Members,
unfortunatly the RAS founders make no difference between trading systems and gambling.
In the past few days a very interesting discussion has started about certain systems and i , on behalf of Janus Trading, like to take the opportunity to point out some of our concerns about some strategies:
1.Several systems on RAS are trading pure or hybrid Martingale strategies and publish returns of 100% per month. While this appears on the first look very promising, there is an often overlooked risk.
All of these systems risk 100% of traders capital and trade with way overleveraged positions, which will cause margin calls on very small movements.
Even, if a system has a 50% equity stop, you are still exposed losing 50% of your trading capital.
The only difference to the 100% exposure right from the beginning is, that you can have the equity stop triggered 2x in a row.
There are systems offered on this website, which deliberatly mislead traders about the actual risk.
If you invest 10 000USD and are willing to risk 5000USD, than there is no assurance, that you will not lose 2x in a row your 5000USD risk money.
Lesson 1:
A trader, who loses almost all of his trading capital is out of business.
Strategies, which already expose traders capital to that risk, put a trader already at the edge.
2.Unfortunatly the statistics page of the RAS website is so bad, that anybody can simply alter timeperiods in the system graph or put different minimum equity on it and have a very profitable system "look" as a losing one.
Lesson 2:
When checking systems, please look at the "start date" and the "total USD" in the very right column first. Than you already know, whether a system has made money or not and during what timeperiod
3.Tradeleverage:
There seems to be a total misunderstanding between 2 very important words:
1.Account leverage
2.Tradeleverage/Positionsize
1.Account leverage is the amount of margin your broker requires to open and maintain a position.
For a 100 000Currency unit position, you usually need 1000CU to open and maintain this position.
Account leverage is 1:100
This number has absolutly nothing to do with:
2.Tradeleverage/Positionsize:
This number is the relation between account equity and the size of your total positions open.
If you have 1000 USD in your trading account and trade 0.01 lots(standard account), your tradeleverage is 1, because you are trading exactly the amount of equity , that you have in your account.
Trading 0.1 lots(standard account) puts you already on a 10:1 tradeleverage, since you are trading a position, which is 10x higher, than your account equity.
A solid risk management never uses a tradeleverage of more than 10:1 on small accounts and never more than 4:1 on large accounts.
Any tradeleverage, which is beyond 10:1 is highly dangerous and exposes your account to an unacceptable risk.
Now let`s look at some details:
TriggerFX=RAS ID 515
Mt4 stats here:
MT4 Stats - Share your MetaTrader 4 Statements with the world
System description here:
TriggerFX | Rent a Signal
This system trades 0.01 lots on a 10 000USD account and had as maximum 9 active orders(positions) open in its history.
What does that mean?
9x 0.01(1000)= 9000 is a tradeleverage<1=ultralow risk
RAS website states the maximum drawdown at 380USD, which equals 3.8% of the total equity of 10 000USD.
On the other hand, the statistics at RAS post a total profit in a little over 6 months of 1330 USD, or 13.3% of 10 000USD in equity
Summary:
-System has a 6+month track record
-System is profitable
-System has very low tradeleverage
-System had very low Drawdown
Conclusion=
Very Low Risk
Now let`s modify the system and multiply the tradeleverage by factor 10 with the very same account equity:
-Account equity= 10 000USD
-Tradeleverage max: 9x 0.1(10 000USD)=90 000USD=9
-Drawdown= 3800 USD= 38% of account equity
-Profit= 13 300 USD= 133% of account equity
While profits appear great, the Drawdown is unacceptable, but more important is the tradeleverage factor way too high(9).
This would turn the original TriggerFX system into a very scary adventure and expose traders capital beyond acceptable levels.
Conclusion:
Very High Risk
Unfortunatly many subscribers to RAS are not seeking consistant systems, but rather the become rich quick ones.
Please note, that RAS EA allows any subscriber to chose own risk appetite:
-If you are a gambler, you can trade TriggerFX with 10x higher Lotsize factor
-If you are a serious trader, you simply leave the lotsize factor at 1
A system, delivering 13.3% return in 6 months with a Drawdown of <4% is reagarded as outstanding in the real investment world.
Please keep that always in mind, when you chose your personal trading system.
Janus
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