one that drifts around and eventually comes our way, but that's where controlling your risk allows for this .

            Comment


            • #7
              Just want to step in because the censored signalīs description looks a lot like ASTA

              First of all: You must not aim for a 10% return every single month when you are running this as a serious investment with properly sized accounts (so not talking of smallish accounts to play a bit). Month to month "consistency" is mainly done through fishy tricks like plain grids or more often through martingales. These are horrible in terms of risk/return-ratio, because the time comes when you dip into a very deep drawdown. Additionally even 10% monthly return on average(!) is pretty risky and should not be a target for your whole assets. With these kind of potential returns you are looking into potential drawdowns in the ballpark of 50% or above at one point.

              Now to the part of p3t3jjīs statement: Amount of trades is completely irrelevant. What you should be interested in is net profit. So kicking out the same comparison to Viper, but with the correct figures. ASTA has an average monthly return of 4,5% and thats while we are still sitting near peak drawdown (and thus reducing the monthly average rate significantly). Thats with a max. historical drawdown of 18,4%. Viper returns 3,0% monthly with a max. historical drawdown of 13,8%. When you normalize these values, both signals are very similar in terms of risk/return. Just a quick example so you get what i mean with normalizing:
              - ASTA => 4,5 / 18,4 = 0,24
              - Viper => 3,0 / 13,8 = 0,22
              Higher value is better in terms of risk/reward, so i think there is some risk control in place, isnīt it?

              Please keep in mind i am not here to offend anyone, especially not Jeff or his trading, nor do i usually want to draw comparisons between traders because thats obviously some non-gentlemen territory i donīt want to be involved. Just wanted to shed some light, because here were major mathematical and logical flaws going on. IMHO Jeff is doing an amazing job for this community. Not mainly because of his trading, but more importantly because he does teach retailers to take care of their investments and keep risk in mind.


              Cheers,
              Prof


              --------
              edit because of some typing errors
              Last edited by ProfBernardo; 12-06-2014, 08:57 PM.
              ASTA light master account - myfxbook link
              Former ASTA light signal account with 12 months trading history - myfxbook link

              Link to signal on simpletrader website

              Comment


              • #8
                Prof your system was just used as an example, it was top of the list so first one looked at. The point I was trying to make was my opinion of how to spot if a system is risky. Suppose we could use you as a case study of sorts.
                Its not only the results or DD, but looking at how the trader presents himself.

                Over the months many guys with one or two wining months turn up and disappear just as quickly. Fact of the matter if a system had a decent history you would present it as a selling point.
                Saying your new to MT4 so the history doesn't exist is weak, Only 10% of my trading takes place on MT4 but I can assure you even the custom software I use along with all commercial software has a reporting function. So click the report button and present the results, why not. Using terms like hedge funds. institutional etc etc is just plain marketing. Nothing more, trying to stand out in a crowd with BS because the trading cant do the talking. -- Alarm Bells

                Talking about a system that is connected to major accounts, several 7 figure accounts etc etc. -- But all you can scrape together for a signal is 1k, for a big hitter on the institutional level? -- Alarm Bells
                Running comparisons with Viper on Risk reward, cmon. Viper dropped 100k and started preforming. ASTA deposited the equivalent of a night out with the lads, and caught one run after four months.

                Being a low funded guy that has developed a system that returns a few percent safety, and making it available for others to follow is excellent and a reason why social trading exists. There some brilliant guys out there that just dont have the funds initially, nothing wrong with that. Traders trying to sell themselves as an institutional level guy with 1k is just bullshit really. So its one of two things, either you dont have the funds and have made up the whole big player system story, or you just don't trust the system at all. If you get one follower, hes giving you a return of 10% a month on your investment already. That one follower already creates returns exceeding you own trading capabilities. Not trusting the system is fine, like maybe the Caesar guy. We all know hes going to blow but you can still make serious cash out of him until he does. All you need is timing and get your initial deposit out. But hes straight up about that, and everyone knows the risks.

                Your comment "Month to month "consistency" is mainly done through fishy tricks like plain grids or more often through martingales" is so incorrect its laughable. Thats just a case of I cant do it, no one can. I certainly have monthly and yearly consistency, I earn a profit share so just clocking over monthly wont cut it. The signal guys here certainly have consistency as well, and many more in the chat.
                " p3t3jjīs statement: Amount of trades is completely irrelevant" - Really, look at your account commissions VS profits. Your investors profits have been basically halved to cover the costs paid to the broker.

                Dont get me wrong, I like your system. All those open trades in green and 107% equity. If you still around by Easter I would be tempted to hook you up to one of my customers that have a buttered spread and just clock profits from transactions. Then use normal trading to create profits for them. But I will wait till your trading does the talking for itself, until then I consider you very high risk for the reasons stated above.

                Anyway the point of all that is there many areas to be examined when deciding of a system is risky or not.

                Comment


                • #9
                  That escalated quickly. Kind of thought this would happen, but i will respond once again to your statement and will then stay away from this topic. Might be better, because otherwise it just ends in a conflict. Will do my best to go into all points you mentioned. First of all: Claiming somebody is telling bullshit is harsh and you be supported with a proof. Additionally i have the experience that people acting aggressive is because they try to hide something. So in no way will i offend anyone nor respond in an unprofessional manner. I say this because forums and actually any written word lacks of additional information source like the sound of a voice or emotions through the face. That could lead to some statements coming through differently as they are intended. So if you feel i am attacking you in any part of my text, please take the time and drop me a message, because i can assure you that is not the intention of my post

                  I will go through your passages one after another. That should make my response easier to understand.

                  Your first passage is perfectly in line with my own view. To validate a trader you must not look only at returns or DD, but the way the trader presents himself. Usually non-helpful people have a reason for being that way. Mostly they have to hide something and/or want to force you into something (and thats usually not as good as advertised).

                  Second passage: Of course there is a function to export history and complete account details. The point is that you can not hook these up to myfxbook, so there is no way to both hide critical personal data (like the account number) while at the same time offer a verification. Do you think Jeff/Viper had no history or personal accounts to show when he started to offer his skills? Of course he did, but you havenīt seen any of his private accounts nor history besides the account set up specifically for the signal service. The system has now about 6 months of history. Pretty new, but history only comes with time. I am here to stay.

                  Reason the account size is that low can be read in my own ASTA thread. It doesnīt make any financial sense to leave money in an account that is performing worse than the main prop accounts. Wonīt describe it here a second time, as that would make this post too long. Can send you a link to the post i am referring to if you like (just drop me a private message on this forum).

                  I am not an institutional level guy, my team is. I am only a small part of it and actually the one with least funds. Thats why i am looking into the retail section and not the others (who are even not very confident with the potential of a true business case in the retail sector).

                  What is mean by month to month consistency is that some followers here are looking for a trader that can generate a positive return every single month. Thats what i think is not possible. We canīt do that, nor have i seen a single person that is able to do that either. There have to be some month where your equity(!) turns out lower than the month before. Otherwise you are playing with the tricks i have stated. Yearly consistency is a very different animal and that of course is mandatory to become profitable. But if you are really referring to your monthly consistency being able to increase your equity every single month, then you are a blessed man. I am not talking of the consistency you can see from the signal guys here. Of course they are consistent, but not in that extreme scenario i wanted to underline. Hope that it now is clear that with that "monthly consistency" i mean being profitable on equity every month.
                  Regarding the commission: It is still irrelevant. Why do you care about commissions? What you are looking to is maximizing your net profit. When you want to decrease
                  commission, you can just stop trading. That would bring the commission down to zero Just throwing out extreme examples, but take a look at it from a different perspective. What are your main interests when looking on the account? Is it the amount of trades, the traded pairs, the amount of commissions or is it the net (!) return of your account? Not talking of the gross return, as that does not reflect what is left in your pocket. My investors profits have not been halved. Following from day 1 they would sit at 30% net return.

                  Thanks for liking my system and i appreciate that you are analyzing it/doing due dilligance. I will be around by Easter next year, as confidence in a signal provider grows with ongoing public history and a guy behind it for questions. I think people will notice that i am not here to create a hype or make a fast buck to disappear at the first sight. But that takes time and i am ok with that. Have stated some of these information in my thread, so just leaving a quick summary hear: Actually we are looking into hooking up a seriously sized account for the signal service. Something more common for real world investments (>$50k). Question is how many subscribers are willing to use their VIP accounts for following a signal service without too much history. So that i something we might do when we have passed 12 months of public history and will then investigate with Nick for being hosted as an official Forexsignals signal provider.

                  Will put that discussion to rest now, because i donīt want to sound like i am arguing for advertising purposes. As you have said, trading will take the talking for itself


                  Wish you all a nice sunday.
                  ASTA light master account - myfxbook link
                  Former ASTA light signal account with 12 months trading history - myfxbook link

                  Link to signal on simpletrader website

                  Comment


                  • #10
                    Wow the mangina's are sensitive around here. As I said it was my opinion on how to spot a system that is risky, and you were top of the forum post list at that moment, so clicked on you and used your BS as an example. There is no escalation or aggression here, you were not the focus of the conversation. I really don't care what you do, you were just a suitable example. Your response just proves the point even further, and would be a good lesson for someone new to sniff it out.

                    Whatever your explanation is for the small account is nothing we haven't heard before here, same same but different. But in reality its usually some guy in hes moms basement trading hes unemployment cheque referring to himself as WE. You don't need myfxbook a few screenshots would help. And poor old Jeff gets himself compared to every new kid on the block, comparing their 5 minutes of trading history to hes 19 months. Sure he didn't publicly advertise hes history that I know of. But dropping 100k from day one said a hell of alot.

                    But again the conversation is not about you, you were just a convenient example.

                    Originally posted by ProfBernardo View Post
                    That escalated quickly. Kind of thought this would happen, but i will respond once again to your statement and will then stay away from this topic. Might be better, because otherwise it just ends in a conflict. Will do my best to go into all points you mentioned. First of all: Claiming somebody is telling bullshit is harsh and you be supported with a proof. Additionally i have the experience that people acting aggressive is because they try to hide something. So in no way will i offend anyone nor respond in an unprofessional manner. I say this because forums and actually any written word lacks of additional information source like the sound of a voice or emotions through the face. That could lead to some statements coming through differently as they are intended. So if you feel i am attacking you in any part of my text, please take the time and drop me a message, because i can assure you that is not the intention of my post

                    I will go through your passages one after another. That should make my response easier to understand.

                    Your first passage is perfectly in line with my own view. To validate a trader you must not look only at returns or DD, but the way the trader presents himself. Usually non-helpful people have a reason for being that way. Mostly they have to hide something and/or want to force you into something (and thats usually not as good as advertised).

                    Second passage: Of course there is a function to export history and complete account details. The point is that you can not hook these up to myfxbook, so there is no way to both hide critical personal data (like the account number) while at the same time offer a verification. Do you think Jeff/Viper had no history or personal accounts to show when he started to offer his skills? Of course he did, but you havenīt seen any of his private accounts nor history besides the account set up specifically for the signal service. The system has now about 6 months of history. Pretty new, but history only comes with time. I am here to stay.

                    Reason the account size is that low can be read in my own ASTA thread. It doesnīt make any financial sense to leave money in an account that is performing worse than the main prop accounts. Wonīt describe it here a second time, as that would make this post too long. Can send you a link to the post i am referring to if you like (just drop me a private message on this forum).

                    I am not an institutional level guy, my team is. I am only a small part of it and actually the one with least funds. Thats why i am looking into the retail section and not the others (who are even not very confident with the potential of a true business case in the retail sector).

                    What is mean by month to month consistency is that some followers here are looking for a trader that can generate a positive return every single month. Thats what i think is not possible. We canīt do that, nor have i seen a single person that is able to do that either. There have to be some month where your equity(!) turns out lower than the month before. Otherwise you are playing with the tricks i have stated. Yearly consistency is a very different animal and that of course is mandatory to become profitable. But if you are really referring to your monthly consistency being able to increase your equity every single month, then you are a blessed man. I am not talking of the consistency you can see from the signal guys here. Of course they are consistent, but not in that extreme scenario i wanted to underline. Hope that it now is clear that with that "monthly consistency" i mean being profitable on equity every month.
                    Regarding the commission: It is still irrelevant. Why do you care about commissions? What you are looking to is maximizing your net profit. When you want to decrease
                    commission, you can just stop trading. That would bring the commission down to zero Just throwing out extreme examples, but take a look at it from a different perspective. What are your main interests when looking on the account? Is it the amount of trades, the traded pairs, the amount of commissions or is it the net (!) return of your account? Not talking of the gross return, as that does not reflect what is left in your pocket. My investors profits have not been halved. Following from day 1 they would sit at 30% net return.

                    Thanks for liking my system and i appreciate that you are analyzing it/doing due dilligance. I will be around by Easter next year, as confidence in a signal provider grows with ongoing public history and a guy behind it for questions. I think people will notice that i am not here to create a hype or make a fast buck to disappear at the first sight. But that takes time and i am ok with that. Have stated some of these information in my thread, so just leaving a quick summary hear: Actually we are looking into hooking up a seriously sized account for the signal service. Something more common for real world investments (>$50k). Question is how many subscribers are willing to use their VIP accounts for following a signal service without too much history. So that i something we might do when we have passed 12 months of public history and will then investigate with Nick for being hosted as an official Forexsignals signal provider.

                    Will put that discussion to rest now, because i donīt want to sound like i am arguing for advertising purposes. As you have said, trading will take the talking for itself


                    Wish you all a nice sunday.

                    Comment


                    • #11
                      You say there is no aggression while at the same time claiming someone is telling BS. I mean... come on

                      Tried to respond on your points, but it seems you wonīt be satisfied until there is a larger account in place and/or enough history in public. Chances are good that you will see both within the next year.
                      ASTA light master account - myfxbook link
                      Former ASTA light signal account with 12 months trading history - myfxbook link

                      Link to signal on simpletrader website

                      Comment


                      • #12
                        Originally posted by p3t3rjj View Post
                        Wow the mangina's are sensitive around here. As I said it was my opinion on how to spot a system that is risky, and you were top of the forum post list at that moment, so clicked on you and used your BS as an example. There is no escalation or aggression here, you were not the focus of the conversation. I really don't care what you do, you were just a suitable example. Your response just proves the point even further, and would be a good lesson for someone new to sniff it out.

                        Whatever your explanation is for the small account is nothing we haven't heard before here, same same but different. But in reality its usually some guy in hes moms basement trading hes unemployment cheque referring to himself as WE. You don't need myfxbook a few screenshots would help. And poor old Jeff gets himself compared to every new kid on the block, comparing their 5 minutes of trading history to hes 19 months. Sure he didn't publicly advertise hes history that I know of. But dropping 100k from day one said a hell of alot.

                        But again the conversation is not about you, you were just a convenient example.
                        A but rich calling him "sensitive" then saying everything he posts is "BS" don't you think? If I were a vendor I'd take offense as well as should anyone.

                        Whether ASTA has institutional backing or it is a guy in his mums basement as no doubt I'm sure you've seen from your extensive experience on this site, a huge trading account and a long history don't always amount to a safe and reliable signal. If you subscribed to every signal which met that criteria you'd have a very empty bank account by now.

                        If you don't like his signal that's cool. But don't abuse him and wonder why he chooses to defend himself. As it is I think his posts have been quite reasonable given the ease with which an anonymous user can attempt to pull his system apart with no evidence for support.

                        How can you say he wasn't the focus of the conversation when you clearly referenced his signal? How can you reference this signal in the "how to spot a risky signal" thread when the system unlike many other signals cuts losers quickly and always holds open profitable positions?

                        Comment


                        • #13
                          Originally posted by pearcey2 View Post
                          A but rich calling him "sensitive" then saying everything he posts is "BS" don't you think? If I were a vendor I'd take offense as well as should anyone.

                          Whether ASTA has institutional backing or it is a guy in his mums basement as no doubt I'm sure you've seen from your extensive experience on this site, a huge trading account and a long history don't always amount to a safe and reliable signal. If you subscribed to every signal which met that criteria you'd have a very empty bank account by now.

                          If you don't like his signal that's cool. But don't abuse him and wonder why he chooses to defend himself. As it is I think his posts have been quite reasonable given the ease with which an anonymous user can attempt to pull his system apart with no evidence for support.

                          How can you say he wasn't the focus of the conversation when you clearly referenced his signal? How can you reference this signal in the "how to spot a risky signal" thread when the system unlike many other signals cuts losers quickly and always holds open profitable positions?
                          Chill Percy, its 7am in Melbourne. Go grab a coffee then come back and reread what I wrote. You'll get it.

                          Comment


                          • #14
                            Originally posted by ProfBernardo View Post
                            You say there is no aggression while at the same time claiming someone is telling BS. I mean... come on

                            Tried to respond on your points, but it seems you wonīt be satisfied until there is a larger account in place and/or enough history in public. Chances are good that you will see both within the next year.
                            Sounds fantastic, but how about we stay on topic

                            Comment


                            • #15
                              Originally posted by p3t3rjj View Post
                              Chill Percy, its 7am in Melbourne. Go grab a coffee then come back and reread what I wrote. You'll get it.
                              Lol there's nothing in my post that not "chilled" I'm more than functional in the mornings and I completely get it

                              Still doesn't change the fact that you rip into a trader simply because he won't show you if he has any more money backing him and say he's being overly sensitive when he has every right to defend himself.

                              Reread my post peter. You'll get it

                              Comment

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