How to evaluate a Trading System

These are some of the points to consider when you are thinking
of buying a trading system to help you succeed as a trader.

  1. How long has the system been in existence.
  2. Has the system proven itself in REAL time trading.
  3. What was the worst historical drawdown period.
  4. Does the system produce consecutive losing trades, ie. drawdown periods.
  5. What is the Winning ratio: winning trades/losing trades: (W/L).
  6. What is the Profit ratio: average profit/average loss: (P/L).
  7. What is the Performance ration: (PR) = (W/L) x (P/L).
  8. Testimonials: what do the past and present customers have to say about the system.
  9. Has the system been tested and evaluated by independent third parties.
  10. Has the developer traded/tested the system with his own money.
  11. Are these trading results available for verification.

Evaluating a trading system does not have to be complicated.

First calculate the following 3 ratios.

5. Winning ratio (W/L): Winning Trades
                        Losing Trades

6. Profit ratio (P/L): Average Profit
                        Average Loss

7. PERFORMANCE ratio (PR): = (W/L) x (P/L)

In order for a system to be profitable in the long run, it has to at least:

(a) Produce twice the number of winning trades to the number of losing trades, or
(b) The average profits of the winning trades has got to be twice the average loss of the losing trades.

Therefore PR must at least be equal to 2.

What was the biggest historical drawdown period.

Large drawdown periods will rattle any trader. This is when a trader is really tested. Do you have the discipline to keep trading the system even when it is losing money. You must. Otherwise you will be second guessing a system.

Are there actual testimonials available from customers who are trading the system.

Has the system been tested by independent third parties, and are the testing results publicly available.

Has the system been automatically traded by brokers for customers with real accounts.

has the system been traded by its developer, and are the results/proof available.

This is how the ATS-3200 has performed.

1. The ATS-3200 was first created in June of 1993. I started trading it in September 1993 and made 83% during the first 6 months. These results can be verified. I kept all the brokers statements to prove it.

2. During the last 23 years the ATS-3200 has always been profitable. Except in 2007, when it made a loss of only $1,093.75. Download the free trial to check this for yourself.

3. The worst drawdown period occurred in 2015. The system had 2 losing trades for a total loss of $14,281. The recommended capital to trade the system is $25,000 per contract. If the system goes into a drawdown you will not be stopped out of the market and miss on the next big win.

4. The biggest number of consecutive losing trades was 2. This occurred 10 times during a 33 year period.

5.  The WINNING ratio: (W/L) = 2.53
6.   The PROFIT ratio: (P/L) = 1.89
7. The PERFORMANCE ratio: PR = 4.78
More than twice the minimum requirements of '2'.

The ATS-ZB32 has performed much better.

1. During the last 10 years the ATS-ZB32 has averaged more than $24,000 per contract per year.

2. And during the last 3 years the profits were more than $33,000 per year per contract.

3. The new TREND function has reduced the max. drawdown from $7500 to only $2800 and made losing trades very small.

4. The  WINNING ratio: (W/L) =  3.10
5. The   PROFIT ratio: (P/L) = 12.33
6. The PERFORMANCE ratio: PR = 38.22

8. On my web site you can find the testimonials of many of my customers.

9. The ATS-3200 has been tested and reported by Futures Truth from the very beginning. On my web site you can find the Top-Ten ranking going as far back as October 2003 when the ATS-3200 went to #2 with an annual performance of 216.3%.

The ATS-3200 has also been traded by Striker in Chicago for several of my customers during 2012, 2013 and 2014. It was always one of their top performing systems. Consistently in the top 5. Their results are available on my web site.

I started trading the ATS-3200 after I first completed the system in June 1993. During the first 6 months I made 83%. I still have all my broker's statements to proof this.

The new ATS-ZB32 is much better.