Today, we are going to look at Tecnofinanza. This is the 3rd system from our previous list. On 9/26/08 we reviewed the Tecnofinanza_II system. These obviously come from the same family, but they do have some differences. Both curves seem to follow a similar pattern…very fast run up, then it begins to drawdown and move sideways.

The equity curve we are looking at today does not have as high of highs or as large of a drawdown then its Tecnofinanza_II brother. Without knowing the specific strategies on how they trade, it appears as though Tecno_II will apply more trades to those positions that are doing well and utilize up to 4 maximum positions at any one time. This allows for a rapid increase in the equity. On the other hand, the Tecnofinanza has a maximum position of 1 so its peaks and valleys are going to be closer relative as it is not opening as many trades in the market at one time.

Since Tecno_II has maximum positions of “4” and Tecno has a maximum position of “1”, let’s compare these systems on an apple to apple basis to determine one that we would prefer. To do so, we need to make sure our effective leverage is the same for each system.

*Keep in mind leverage is a double edge sword that can magnify losses as well as gains.

The leverage in the FSS platform is figured by:
Max positions X Trade Size / Account Equity = Portfolio Leverage

For illustrative purposes we are going to trade Tecno_II on 10k lots starting with $10,000. So the portfolio leverage becomes:
4 x 10,000 / 10,000 = 4 (or 4:1 leverage)
(Max positions X Trade Size / Account Equity = Portfolio Leverage)

Now, we need to figure the trade size on Tecnofinanzas so we arrive at 4:1 leverage (this is so we can compare apples to apples with Tecnofinanzas_II), our formula becomes :
1 x (Trade Size) / 10,00= 4
Max positions X Trade Size / Account Equity = Portfolio Leverage)

Therefore, we need 40,000 fixed lot trade size to compare an apples to apples.

(The chart for Tecnofinanzas_II is noted on the 9/26/08 post).

Conclusion: If we had to choose between Tecnofinanzas and Tecnofinanzas_II, we are going for Tecnofinanzas_II because it has slightly smaller drawdowns and slightly higher profits on an apples to apples basis.

Note : If trading Tecnofinanzas_II in a small account, keep in mind there may not be enough capital to support the system as the drawdown is -4905 pips.

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