Today, we are going to look at Tecnofinanzas_II simply because it is the first on the list. Some key data about the system:
Max DD : -4905
Profit in Pips : 5264
Start Date : 10/8/2007
Below is the equity curve for this system on the past 12 months. This curve shows us what the equity in the system would have been had you invested in it 12 months ago. Although we have shown a nice profit of 5264 pips, let’s assess on how we got there.
Point 1:
The system did very well and ran up 8,136 pips from its inception of Oct 2007 to the end of Dec 2007.
Point 2:
The system reached its all time high again, but could not sustain. It began its largest drawdown to date of 4905 pips.
Point 3:
The system is trading in a long series of sideways action trying to pull out of its current drawdown.
One measurement of risk is our
drawdown. This system is currently in a drawdown of 4905 pips. For example, if I invested in this system $10,000 and traded 1 mini lot each time a signal is generated, then I run the risk of a 50% drawdown. If I were unlucky and started investing in this system in March 2008, then by April my equity would have dropped by $4905 to $5095. (The drawdown would have been larger if I had made larger trades.) Many traders would not be able to withstand that drop in equity. If I were a trader that could not survive that drawdown, then I am left with 2 choices :
1) Look for a system that better fits my appetite, or
2) Look for another system that compliments Tecnofinanzas so when they are added together the blended equity curve fits my appetite.
For moment, we will continue reviewing the other EURUSD systems. Here are some items to note about Tecnofinanzas:
Pros – Ability to produce large increases in a short amount of time, trades frequently (2205 trades in 1 year), has been trading live in FSS for almost 1 year.
Cons – Fairly large 4905 pip drawdown, still trying to recover from a 6 month drawdown.
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