How are signal % gain calculated? Can they be gamed - page 3
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I was not arguing in a negative way with you and I actually am in quite a good mood! I was just expressing my opinion about it and exchanging comments. There was no ill disposition at all!
That's perfect then (I know there was nothing negative with me).
My point is : you wrote "compounding lots will never occur'', it is a complete mystery to me how you can say that, as it's so obvious you are incorrect. What I mean is : yes without withdrawal their could have been a compounding, you can't know what would happen. But your interpretation was negative.
Thank you Fernando and Alain for your input and making it clear how it works, it is an interesting problem with how to fairly show % gain of any signal.
I think a solution would be implementing Absolute gain along with TWR figures such as myfxbook does.
Yes I am also thinking the best solution would be to provide both statistics.
That's perfect then (I know there was nothing negative with me).
My point is : you wrote "compounding lots will never occur'', it is a complete mystery to me how you can say that, as it's so obvious you are incorrect. What I mean is : yes without withdrawal their could have been a compounding, you can't know what would happen. But your interpretation was negative.
I expressed myself incorrectly. I did not mean that the EA or trader will not apply fractional position sizing (compound lots). I meant that due to the automatic subscription percentage that is aplied based on balance, the position sizing on the subscriber will automatically also be reduced after withdrawals, so the implied “compounding” that the calculation “expects” as you talked about will not actually take place even if the EA or trader does use “compondong”. It is rather difficult to express clearly what I am trying explain, but I hope you understand what I am trying to state.
Yes I understand.
But look at the statistics of the signal, the balance is regularly increasing and the lost size too, it seems pretty obvious that compounding IS used on this signal. Now take the hypothesis without withdrawal. Take the same trades, imagine there is no withdrawal at all, the lot size would have been compounded accordingly and you will get your 4090% realized in real money.
I don't know for sure the main reason for the withdrawals (most probably money management), but what is obvious is these withdrawals result in a serious miss to win (around 8,500 USD). Of course considering it's a signal with a lot of subscribers it's not a big deal.
Yes I understand.
But look at the statistics of the signal, the balance is regularly increasing and the lost size too, it seems pretty obvious that compounding IS used on this signal. Now take the hypothesis without withdrawal. Take the same trades, imagine there is no withdrawal at all, the lot size would have been compounded accordingly and you will get your 4090% realized in real money.
I don't know for sure the main reason for the withdrawals (most probably money management), but what is obvious is these withdrawals result in a serious miss to win (around 8,500 USD). Of course considering it's a signal with a lot of subscribers it's not a big deal.
Yes what you say is true, and that is the reason for TWR I guess, so deposits and gains don't effect the growth.
But..I think the problem is would have/ could have doesn't work in trading, only what is done. the growth % shown is hypothetical, not what has been achieved, which is a problem when the part of the strategy is to withdraw gains regularly because of its riskiness.
Seems a bit misleading to only risk a portion of your funds yet have the gain % be the same as if you'd risked the whole lot.
Yes I understand.
But look at the statistics of the signal, the balance is regularly increasing and the lost size too, it seems pretty obvious that compounding IS used on this signal. Now take the hypothesis without withdrawal. Take the same trades, imagine there is no withdrawal at all, the lot size would have been compounded accordingly and you will get your 4090% realized in real money.
I don't know for sure the main reason for the withdrawals (most probably money management), but what is obvious is these withdrawals result in a serious miss to win (around 8,500 USD). Of course considering it's a signal with a lot of subscribers it's not a big deal.
Thank you Fernando and Alain for your input and making it clear how it works, it is an interesting problem with how to fairly show % gain of any signal.
I think a solution would be implementing Absolute gain along with TWR figures such as myfxbook does.
That's exactly my point Lachlan, if you continue like that, after a few months you will see a big TWR value and a smaller Absolute Gain one in your account too.
This is how growth and profit calculations work.
Yes what you say is true, and that is the reason for TWR I guess, so deposits and gains don't effect the growth.
But..I think the problem is would have/ could have doesn't work in trading, only what is done. the growth % shown is hypothetical, not what has been achieved, which is a problem when the part of the strategy is to withdraw gains regularly because of its riskiness.
Seems a bit misleading to only risk a portion of your funds yet have the gain % be the same as if you'd risked the whole lot.
No, you will not! That is what I have been trying to explain but have been unable to put it into words properly.
In order to achieve the hypothetical gain, the subscriber would need to increase his balance or adjust his % in order to offset the reduction caused by the provider's withdrawal.
For example, lets say the signal balance is $1000 and the subscriber also has a $1000 balance and is using 50% signal ratio, so that when the signal gains 10% ($100) , the subscriber will be gaining 5% ($50).
When the provider takes out 20% of his balance, bringing it down to $800, a 10% gain is now $80 and for the subscriber it will now be only $40 even though he did not make any withdrawal at all on his own account. In other words, he is not even maintaining the simple growth any more, and his position size drops instead of increasing geometrically and the hypothetical compounding cannot be achieved even if he does not make any withdrawals.
The only way for the subscriber to maintain the natural compounding effect, would be to either increase is % of the signal, from 50% to 62.5% or increase his balance to $1250, and he would have to calculate and do this on every single withdrawal the provider does in order to compensate and achieve the hypothetical % growth. This is obviously not feasible and not in the spirit of the metrics that are calculated and shown by MetaQuotes.
No, you will not! That is what I have been trying to explain but have been unable to put it into words properly.
In order to achieve the hypothetical gain, the subscriber would need to increase his balance or adjust his % in order to offset the reduction caused by the provider's withdrawal.
For example, lets say the signal balance is $1000 and the subscriber also has a $1000 balance and is using 50% signal ratio, so that when the signal gains 10% ($100) , the subscriber will be gaining 5% ($50).
When the provider takes out 20% of his balance, bringing it down to $800, a 10% gain is now $80 and for the subscriber it will now be only $40 even though he did not make any withdrawal at all on his own account. In other words, he is not even maintaining the simple growth, and his position size drops instead of increasing geometrically and the hypothetical compounding cannot be achieved even if he does not make any withdrawals.
To only way for the subscriber to maintain the natural compounding effect, would be to either increase is % of the signal, from 50% to 62,5% or increase his balance to $1250, and he would have to calculate and do this on every single withdrawal the provider does in order to compensate and achieve the hypothetical % growth. This is obviously not feasible and not in the spirit of the metrics that are calculated and shown by MetaQuotes.
Fernando you are wrong, growth is not affected by signal withdrawals, only profit is.
Alain's argument is correct: "If you follow this signal from the start without withdrawing you would have this growth."
Read the following article please: https://www.mql5.com/en/forum/10773#q23