Accuracy of Robots Testing??? - page 2
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rider...algorithms are definitely the way to go if you have the knowledge. There is a group in London of achedemics who trade as a business. A mate went for financial (non trading) interview with them. But even they find it hard. He said they had hardly made any money in 5 years but in the 6th they made millons. So however you trade it is never a dead cert.
I have to agree with Hooya, I would not place my confidence in backtesting data, no matter how attractive it is. It doesn't matter whether the developer is an outright scammer or just naive, if he/she uses backtest data as the only proof for the system, be very, very careful.
That said, I think it's too extreme to say that EVERY automated trading system out there is a scam. There are genuinely safe and profitable systems out there, and I know that because I've personally developed a number of them for the hedge fund I work for. We've also tested some of the commercial systems out there, and found some hidden gems.
So how do you tell the difference between a working trading system and one that's just going to blow up your account one fine day when you least expect it? Simple. You open a demo account with a broker that supports Metatrader 4 and plug your trading system/EA into it. Test it on demo funds for at least 30 days or 30 trades (though I recommend collecting 50-100 to be safe) to determine the control parameters of your system, and if the system is profitable on the live demo test, then you can feel confident to invest real funds into it.
I would highly recommend that you only buy trading systems that offer you at least a 30 day money back guarantee so that you have enough time to do a proper demo test. If the developer isn't even going to offer you a guarantee, then there's a very good chance that it's a scam... so run.
Using this methodology, you'll be able to reduce your risk to zero (if the system doesn't work, return it for a full refund!) while maximizing your upside potential should you discover a consistently profitable commercial trading system.
Hope this helps!
Thad B.
Professional Trading Systems Developer