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Why the most popular Collective2 system is NOT in our portfolio

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Collective2 sent an email describing EFT Timer as the most popular system . They list 3 reasons why they think the system is the most popular: simplicity, can be traded in smaller accounts and fair monthly price.

The performance is outstanding. Smooth equity growth, 30 months track record, 70+% annual return with less than 30% max drawdown.

Yet we don´t have it in our portfolio for a very simple reason: the total number of trades is just 21 at the time of writing. The sample (number of trades) is too small to draw a statistically sound conclusion. To avoid the fallacy of small numbers, we look for systems with 30 or more trades. 30 is not a magical number, but anything below it we consider as something influenced by the law of small numbers rather than a proof of a working trading algorithm and good performance.


Written by A.S.

July 6, 2010 at 1:08 pm

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