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Various old-timer members of the omega list have inveigled
me into posting this article. I wrote it and it was originally
published in a newsletter called _Club_3000_News_ (issue 98.02)
about nine months ago.
Club 3000 is, in my opinion, a tremendously valuable resource
for mechanical systems traders. Their email is club3000@xxxxxxxx,
their phone is (616) 623-8235, and their internet home page
URL is http://www.ison.com/club3000 . You should subscribe;
I do. And I have profited enormously from the info I've read
in its pages.
In January of this year, I went through my statements for the
previous 12 months, and I decided that I would take a chance
on being ridiculed, by revealing my exact trading results.
So I wrote the article you see reprinted below.
My goal is not to focus upon one particular system or one
particular method of betsize selection; rather it is to
say, "here's one person's results. It CAN BE DONE, I
know it can be done, because I DID IT." So don't send
me email saying "I am too lazy to look up Keith Fitschen
in the phone book or in Futures Truth or in TASC or in
Futures Magazine, so I demand you send me the following
information" --- because the particular details of this
one particular system are NOT the point.
The point is, vendors DO exist who give out real-money
account statements, and systems-for-sale DO exist that
generate profits in real-money accounts, and regular folks
like you and me CAN make money trading vendor-sold
mechanical systems. I know this is true: it happened to
me, I have one hundred eighteen thousand reasons to
believe it.
===============================================================
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Reprinted WITH PERMISSION from Club 3000 News, issue 98.02:
(mailed approx 25 Jan 1998)
I'd like to offer some words of encouragement to
Club3000 members: The little guy, the nonprofessional,
the part-time trader can make money trading futures
using 100% mechanical systems purchased from vendors.
I offer myself as a living example: In the 12 months
of calendar 1997, I made $118K in net profits
(a return of 87.8% on my trading capital), trading a
mechanical system I bought from a vendor who
advertises right here in Club 3000 News.
My purpose in writing this article is neither to brag
about myself nor to boost the sales of some vendor's
product. Instead, I'm writing to present some actual
real-time, real-money evidence that it not only can
it be done, it has been done, in real life, by a
regular guy, a non-professional. Many people are
eager to tell you this is impossible. It's even been
said by a Club 3000 member, Robert Miner, both here in
the newsletter (issue 95.04) and on the Internet website
he advertises in "The vendors speak" at the back. A few
excerpts from his remarks:
"The myth that a so-called mechanical trading or
investing 'system' may be purchased that will
provide consistent and significant profits over time
is a sad reminder that a significant portion of
the population has more money than brainpower..."
"I don't believe there has ever been a system sold to
the public that the purchaser has profited from over
a period of more than a few months. The relatively
brief period of profitability always seems to be
followed by consistent losses that wipe out any
accumulated profit in a short amount of time."
"They [systems vendors] know the trading system will
never perform to the level of their hypothetical
results. They know because the systems sold have
never actually performed in real-time trading...."
Discouraging, isn't it? Not only does it sound
impossible for regular folks like you and me to make a
profit, we're led to believe that only egotists and
suckers are naive enough to think otherwise. But I did
make a profit, using a system I purchased from a vendor.
Brokerage statements have been provided with this
article to corroborate the results.
1997 began with $149,841 in my trading account. Two
weeks into the year (on 1/15/97) I withdrew $15,000. I
finished the year with $253,284 in the account. That's a
net profit of $118,443 for the year.
{Math: (253-(150-15)=118K)} Return on capital was
87.8%. {Math: 253/(150-15)=1.87x} These are real-
money figures, including real rollovers, real commissions,
real fees, and real slippage.
My trading in 1997 incurred more commissions than a
"theoretical" analysis would predict. I switched
brokers in July, from a "Broker Assist" type of
account ($39/round turn) to a "Full Discount" account
($24/R.T.). This required extra trades (with extra
commissions and extra slippages) to close and re-open
existing positions, but still the year was satisfyingly
profitable.
My net account equity values in 1997 were:
12/31/96 $ 149,841
1/15/97 (withdrew $15,000)
1/31/97 $ 181,740
2/28/97 $ 237,543
3/31/97 $ 319,647
4/30/97 $ 293,402
5/31/97 $ 241,270
6/30/97 $ 194,022
7/31/97 $ 279,860
8/31/97 $ 223,839
9/30/97 $ 238,358
10/31/97 $ 268,751
11/30/97 $ 221,343
12/31/97 $ 253,284
Peak account equity for the year occurred on April
10th, at $335,146. Lowest subsequent equity was on
June 30th, at $194,022. Therefore my drawdown in
1997 reached a maximum of 42%.
{Math: (335-194)/335=0.42} Remarkably, my results
of 87% profits with 42% max drawdown, are exactly
as member K. D. Angle predicted more than 3 years
ago (in issue 94.14):
"... this 2-to-1 ratio of return to drawdown is a
very common occurrence in the vast majority of
trading programs ..."
Like many (most?) Club3000 members, I'm just a part
time trader. I work an 8-to-6 job, 40+ hours a week, and
trade futures in my spare time. When I come home from
work I turn my computer on, download daily data, run
my systems code, print out any orders that might need
to be placed the next day, and then I turn my computer
off. This takes about 15-20 minutes. Once or twice a
week I have to telephone an order to my broker;
counting this as 20 minutes, I spend a total of 120
minutes per week trading futures. I don't find it
excessive.
I trade the system on a portfolio of 25 futures
markets, drawn from four sectors: the energies, the
"softs," the currencies, and the interest rates.
Big winners in 1997 were Dollar Index, Japanese Yen,
Coffee, and Crude Oil. Big losers were Lumber,
Mexican Peso, and Unleaded Gasoline.
I purchased this system from its author and vendor,
Keith Fitschen of Beavercreek, Ohio, USA. I have no
affiliation with Mr. Fitschen except that I'm a
satisfied customer. He advertizes the system here in
the newsletter, as well as in Futures and
Stocks & Commodities. The ads contain the rarely seen
phrase "account statements available," a practice
I wish more trading system vendors would adopt. I've
sent for and received these statements, and they show
real-time, real-money profits over a 16 month period.
I imagine that the naysayers will dismiss me and
my results, but everything I've said is true. I really
did trade a vendor system for a full calendar year,
and I really did make 87% ($118K) in real-money
profits. It's not impossible: I did it. Others
can too.
Mark Johnson
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