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Here is a checklist i saved from a newsgroup. Credit goes to the author.
Subject:
System Evaluation
Date:
Tue, 17 Mar 1998 05:25:22 -0800
From:
Chris Jackson <chrisj@xxxxxxxxxx>
To:
"chrisj@xxxxxxxxxx" <chrisj@xxxxxxxxxx>
I've evolved an "interview" sieve process for evaluating trading
systems, basically my hands won't part with any money until a vendor
can answer a majority of these questions directly, honestly, without
evasion or obfuscation.
Even though several members of this news group are clearly sucessfully
(i.e. making money) trading with some kind of trading "system" or
"method", and some have even claimed that they successfully traded a
personally "modified" or customized version of that system for a while
and have also actually made money.
I am thusly extremely interested in purchasing/using a "system" or
"method". Nevertheless, I need to have the following questions
answered before I can make the purchase. I hope any potential System
Vendors can find the time to answer the questons fully.
Also, if more "newbies" and "old-timers" practiced this type of
interview process, less of these "con-men" and "hucksters" would get
away with the S*** that they do. If you do buy a "system" or "method"
without a proper answers to the following questions, then you get what
you deserve.
I thusly challenge any Trading System or Method Vendor to openly and
honestly answer these questions. Chances are less than 5% can actually
honestly answer the following questions without embarrassing
themselves, or revealing their system to be bogus, or faulty.
TIA
1.) Question number one What are the differences between your "System"
and other trading "Systems" or "methods"? Could you please briefly
explain the evolution & development of your product?
2.) Could you please describe the system generally? What type?
Day-Trader? Short-Term? Position? Long-Term? Trend Following? What
kinds of Technical Indicators Do you use? Gann? Fib? Moving Avg.
Stochastic? MACD? Bollinger? Williams? RSI? ADX? CCI? Is it truely
mechanical? What other types of methodology are used?
3.) Do you actually trade with this "System" or "Method" when you
trade? What system are you using today?
4.) How long have you been actually been trading with the "System" or
"Method"?
5.) How long has it been traded since any parameters were fixed or
"optimized"? Was the system "walk forward" tested? Over what period?
6.) Has it been "optimized"? How? How Many Times? How Often? Why?
7.) Are you willing to show me your personal brokerage trading record
(not a computer generated record) of trades using the "System" or
"Method"?
8.) What is the optimal amount of starting capital that the system
requires to operate? What is the minimal amount?
9.) What is the maximum draw down I'd have to expect? How did you
arrive at that number?
10.) What kind of System-side "Slippage" did you experience?
11.) What is the maximum risk per trade (note, this is different from
maximum draw down)?
12.) What kind of money management & risk management techniques are
incorporated into the system?
13.) What is the "Win/Loss Ratio"? How many consecutive Losses in a
row have you ever experienced? Can you show me a verifiable
documentation to prove your point?
14.) What is the average profit per trade? Does this figure include
commissions and slippage?
15.) Does it trade a broad basket, a particular sector, or a single
commodity? Can it be used for day trading and position trading? What
is the optimal time frame to use?
16.) Can you give me a list of users that are willing give comments,
recommendations, or references?
17.) Is it a "Black Box" system or is it an "Open System"? Can I
modify it or customize later on to suit my needs?
18.) How much after-sales support or coaching can I expect?
19.) What kind of money-back guarantee can I expect?
20.) Are you a CFTA certified CTA? Can you show me any CFTA Disclosure
Statements?
I hope you potential system vendors don't mind my asking all these
questions, The reason I'm asking is because I am seriously considering
purchasing a system!
Thank you for you cooperation,
Yours sincerely,
Tony Parker
A. N. Brabrook, Inc.
548 West 53rd Street
New York, NY 10019
t. 212-582-9120
f.212-582-9122
e. tgparker@xxxxxxxxxxxxxxxx
-=<(((kAtMaNdOo)))=-
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