The Proof of Fantastic Results

I'd like to draw an analogy to what seems to be a favorite topic which appears to split many discussions into 2 camps (perhaps 3 groups if you include those on the fence, the agnostics).

If I said to you that I clocked my Ferrari at 300 MPH on the I-5 would you believe me? Probably not, I certainly wouldn't believe it.

If, however, I showed you the citation that I received or more likely the newspaper article describing the trouble that I go into after being caught doing that you would probably have no problem believing it.

If I tell you that I took a $10,000 account and turned it into $1,000,000 over 1 year and am now selling you the system so that you can do it would you believe me? If so, what reason do you have to believe what I have said? You would (and should) want to see proof before buying the system.

This doesn't just apply to trading but almost any claim that anybody makes.

in his book wilt chamberlain claimed he had sex with over 1000 women during his life. how would you propose he prove that?

max

Lucky man!

I am not familiar with his book or with him but does he sell his book on the premise that he will let you in to the secrets of how to bed 1,000 women? If so, then the claim needs to be substantiated. Perhaps these 1,000 women accepted credit cards as a means of payment and he can show his credit card receipts or statements?

A search for Wilt Chamberlain led me to this wikipedia entry: http://en.wikipedia.org/wiki/Wilt_Chamberlain and this paragraph:

In his second autobiography, A View from Above (1991), Chamberlain claimed to have had sex with almost 20,000 women. This would have meant, on average, having had sex with more than one new woman every day of his life since the age of 15. Because of that, many people doubt his specific number, though few question the fact of his promiscuity.

back to the boring topic of trading.

what if the person doesnt make any claims of personal riches but sells his system for $5000 claiming only it will make money. and lets say you observe that moneymaking success in realtime every day for a couple weeks or even a month. you can ask for backup but since hes not making any personal claims what would you do or what should you do?

In this situation I would also back test the system rules that he/she is using to see if the system has worked consistently in the past or if this is just a run of luck that he/she is having.

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Originally posted by day trading

In this situation I would also back test the system rules that he/she is using to see if the system has worked consistently in the past or if this is just a run of luck that he/she is having.

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you dont get the rules unless you pay. all you get is what you see in real time. the trades but no detailed explanation why they are taken.

max

If the entries and exits are posted ahead of time in such a manner that you can also trade them while watching the calls and it's done over a long enough period (or you come back for several free trials) and the risk is small and the profits are consistent then it would definitely be worth considering the purchase of a system such as this. I would also read Fooled by Randomness at the same time for an explanation of how people can call the market like this without having a winning system.

Personally I would measure the results that I see over different market conditions (i.e. several free trials over a period of time) to ensure that this system is robust.

You raise a valid point Max but also a bunch of other questions at the same time one of which would be: Why does he not trade his system's calls? If you, the potential client, can trade his calls and make money during the free trial then why doesn't he/she employ someone to do just that?

lets keep this train of thought going as you originally outlined it.

if hes not making any claims its not really relevant why he is or is not trading right?

maybe hes the beneficiary of a massive trust fund and doesnt need the money or the stress of trading. or maybe he has other people in the room who are trading on his behalf but doesnt disclose that. or maybe hes one of these types i read about who can make great calls but psychologically or emotionally cant pull the trigger for himself.

so in this example the decision to pay or not rests with your eyes ears and gut since you cant get harder evidence based on the available facts.

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Originally posted by max

so in this example the decision to pay or not rests with your eyes ears and gut since you cant get harder evidence based on the available facts.

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In this (I assume hypothetical) example I would say that risking $5,000 for the system is reasonable. I am basing that statement on watching calls for 20 consecutive trading days in which each day shows a profit, the calls are ahead of the entries/exits, the entries/exits can be mirrored in real time.

In fact, if you traded the calls during the trial period you would probably be able to pay for the system from your profits. Perhaps that should be the sales pitch for a system such as this. For example: "If you had traded X contracts per trade on each of our calls from any of our free trials you would have made enough money to pay for the system and had change."

if everything goes as you state there is still the issue of getting fills at the entries/exits especially if your trading in simm mode where a fill wont happen unless price trades through your order but you cant hold that against the guru.

and i would never trade the calls during the trial even with the prospect of cleaning up because thats not why im there. if the method is as good as it appears there will be plenty of time to make money after i understand whats behind those setups.

and if i were operating a room like the one described i wouldnt use your sales pitch even though its darn good because past results dont guarantee the same thing in the future blah blah blah.

id be interested to learn how many people who read this thread would buy this thing if it existed as we described it. dont be bashful folks. cast your votes.

max the dream weaver

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Originally posted by max

pt is that a nay or ay vote whether youd buy this thing? if nay please explain why.

max

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Let's rephrase your question... your asking me: would I give $5,000 to someone that replied to an inquiry for records of past performance with a vague statement of the system having a "90 % accuracy" ?

What the vendor is saying is: I cannot provide reasonable proof, I have not prepared any type of formal trading records to back up my claims, so instead trust me and take my word for it, it's 90% accurate.

My immediate question is: what exactly does the phrase "90% accurate" actually mean ?

Here is my simple question for any vendor: why can't the vendor provide reasonable proof, a week by week or month by month non-proprietary track record ? What is the actual reason why ?

For example, the vendor could very easily maintain an excel spreadsheet table showing the actual performance of the service on a month by month basis. In January 2006 the system produced this profit or return on investment. Then provide that simple performance information to new customers. So why won't the vendor provide even that simple level of non-proprietary information about the service being offered for sale ?

....meanwhile over in the real world:
In order to obtain and hold a CTA license a trader must maintain very specific and detailed records verifying an actual trading history. The CTA is required by law to provide this non-proprietary performance information in the form of a disclosure document to new clients / customers. This is not some simulation from a computer program, or some other made up story, it is produced from independently verifiable trading records. A violation of this rule, will result in action (a fine and possible loss of the license) by the CFTC/NFA levied against the CTA.

So if all licensed CTA's maintain and provide a detailed non-proprietary trading history of their service to their customers, why can't Falcon or any of these unlicensed and unregulated advisory services ?