Test (and blog) End.

Real Time System Test Summary:

Total Number of days traded:    20

Total number of winning days: 14

Total number of losing days        6

Percentage of winning trades 52%

Total profit in 20 days based on minimum spread bet size of £1 per point £1,246

I was asked to test this system method in real time for a full four week period. Not knowing that August would be one of the toughest and most volatile periods on record... Read article 

Volatility is the enemy of traders, yet perversely, many people are enticed by the wild market swings, blissfully unaware that far from the opportunity it may appear – volatility is the destroyer of novice trading accounts, providing windfall profits only for the spread betting firms.You only need to read their annual reports and accounts to see evidence of this.

However, the results of the system test are in ; 14 days out of 20 were profitable with a win rate of 52%  Over £1,200 profit from just £1 per point in most cases. For any method to have fared so well in such a volatile period is really quite extraordinary. The benefits of trading a mechanical approach couldn’t be better illustrated. Comparing the results in the test period to previous months/years it can be seen that the results were not unusual (within expected levels of deviation given the relatively small sample size) The win rate and rate of return for the system were only marginally down on the historical performance if judged  on a level stakes basis.

Adjusting the order levels to account for the spread was the only real difference between trading the method via spread bets compared with direct access and trading contracts.  The tax saving benefit however is considerable.  As the system was so exact at finding the key inflection points in the market, it was important to adjust the order level for the spread (as covered in the previous post) My personal "fat finger" was setting the orders in the early hours while packing to go on holiday, which serves as a reminder to measure twice and cut once!

The system test was performed at the minimum of just £1 per point, with the exception of a few trades at £2 per point to keep some level playing field. This was to keep it simple and to make it easy to see the overall number of points gained or lost.

However the system signals are in reality only one part of the overall method I had access to. The trading method tested originated in Japan and employs a proprietary position sizing algorithm which apportions the amount risked in monetary terms to the expected value and volatility of each trade opportunity.

The "proper"  way to trade this system is to set aside a bank roll and stake each trade at an amount per point based on the algorithm. To illustrate the difference, below is my first trading week stepping up to using this correct money management. I set aside £5,000 from my current spreadbet account on which the system worked out my bet sizes.

It seems the good run I was enjoying in August has continued as my £5,000 pot has nearly doubled in the first week! Below is a screen shot of the trades I made each day this week. You will note the varying amounts staked now based on the apportioned position size as advised by the method.

The  system's signals -giving new trades each day- combined with the proportional money management algorithm looks incredibly effective. I shall carry on trading my account using this method (why would I not!), but not this blog unfortunately - I have gone from tester to "proper user" and as such I can no longer share the signals advised.

Transactions using the systems signals and now the correct stakes:

This blog concludes this 4 week test period. I hope it was of interest to see a systematic approach to trading with real money on a real time account... in real time!

I wish you the best of opportunities.

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