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At 06:39 PM 3/25/98 -0600, Peter Aan wrote:
>I believe that Futures Truth can be of great benefit to a trader wishing to
>purchase a trading system. Experienced traders know that a huge percentage
of >material offered is of low quality,...
That would be an understatement.
This would include at least 97% of all systems tracked by Futures Truth,
including several that get into the so-called 'top ten', the reason being
the general quality is really quite bad. Check the published drawdowns
yourself in the 'top ten' systems and ask yourself how many of those systems
will end up really acceptable to any new or experienced trader. Ultimately
very few in my opinion.
I think Tom Cathey hit the nail on the head.
>Here is how a trader can benefit most from Futures Truth, in my opinion:
>1. Avoid systems that will not allow tracking by FT. If the vendor really
>expects the system to be successful, he will welcome the free attention.
The very best systems are not tracked by Futures Truth. Some for good
reason. When John Hill owner of Futures Truth started to manage money as a
professional fund manager a few years ago, in addition to being the
'independent' systems testing service, he took a lot of criticism at the
time, lost a lot of credibility and admittedly put himself a clear conflict
of interest situation. But he had to do it because at the time he
reportedly made too little profit with the good testing service he provided.
The very best systems are never disclosed for obvious reasons. Those who
might have had good systems at the time and not wanting to disclose the
logic, would not agree to have the system tracked by John Hill, to avoid
proprietary disclosure, so what you were generally left with was the rest,
who didn't care anyway, as long as they got the free publicity. Because the
quality is so low, poor systems regularly end up in the 'top ten' ranking
and the vendors, ad media, brokerage community, all feed off of that very
misleading ranking.
Futures Truth standings have been sorely abused over the years by many
system vendors, many brokers, and fraud artists. Many of the ads you read
regularly quoting ranking by Futures Truth even now, are a complete farce on
the newbie.
>2. Look for systems that have made multiple appearances on the top ten
lists. >One or two appearances might be a fluke or the result of unusual
market action. >Donąt expect any method to make the top ten every time, but
multiple >appearances should be cause for further investigation.
This is a reasonable 'starting point' for further investigation, but that's
all it is.
>3. After you have found a few candidates, you might have FT run some
special >reports for you.
George Pruitt is knowledgeable and their services I'm told are reasonably
priced, so it likely is good advice if any of the systems look promising at all.
Like for example, on the recently promoted ETS system, have George Pruitt
test the black box logic of the S&P daytrader back five or ten years on
daily and intraday data. Before you buy it OR trade it.
>4. Consider the general approach of the system. The trader that craves
action >wonąt be satisfied with a long term system, even if profitable.
Make sure you >can live with the system.
I suggest that most people with any trading experience at all would pass on
over 97% of all the systems tracked by Futures Truth, because the
performance is so poor.
I'm not suggesting here that that includes Peter's system, and I know that
Peter Aan has a very enviable real time track record as a CTA, but IMO the
general statement applies to at least 97% of all the junk tracked by Futures
Truth.
In my experience watching Futures Truth for about 6 years, I came to the
exact same conclusions Tom Cathey reported here and believe they need to be
carefully considered by prospective users.
>5. Talk to the vendor and ask for a disclosure document or other
verifiable >track record of actual trading.
And if he is able to produce it and prove good performance, expect to pay
something decent for it, because it will be rare.
>6. Donąt expect to buy the holy grail.
The holy grail in trading doesn't exist. The sooner traders realize that and
stop looking for it, the sooner they will stop losing money on poor systems
and to unscrupulous vendors.
Michael Paauwe
mpaauwe@xxxxxxxxxx
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