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What's wrong with this picture:
A perfect stranger wants to make you very wealthy by selling a
no-muss, no-fuss trading system. No hard trading decisions to
make, just slavishly take every signal and retire in a few
years. The seller even has the back-tested data to "prove" it.
How can you lose?
Here's an idea to quickly determine if a black-box "system" is
guilty of using hard-coded dates to support its back-testing
claims:
1. Get the historical data that the vendor used in his sales
pitch. For example, if he's peddling a "Bad News Bears
Bond" system that made uncanny trades in 1994, get your
hands on that EOD data.
2. With the charting tools that you have at your disposal,
convert the 1994 data to its ASCII format.
3. Do a Web search for a site that has perpetual calendars.
I found one at:
http://calendarhome.com/tyc/yg.html
For this example, 1983 had the same calendar as 1994.
4. Edit the ASCII data so that the year field is "83".
5. Try to duplicate the vendor's claims with the edited data.
If the signals don't seem to look so good, return the "system"
to the vendor. Otherwise, your trading account won't look so
good either. If, on the other hand, the "1983" signals look
just as good as the 1994 signals, wait patiently for the 1994
calendar to repeat in 2005. Then trade the hell out of the
system and make a fortune!
I hope I made someone laugh.
Have a great day!
Andris
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