System Trading Blog

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Zulutrade: Only 7 Systems From Top 300 Are Good

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I trade myself and constantly look for improved ways to allocate capital as well as to network with traders and investors. Last month about 5% of my trading activity was outsourced to system vendors listed on zulutrade.com. The result is flat.

System autotrading currently is still unreliable. Performance reports are inaccurate, trading cost is increased to pre-internet era level, trade execution fails too often (you may be left with open position indefinitely due to failed exit trade …).

But those are technical issues. Conceptually, there’s nothing better invented as zulutrade.com, collective2.com or covestor.com. I intend to use these services more and more.

I just set up system trading portfolio for December. The report is sent out to existing and potential customers. Based on historic performance stats, the portfolio (to be traded in test account only) should deliver 20% monthly with 33% drawdown as the worst-case scenario.

It is test account, it should be traded aggressively, even criteria for trading system selection may be somewhat lax … Still, I’m a bit surprised that I could find only 7 systems out of Top 300 (as ranked by Zulu) which are presumably good. All those are added to the test portfolio.

The key issue is that by far most “top performing” systems achieve the result by booking 10-20 pip profit per trade. In live trading conditions such “profit” is eroded or transforms into a loss after real life fills which are heavily taxed by mark-ups and slippage.

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Written by A.S.

November 28, 2009 at 8:54 pm

Posted in Uncategorized

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