Trading Tigers + Data Mining

[Nick Radge]

Some of you may heard of the Trading Tigers service, It’s basically all data mined trades on the Share Price Index Futures. Trade setups include things like the market rises the day prior to Melbourne Cup etc etc.

Interestingly here is their latest ‘update’, i.e. their data mining luck ran out and they needed to find ‘new improved’ setups.

This is the exact same process as Brent Penfold over at Index Trader goes through. I think he’s in his 3rd or 4th iteration of systems.

Anyway, here’s what Trading Tigers has to say (and I think they should use a bar graph for the equity gain each year)

[MichaelRodwell]

Re: Brent Penfold’s systems… He reports 30+ years of results for some and implies the setups he uses are persistent and haven’t changed.

[TimothyStrickland]

Nick,

We had a conversation the other day about someone trying to sell me their idea about giving them money so they could have a trader make more money. I did more digging and found out how they came to their stats.

They had less than 4% drawdown. 68% Winrate and they had an average winning trade made 52k, average losing trade made -74k!? but they only had 2 consecutive losers ever in the entire trading history and 9 consecutive winners.

The numbers made no sense, come to find out they were fudging the numbers of course. What they were doing was only counting trades that were currently in their drawdown parameters but not counting all the trades that they haven’t closed that were in a serious losing position. They were waiting on trades to “come back” from a losing position that had exceeded their max drawdown allotment and wasn’t counting that trade lol. I was like, that’s silly, what happens if it never comes back? They said they would just never close the trade then. I then asked, won’t you run out of capital? That didn’t say anything. There are some real transparent people out there in the trading world, that’s for sure (sarcasm).

[TimothyStrickland]

They also lied about the number of trades they have taken or their string of losers. They said they had made over 1000 trades. I said, well, according to your 68% win rate, the possibility of only having 2 losers in a row is mathematically impossible, in fact, you are guaranteed to have at least 3 losers in a row and almost guaranteed to have 4…

[Nick Radge]

Yes, there are numerous errors when reporting performance.

Your one is common and there is a company here in Australia selling a service with a 94% win rate. Thing is they don’t include any open positions in that number and funnily enough some of those are waaaay underwater.

The other, which I see a lot of across the net, is reporting the total percentage gain/loss on individual trades rather than the portfolio return. Doing this suggests 100% of capital was allocated to each and every trade – which is usually not possible or incredibly risky.

For example, if I do that to my Growth Portfolio I get a total return of +680%, yet in reality, on a portfolio level, the total return is +63%.

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