Bone brings up a good issue which is the types of verifications I believe a legit vendor should produce and the type most will not produce. I've always been consistent in what I've claimed that an educator should produce, and I've stated I want to see either:
A. A third party audited hypothetical record
B. A real money track record
Now, what TradingAdvantage sent to me was what most scam vendors send out: a spreadsheet that states how much they made without any verification. Again the key point is I don't trust results on a random website. Okay that's the key point is that I don't believe its good business. Most of these results are also very incomplete and leave a lot of questions too.
My trades at C2 while simulated are placed in real-time, they aren't backtest, and most importantly, I can't go back and make stuff up or change my calls in hindsight. You can see exactly if I were using markets or limits and then get some idea of how realistic my method would be for you. It also shows the open trade drawdown and other very important metrics.
This is completely different then a spreadsheet which claims so many points were made per month. It is completely different and a lot of beginners may not understand how important that difference is.
Really there are a few kinds of results, and I want to share those for your benefit:
A. Website or random statements produced by vendor. Worthless
B. Backtest. Very useful but not enough.
C. Audited third party hypothetical. Good to very good.
D. Real money verified/audited. Best. Actually C is in some cases better. The reason that D is good is because they know if they lie about this then they break the law. However, several have been caught lieing In that respect, C is better because you know what you're dealing with.
Ideally, you'd get B, C, and D. That would be the ideal case. B would tell you historically what you are dealing with, C. would demonstrate it worked in real-time, and D. would confirm that there wasn't any slippage or other limitations.
Also, what Bone has stated is misleading because since April I've taken every trade in either of my systems with real money on the line. He is correct in that I've never placed a futures trade but I've had real money on the line on every single trade using the spreads at Nadex. My journal is here for those who care.
I want to make it clear that I don't have anything against people on simulated accounts and teaching provided that they make it clear they trade simulated, have sounds reasons why they aren't trading with real money, and they articulate that well. Provided they are trading in a disciplined and realistic way then it really is a moot point if they could trade as well with so call real money on the line. I'd rather follow a sim trader who used skill and discipline then a trader like Rob Hoffman who averages down until his account triggered a margin call
Bone has this tendency to take pot shots at people and do underhanded things. In this case, hopefully I've elucidated my logic and it makes sense.
One other thing that plays into this is what I like to think of as a hurdle ratio. My trading systems return about 50% to 120% historically per year at a maximal leverage. This is a great return but I feel would take significant risk in seeking these returns. My system uses a huge stop in the order of 30-35 points or around $1500. This means that there is a larger hurdle for me to trade this system. I take every trade now using the vertical spreads. But, I could see someone not wanting to trade my system even though it is profitable and there are some system developers who don't trade their systems.
You see there is this concept of the hurdle. Even as risky as my system, I'm always trying to get my money in on it. It can be difficult to get find the spread that allows me the leverage I need. But my point TradingAdvantage claims to do 120k on a 5k account using a 2 point stop.
The hurdle ratio is so low that it is completely unbelievable that they wouldn't trade this with a real money account if they had any way too. Now, we know they have money and they claim trade with real money accounts too. The concept is as the hurdle ratio drops then the amount of evidence required goes up. This is a very concept and actually helps to explain why my claims have a much higher veracity then most other vendors claims. Another thing that makes it unbelievable is that if they were to audit their real money results then they would have a very powerful sales tool and given that, again it just doesn't make sense that they wouldn't do that. Another red flag, is they are fine with telling how Larry made a real 2 million in the market right. So, why not show they are doing today. I want to make it clear:
I belive what they claimed is complete BS.
Again I never claim to have any capital. I've been a primarily a simulated trader and while my systems and methods are hugely profitable and my ability to predict is probably among the best. The hurdle ratio is still rather high. If I claimed to do 120k per year on a 5k account with a tiny stop then the hurdle ratio would be so low that I'd agree that I'd need to produce real money results, as well. Because with 5k, I can come up with 5k and make 120k then even I could do that. So, there wouldn't be rational arguments and with such a small stop again that reduces the risk. With my system, even though I could probably wing on a 5k account then I would still be at risk of blowing out the account and I wouldn't be able to take my discretionary trades which I highly value. Obviously, I'm always trying to improve and certain I'd like to believe it was possible to do these claims. Hope is good but sound logic is certainly the deciding factor.
Hope this helps.
Quote from bone:
http://www.elitetrader.com/vb/showthread.php?s=&action=&postid=3074999
Lucias is in fact a trolling hypocrite who stealth markets his trading system on C2, which is entirely simulated. By his own posts, he admits that he has never traded live futures. By his own talking points, what he is peddling should be illegal according to his own logic.
