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Ron Augustine wrote:
>
>
> Do you have any objective, verifiable proof that backs-up your statements?
> If so, would you post some references to it?
>
> Otherwise, are members of this forum expected to believe your claims just as
> you would have them reject the claims of others?
> _____________________________________
> At 02:39 PM 6/21/99 -0700, you wrote:
> >i've seen many traders blow out their accounts after purchasing or leasing the
> >latest system de jour which received positive reviews in prominent
> >trade rags such as futures and tasc. newbies, bless their dumb naive
> >hearts, actually believe what is written about these systems and
> >essentially mortgage the farm to throw 5-10k for an curve fit piece of
> >fecal matter that explodes when it is traded for any length of time.
> >this sad scenario repeats itself year after year
A few months after reading Ken Roberts' course (
http://www.kenroberts.net ), I subscribed to Commodex and opened an
account on borrowed money. If you havent' read KR's course he teaches
that 90% lose because they simply trade off of the news without a plan.
His implies that the 10% winners are winners bec. they use technical
analysis and he teaches a simple, somewhat vague plan for trading, with
no money management mentioned at all. The idea that a lot of the 90%
losers are also trading with TA and maybe even with a plan (just not a
good one), isn't entertained. I received Commodex's brochure and it had
great returns (100% on margin?) and said the greatest drawdown since
1959 was 40%. I figured that's 30+ years, lets assume the worst won't
happen right away and so decided to use 30%. I picked a portfolio
encompassing margin that added up to 70% of my account. I risked only
5-7% per trade but still, I stopped trading about 9 months later at
-75%. Altho their are some problems with its published track record
(rel. to the stop out prices), Commodex appeared to have a profitable
year that year, as usual, *at the end of the whole year and trading all
commodities*.
My account history is one single point of objective fact, that someone
was silly enough to proceed in the "mortgage the farm" manner after
reading a terrible "course" and looking at a brochure. It seemed like a
great way to be debt free (paying off educational loans and charge
bills) within a few years. It's turned out a hell of a lot different.
A significant portion of the blame rests on me for not being prepared.
I was overconfident out of ignorance, having never invested in anything
other than a single CD. However, had the KR course pointed out the
risks, and Commodex made a bigger deal about capital requirements, maybe
I would have either hesitated to proceed, or would have kept a larger
reserve for drawdowns.
You don't read many midsize accout holders talk about their success or
failure with commercially available $1-3k systems. My *guess* is that
quite a few start a system with insufficient idea about what level of
funding it really takes to trade the system. I suspect many of these
are people who have been reasonably successful financially and that they
are only trading a portion of their assets. My belief is that trading a
subset portfolio of a system is particularly perilous, bec. even if the
system is carefully underoptimized the subset probably adds another
layer of optimization ("these 4 trade well together is actually
curve-fitting !!?). I suspect a lot of people who buy multi-commodity
systems actually trade much smaller subset and have trouble. However, I
have no evidence for this.
I do participate on a number of bulletin boards and can say more
certainly about small accounts. I believe small account holders are not
buying $2500 systems out of Futures. Read the bulletin boards and you
will see people who have enough trouble paying for a $100 chart
subscription. They are 'saving" enough money to trade, or to re-fund
their account. They may not be going as far as borrowing $, but it is
pretty unmistakable that this is not a small portion of their
assets/savings. But they are buying books, after stumbling , the first
(or second..) time and learning. Some are following the gurus on that
particular board, but others are developing their own system. In some
ways, they may learn quicker than folks who can buy the 2K system of the
month. However, the low level of capitalization they start with will be
a big hurdle.
Where am I? Tiny account. Developing own system. Have not backtested
it near enough in part due to laziness and part bec. I have not gotten
the several indicators and rules put together into a program (and it
needs a couple uncertainties plugged in the rules). Very little
inclination to buy a system. I now view buying a system, if I could
afford it, like I would buying a book. Not to trade, but perhaps to
pick up some ideas from.
It is not my point to disparage Commodex. In fact, altho a low %win
system, it is probably profitable in real time, with a long running
track record (just not as profitable as they say). They actually make a
brief effort to help you pick a portfolio, suggesting 33% of acct., a
standard that might have worked for me. My point is that I do believe
that there are people who read the brochures, start trading without
really knowing enough, and realize that latter fact after substantial
sums are gone.
Altho I used to think registration was the answer, I am glad the court
rule the way it did. So now, what can the NFA or CFTC do, without
infringing on free speech to alleviate the problem we are talking about
- the ads and literature promising too much with too little about the
risks or about the real requirements needed to trade the system? Or is
there nothing the orgs can or should do?
conrad bowers
(bulletin board refs:
http://futurewisetrading.ehosts.net/eshare/server?action=61
http://tfc-charts2.w2d.com/forum
http://www.commoditycafe.com/cgi-bin/bboard.pl
http://softradeinc.com/disc1_frm.htm
http://www.futuresource.com/reg/talk.shtml
http://www.marketforum.com
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