MVPSignalSystem: re Drawdowns
Good points, Steve.
Can't argue with the big picture - and actual facts based on Main QQQQ's past 4 months of live performance. A $10g investment would now be $18g in 17 weeks. Makes the total invested subscription fee for 4 months of $340 seem a good deal - for a return of $8g. Thanks for voicing this perspective.
Also, just read Fast Eddies comment (post #17389) on drawdowns - along with your comment below on drawdowns. For me, I've developed a trading habit of pulling out at pre-defined percentage losses based on many trading experiences - where I REALLY should have pulled out at pre-defined percentages losses. Pulled out of GOOG and BIDU positions awhile ago and am sooooo glad I did (whew). Will never forget when I had a $365g position in AOL and watched it pull back to $165g. At that time, I never used stops and really re-evaluated after that experience. Also, Schwab assigned me a trading adviser years ago who got me into a long position (I forget which stock) that pulled back 8% - at which point I called her and asked her if I should sell. She said no - and I eventually did sell at a 15% loss - and watched it head lower and lower from there. I'm always amazed at how you trade MVP without fear with 100% account value - and add margin position piggy back trades on drawdowns. I have to admit that I can't get myself to do that based on my experiences. I watch the MVP signals and have watched you make money with the added drawdown positions but it's like a line in the sand that I can't get myself to cross anymore. Have always toyed with the idea that if I get out, I can get back in at a better price - but as you know it's also easy to miss getting back in playing that game. I guess what it comes down to is having guts of steel (which I certainly don't have) and being able to trade like a robot without emotion. That leads me to a psychological point I once read about - fear ...
I know fear isn't a good thing. It clouds one's perspective and robs one of vital thought and analization capacity when it's needed most. But I also read and agree with the idea that without fear, one may press on into zones of no return and even death. A friend of mine right now had the idea of starting a property management business and has been absolutely fearless about it. He's pumped all his money and more into it. He's spent all available lines of credit to their limit. Signed a 3 year lease on an office space. Etc, etc, etc. He's now so in debt - and still with not one client - that if his venture fails, he'll be in really deep kim chee. A little dash of fear would have been really healthy for him in my opinion. I know of a similar situation of another guy who started a copy business and is now homeless. I know it's not the same as trading (where you can liquidate quickly in a flash when things go wrong) but fear isn't necessarily a bad thing to have.
I don't know. Maybe it's just me - but these are some random thoughts on why the drawdown issue is one I consider carefully. And, maybe one reason I'm still here and able to post this message.
Ken ;-)
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Posted by: mvpsignalsystem
In reply to: kenwong who wrote msg# 17385
Date:3/21/2008 7:41:43 AM
Post #17386 of 17390
Opinion on system fees. I think this is all relative. By that I mean one should take any system and net out the fees, see what return you now have (net) and then compare the results to how you have been doing on your own.
Main qqqq looks to have taken your 10K investment and turned it into $18,000 in 17 weeks.
17 weeks would mean you would have been billed $85 4 times.
You would have been charged $340 in order to make $8,000.
C2 shows a max drawdown of 10% on a system which delivered 80% in 17 weeks. I think acceptable drawdown needs to be looked at relative to what the system is getting you and the equity curve as well. Drawdown, imo, will go hand-in-hand with returns. By that I mean, the higher the returns you see, the higher a likely drawdown could be. Like with fees, you need to confront one crucial question: how am I doing net in pocket when all this is said and done, and how does it compare to my own results.
I'd like to offer my opinion that all systems need to be perspectivized in this manner and always compared to ones own results.
Its only 17 weeks and in the world of systems thats not much, but its a hellacious start.
If he continues at this pace, his subscribers could get wealthy very fast at a fee 2-3 times as high. All that matters is what ends up in YOUR wallet, net-net-net.
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