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Someone is giving away, for free, trade secrets and untold wealth? Get
Real. (not you personally, Robert)
robert.cummings@xxxxxxxxxxxxxxxx wrote:
>
> Problem I have with this whole deal is how nicely wrapped it comes. He
> posts this about every other couple of months. This is the second or third
> time I've seen it. How convenient the post its accompanied by the venders
> website but perhaps thats normal. Seems fair a couple of grand for a
> $100,000 return in a year not a bad deal. Think what you will and do what
> you might but I see red flags here. One thing I have not seen is anybody
> else other than Mr. Johnson make confession of success using this system. I
> am positive they would use such people who bought this system if they were
> available. So before I would buy into something like this I would have to
> have further testimony from the systems past users. If somebody made me
> $100,000 for a $4,000 dollar investment in a year. I would be very anxious
> to tell anybody wouldn't you so where are these joyous happy people. Not
> saying there not around but like I said if they were I feel they would use
> them and they haven't. This is scam IMHO. For example lets do a poll on
> this list right now. Mr Johnson says "Various list readers have been
> requesting that I post this
> article for quite a while." Well list members, readers have you been asking
> him to post this? Please respond and tell us if you did.
>
> Robert
>
> At 08:46 PM 7/10/00 -0700, Mark Johnson wrote:
> >Various list readers have been requesting that I post this
> >article for quite a while. I wrote it and it was published
> >in a newsletter called _Club_3000_News_ back at the
> >beginning of the year. Six months have passed since it was
> >originally printed and sent out to Club members, and so
> >I've recently sought and gotten the Editor's permission
> >to reprint it here. The Club's URL is http://www.club3000.org
> >and subscriptions to their newsletter are very reasonably
> >priced; click over to their website and check it out. -mj
> >____________________________________________________________________
> >
> >
> >(Reprinted, with permission, from Club 3000 News
> > issue # 2000.01, dated February 18, 2000)
> >
> > >
> > > Vendor system, real profits for three years -Mark Johnson
> > > -----------------------------------------------------------
> > >
> > > I bought a futures trading system from a vendor who
> > > advertised it here in Club3000 News, and I've been trading
> > > it in my real-life, real-money brokerage account. For the
> > > period 12/31/96 to 12/31/99 (i.e. for the three calendar
> > > years 1997, 1998, 1999), the system has produced net profits
> > > of $546,762 in my account, including commissions, slippage,
> > > vacations, rollovers, and human mistakes. Starting from my
> > > initial capital, that's a compound annual growth rate of
> > > 71.6 percent per year, for three years. Year by year
> > > results were as follows:
> > >
> > > Net Return Worst
> > > Year Profits on capital Drawdown
> > > --------------------------------------------
> > > 1997 $118,443 87.8 % 42 %
> > > 1998 $102,619 41.5 % 33 %
> > > 1999 $325,700 91.5 % 39 %
> > >
> > > (I've sent copies of my brokerage account statements to the
> > > Editor of Club 3000 News, to authenticate and validate these
> > > results.)
> > >
> > >
> > > I want to encourage other Club3000 members that it truly is
> > > possible to make money trading 100% mechanical systems
> > > purchased from vendors. I ITALICS{know} it's possible,
> >
> > > because I've done it myself, three years in a row. My aim in
> > > writing this article to isn't to brag about myself, or to
> > > boost sales of some vendor's product. Instead, I'm reporting
> > > my profitable results to show that not only ITALICS{can} it
> > > be done, it ITALICS{has} been done, in real life, by an
> > > ordinary citizen. A regular guy who works 40+ hours a week
> > > in a normal job unrelated to investing or futures or
> > > finance, and who trades commodities on the side, in the
> > > evening.
> > >
> > > Plenty of people will scream at you that this is
> > > ITALICS{obviously impossible.} It even appears in the
> > > advertisements right here in the Club3000 newsletter: "Don't
> > > become another losing systems junkie" says the ad, and the
> > > WWW site it promotes contains a Trader Education tutorial
> > > which claims "... systems sold have never actually
> > > performed in real-time trading ..." Well, I present my own
> > > real-money, real-time trading results (above) as a
> > > counterexample.
> > >
> > > When I began to investigate futures as an investment/
> > > speculation vehicle, it took me quite a long time to find a
> > > trading approach that fit my personality. Eventually I
> > > discovered what was right for me:
> > >
> > > * I need to use a 100% mechanical trading system, to
> > > eliminate my own (very poor!) subjective judgement
> > > from trading.
> > >
> > > * I need to use the exact same system and the exact same
> > > system parameter values on ALL markets that I trade.
> > > Otherwise, I become nervous that I may have "overfitted"
> > > the system to past history.
> > >
> > > * Long-term trendfollowing suits my personality. It produces
> > > large profits (and large losses!) per trade, making
> > > commissions and slippage less of a life-or-death issue.
> > >
> > > * I need to research the system ITALICS{myself}, in
> > > computerized historical backtesting. I found that I am
> > > unable to "pull the trigger" unless I've run a huge battery
> > > of historical backtests myself, and spent hours pondering
> > > the results.
> > >
> > > * I need to trade the mechanical system's entry and exit
> > > signals, with a betsize selection algorithm (some books
> > > call this "money management") that trades more and more
> > > contracts as my account grows larger and larger.
> > >
> > > * I decided that I probably wouldn't be able to emotionally
> > > survive an equity drawdown bigger than 40 percent; I'd
> > > probably panic and stop trading. So I chose a betsize
> > > selection algorithm that produced less than 40% drawdown in
> > > historical backtests, with the mechanical system.
> > >
> > >
> > > Remember, this is just me. Each trader is different, and
> > > what's right for me might be exactly wrong for you. But I
> >
> > > found that when I adjusted my trading style to align with
> > > ITALICS{my} personality, I started achieving good results.
> > >
> > > I purchased the mechanical system from the vendor, and spent
> > > a year backtesting it on a variety of markets and using a
> > > variety of betsize selection algorithms. I also telephoned
> > > the vendor to ask to see brokerage statements from trading
> > > the system with real money. He faxed them to me that same
> > > evening. Regrettably, BOLD_ITALICS{very few} system vendors
> > > give out account statements, which might make you wonder
> > > whether they're hiding something.
> > >
> > > Since that time, the vendor has gotten a Web Site (who
> > > hasn't?) and has scanned in his brokerage statements so that
> > > visitors can study them for themselves. The web address is
> > > http://www.trade-system.com .
> > > I hope other system vendors will adopt this practice soon.
> > >
> > > After doing all this backtesting and studying, I decided to
> > > trade the system on a portfolio of 25 futures markets,
> > > using the exact same system and the exact same parameter
> > > values (namely, "80" and "2") on all markets. I decided to
> > > trade the currencies, the energies, the softs, and the
> > > bonds/notes/interest-rates.
> > >
> > > I also decided to use a betsize selection algorithm that
> > > risked a percentage of my total account equity on every
> > > trade. But this percentage is ITALICS{not fixed} -- it
> > > varies as the account equity fluctuates. The risk-versus
> > > -equity curve for my betsize approach is shown in Figure 1,
> > > and the math formula behind the curve was presented in
> > > Club3000 News #99.04.
> > >
> > > note: The curve of Figure 1 was generated in Microsoft
> > > Excel, and may be viewed or downloaded from the web, at
> > > http://www.mjohnson.com/plots/fig1_2k01.xls
> > >
> > > Previous articles have detailed my 1997 trading results (see
> > > Club3000 News #98.02) and my 1998 results (#99.02). In
> > > calendar 1999, my account equity peaked at $788,750 on
> > > Sept. 23. The lowest subsequent valley was on Nov. 5, at
> > > $481,782. Thus my worst case drawdown in 1999 was 38.9
> > > percent {math: (789-482)/789 = 0.389 } . I started the
> > > year at $355,903 and ended it at $681,603 so my account
> > > grew 91.5 percent in calendar 1999.
> > > {math: (682-356)/356 = 1.915 }. Here is a table of my
> > > account equity values for the three year period:
> > >
> > > ..................................................
> > > 12/31/96 $149,841 06/30/97 $194,022
> > > 01/15/97 (withdrew $15,000) 07/31/97 $279,860
> > > 01/31/97 $181,740 08/31/97 $223,839
> > > 02/28/97 $237,543 09/30/97 $238,358
> > > 03/31/97 $319,647 10/31/97 $268,751
> > > 04/30/97 $293,402 11/30/97 $221,343
> > > 05/31/97 $241,270 12/31/97 $253,284
> > > ..................................................
> > > 12/31/97 $253,284
> > > 01/30/98 $306,979 07/31/98 $206,376
> > > 02/27/98 $283,581 08/31/98 $328,982
> > > 03/31/98 $289,500 09/30/98 $443,173
> > > 04/30/98 $248,353 10/31/98 $390,351
> > > 05/29/98 $214,811 11/30/98 $336,843
> > > 06/30/98 $223,702 12/31/98 $355,903
> > > ..................................................
> > > 12/31/98 $355,903
> > > 01/29/99 $331,508 07/30/99 $646,242
> > > 02/26/99 $459,914 08/31/99 $717,237
> > > 03/31/99 $510,545 09/30/99 $735,686
> > > 04/30/99 $583,033 10/29/99 $537,519
> > > 05/28/99 $588,308 11/30/99 $634,698
> > > 06/30/99 $675,430 12/31/99 $681,603
> > > ..................................................
> > >
> > >
> > > Since the system follows long-term trends, it holds winning
> > > trades a relatively long time; 6 months is not uncommon.
> > > So I do a lot of rollover trades in addition to system-entry
> > > trades and system-exit trades. These increase the total
> > > commissions and slippage I pay.
> > >
> > > For example, the system signalled to go long Crude Oil on
> > > 11 Mar 99, and I bought 8 contracts of the June99 crude.
> > > I rolled this position over to the August crude on 11 May,
> >
> > > using a spread order ("Buy 8 August crude and sell 8 June
> > > crude, as a spread trade, at market"). The system remained
> > > long so I rolled the position again on 12 July, moving from
> > > August to October crude. The system remained long so I
> > > rolled again on 13 September, moving from October to
> > > December crude. Finally the system signalled to exit on
> > > 11 Oct 99, and I sold my 8-contract position. Even though
> > > this was theoretically a single trade of 8 contracts, in
> > > real life I executed 4 round-trips of 8 contracts each, so
> > > I paid 32 commissions at about $25 each. Total slippage
> > > (actual vs. system theoretical) was $1840 on this 8-lot
> > > position. In theory the system made $58,560 on its
> > > 8-contract position. In reality, I made $55,920. And
> > > $2640 was lost to commissions and slippage.
> > >
> > > I'll call the four individual pieces of that one Crude Oil
> > > trade "legs": there was a leg when trading CL99M, another
> > > in CL99Q, another in CL99V, and a fourth leg in CL99Z. The
> > > account book in which I keep my trading results tabulates
> > > "legs" of trades (since they are individual round-trips).
> > >
> > > Looking over my records for the years 1997, 1998, and 1999,
> > > the mechanical system generated a total of 507 individual
> > > trade "legs"; round-trips that represent either a full trade
> > > or a portion of a trade that lasted so long it had to be
> > > rolled over. I would suggest that 507 legs is a
> > > statistically significant number, for a system that uses the
> > > exact same logic and the exact same parameters on all trades
> > > in all markets. I would also suggest that the system's
> > > favorable trading results for three years in a row, across
> > > 507 legs, are not merely due to chance alone.
> > >
> > > In summary: I figured out a trading approach that suited my
> > > personality, purchased a 100% mechanical trading system from
> > > a vendor, carefully ran it through lots of backtests, and
> > > traded it for three years. The system and I were profitable
> > > in all three years, yielding a compound annual growth rate
> > > of 71.6 percent per year (net profits of $546,762). It's
> > > not impossible: ITALICS{I did it}. Others can, too.
> > >
> > > Editor's note: documentation provided.
> > >
> >
> >
> >--
> > Mark Johnson Silicon Valley, California mark@xxxxxxxxxxxx
> >
> > "... The world will little note, nor long remember, what we
> > say here..." -Abraham Lincoln, "The Gettysburg Address"
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