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As an item for those interested in how realtime trading results are
sometimes generated by system vendors and even CTA's for purposes of
disclosure documentation:
If total volume on a portfolio is, say, 5.0 and the profitable account
verification is 2.5, this often means the account was "mirrored".
In other words, *two* accounts were opened by the trader, and for
each trade taken in one account, an opposite and off-setting trade
was taken in the other. Thus the trader is able to build a "realtime"
trading record, while only suffering the costs of slippage and
commissions. This isn't necessarily bad, as long as the "test account"
is clearly designated. Else the trader would be free to choose only
the profitable side. <g> I don't think this happened in LW's case, as
I doubt the contest organizers would have accepted the mirror.
"Notional" accounts run a small equity balance against a verified
"outside" source of capital. Let's say you have 100 K in trading
capital. You place 10 K in a trading account, and 90 K in the
bank. The Clearing house then allows you to trade the 10 K
account against the total available equity of 100 K. So, if your
drawdowns should surpass the 10 K mark, your account is still allowed
to trade. Yet, all profit ROA percentages are figured against 10 K.
If the drawdowns are small enough to fit the 10 K account, the CTA
claims the bloated ROA percentages. If the drawdowns exceed 10 K,
he claims the ROA percentages against the 100 K total available
equity. Sneaky, but it has been done.
These are examples in which even "realtime" results may be
manufactured or massaged. <g> Apologies for the digression
from the normal guidelines of list topics.
Walt Downs
CIS Trading
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