You have to laugh at this stuff. I was just looking at a website for an automated trading system (which shall remain nameless). According to the site, this fantastic system returned the following results:
|
2001 |
+620% |
|
2002 |
+490% |
|
2003 |
+790% |
|
2004 |
+721% |
|
2005 |
+920% |
|
2006 |
+475% |
|
2007 |
+691% |
|
2008 |
+745% |
|
2009 |
+523% |
Pretty awesome huh? They even show results from investing $10,000 each year. Investing $10,000 in 2008 for example would result in “$74k out”.
I liked the sound of this, so I opened my trusty Excel and worked out how much $10,000 would be worth if compounded. Here are the results:
|
Start: $10,000 |
||
|
2001 |
620% |
$72,000 |
|
2002 |
490% |
$424,800 |
|
2003 |
790% |
$3,780,720 |
|
2004 |
721% |
$31,039,711 |
|
2005 |
920% |
$316,605,054 |
|
2006 |
475% |
$1,820,479,062 |
|
2007 |
691% |
$14,399,989,379 |
|
2008 |
745% |
$121,679,910,257 |
|
2009 |
523% |
$758,065,840,898 |
My god! I think they have cracked it. Nine years of trading and a starting balance of $10,000 would be worth $758 billion (not million but billion). Think of what you could do with that much money: buy a nice house; drive a nice car; fund a war; attract the opposite sex – and more!
By the way, this trading system is for sale for just over $100. There seems to be a lot of this kind of stuff for sale online. I’m guessing it must sell, but does anyone actually believe the claims?
There is nothing wrong with buying a trading system, but step one in looking at these things is to use logic. The lowest quoted return over the nine years was 475%. The top traders in the world are less than one tenth of that. Everyone has good years and bad years, but +475% is their bad year. It doesn’t seem right…
Another thing to look for when considering a trading system is transparency. Do they explain exactly how trades are selected and do they show details of every single trade? There is no reason why you should not be able to see this.
It’s all common sense really.
