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I partially agree with you. Those metrics are not the best because they don't show the total risk. Risk (even partial risk) is hard to show because most (all?) systems won't track it. But annual tax statements are not enough because we are also trying to determine the statistical chance of long term profitability not just historical profitability. A trader can be very profitable for a few years and then blow up spectacularly because he never managed risk well. His historical risk adjusted returns will be poor.
Thank you Bubba1 for sharing with me someone who actually trades live real cash. I have always wondered is there any trader out there willing to show others what they are doing. To me it only makes sense to trade live and show your customers or viewers your trading if you selling them something.
If someone shows you 5 years of annual trading tax statements from 2015 to 2020, AND all of their trades during this period, AND provide you the performance metrics of all these trades, is this not enough to convince you with a high probability chance of not wasting time , energy , stress, and money to invest in this person to teach you how to trade?
What else would you want someone to show you? The performance metrics will show edge and drawdown.
If they provided all of their trades during the period then for sure you'd have all the information you'd need to make a decision, including how much risk they're taking on.
But I have never seen it. Not 5 years worth, and certainly not anyone trying to sell something.
This is really just about teaching people how to evaluate a strategy, because there's a lot of dirty tricks the charlatans are using out there that are very effective at convincing people. The biggest one I see is making money by taking on excessive risk. Strategies that fit this category would include strategies where your target is much closer than your stop (if there's a stop at all), doubling down on losers, or martingale strategies where you risk more and more even when you're losing. Such strategies can result in really high winrates, but risk catastrophic losses. I find this particularly common among combine traders. They'll get funded using excessive risk, and then blow the account later. I know some individuals that have been funded over 6 times!
Many probably stumble upon these kinds of strategies to protect their ego. You'll find that the narcissistic ones almost always do this sort of thing. They don't want to be wrong, and so they take on extra risk to avoid having to face the reality. However, it's also just a really easy way to develop a following on YouTube or to sell a service. To new traders it appears like you're winning all the time. You can get away with it for a long time too. Years even. When that bad day comes along it can just be dismissed as a mistake. The reality though is that the blowing up is an inherent property of a strategy that has no real edge.