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When trying to analyze whether a promotional ad for an investment newsletter or a market timing investment trading system is worthy of investigation, the following questions should be asked:

Does the strategy have a track record? Some promoters do not release their track records because they say 'we used to do a track record but subscribers got upset if the strategy lost money when they subscribed even though it made money over a yearly period.' That may also be true but it is also part of the game. Real time means that the trading signals that were used to produce the track record results were actually generated at that specific moment in time. The hardest thing to detect on the web is when you're being conned about a hypothetical track record because there is no real way to tell when a web sites track record was edited deleted or revised.

When trying to analyze whether a promotional ad for an investment newsletter or a market timing investment trading system is worthy of investigation, the following questions should be asked:

Does the strategy have a track record? Without this you are really granting your emotions to be in play. All of us want to feel that if someone says something it must be true. Yet the sad fact is the truth is probably just the opposite. Most ads and promotions are put in print for self interests first, and all else second. One has to view something on the web with a skeptical eye. The minimum that an investment strategy should give you is a previous track record. The longer the track record is the better. Something that has worked for a matter of months is usually not long enough in the trading world to be considered successful. Some promoters do not release their track records as they say that “past performance is not an indication of future results”. This is true but nothing else but no performance is not an indication of future results either. Some promoters do not release their track records in that they say “we used to do a track record but subscribers got upset if the strategy lost money when they subscribed even though it made money over a yearly period.” That may also be true but it is also part of the game. Subscribers can not expect to make money from day one when trading a long term strategy. However, that should be self evident in the track record. And some promoters do not release their track records simply whereas they don’t have one or they have a bad one. It’s as simple as that no matter what they say.

Is the track record that they are promoting in real time or was it simulated in a computer based on past data? What does this really mean? Real time means that the trading signals that were used to produce the track record results were for real generated at that specific moment in time. In reality. Most track records on the investment web sites are not real time even when they say they are. Even if they did not use a computer and it was done by hand, if the data taken from the last five years but the web site is only a year old then it can’t be so. Why is this so important? being trading is not trading if human emotions are removed. No greed, no complacency, no panic, no hysteria. as good as all computer-generated trading programs fail miserably when literally implemented whereas either the data was too short a time period or the human factor was ignored. That is the human that input the data did it without human emotion. I once had an inseparable friend who told me he had a system that returned 80% per month for the last 6 months. He said he implemented it 6 months in real time. I asked how much he had invested in this strategy. He said nothing insofar as he was paper trading. I said that there is no such thing. He proceeded to tell me what paper trading was. I replied that I knew what he thought paper trading was but it is not trading considering when you paper trade your emotions are not in play. Human greed and ego has a way of making you credit something to be real without looking objectively at the data. But once commonplace real money is at risk the complexion of the situation dramatically changes.

How can you tell if the track is in real time if they lie at hand it fellow in real time? This is not frequently easy but there are some simon-pure tell tale signs. If it is a short term system that risks very little and trades often, say 10-50 times per month. Yet it has an 80-90% trade success ratio, which is most impossible statistically. Most day traders and position traders are doing well if they are winning 40-50% of the time. If they risk more and do not use tight stops, then the win loss ratio goes up but the size of the drawdowns or the size of the largest loss has to go up. Longer term trader may have a slightly reformed win loss ratio but only if their risk is also larger. To make a general statement, the larger the win loss ratio is the more I would be skeptical.

What if the track record is a set-up of partly historically back tested signals and partly real time signals. How should I analyze that? The first thing to look at is if the win loss ratio has deviant dramatically over the track record time period. For example, if it is a 5 year time period, and the promoter claims that the trade signals went live 2 years ago yet the win loss ratio assimilated dramatically only 6 months ago, beware. The hardest thing to detect on the web is when you’re mortal conned at random a hypothetical track record insofar as there is no real way to tell when a web sites track record was edited deleted or revised. Some web sites use an independent tracking site but there are no real ways for a consumer to know other than that.

I hope that the previous ideas will help to determine fact from fiction in the world of investment newsletter promotions.

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