Response from the LS Trader Team
Dear Trade2Win readers,
In response to some of the posts that we at LS Trader (Robert Stewart & Phil Seaton) have seen on this forum we thought we would make a post to clarify a few points.
Firstly, we have been trading for approximately 10 years and have an extensive background in system development and testing. We completed our research approximately 6 years ago which resulted in the system now know as the LS trader system.
This system was first traded by ourselves on my own accounts and a select group of people that we gave access to the system. It was originally released to the public under the name of The Winning Trader in January 2007. The results since launching to the public were 116.7% return in 2007 and 1504.1% in 2008. These are real results and followers of the Winning Trader system (of which there are many happy subscribers) can verify them as the signals have been emailed out every week since January 2007. These results can be seen if full by visiting
Financial Spread Betting & Trading Results :: LS Trader. The archive has now been updated with a full list of the results.
The back testing results which go back over 26 years of data show a CAGR% of 165.8%. Now, as one forum member correctly pointed out, this is testing and does not mean that future results will be the same. What we can say is that since we have been trading this system, the results have been very close to the back testing results.
The reasons for this are as follows:
• The system has been vigorously tested over a long period of data incorporating 44 markets.
• To prove the robustness of the system we have added and taken away certain markets and run tests again and the results whilst obviously not always the same, are similar.
• The system, which although has been optimised, has not been curve fitted. It is easy to curve fit systems based on past data, but to ensure this is not the case we have changed the start date and end date and tested over shorter periods. The results are not markedly different.
• The system has specific and exact rules to cover all aspects and eventualities of trading and is then run over very accurate market data. This rules out any human intervention and an attempt to make the results look better than they actually are
Whilst the results of 2008 are exceptional, we have never said that these are the norm. The second best year according to the back testing results was 1987, which showed a return of 1158.8%. The point is that exceptional years can and do happen and when they occur they are a bonus. What really counts is how consistent the performance of a system is.
The secret is good performance allied with compounding. In own trading performance, we have always aimed at 100% returns per year. We believe from our experience and the back testing results of the system that this is an achievable realistic target. However, the system is actually producing average returns of 165.8% but we have lowered that slightly to say that we aim at 150% per year.
Consider the table below
Annual Growth Rate 100% 165.80%
Starting capital £10,000 £10,000
Year 1 £20,000 £26,580.0
Year 2 £40,000 £53,160.0
Year 3 £80,000 £106,320.0
Year 4 £160,000 £212,640.0
Year 5 £320,000 £425,280.0
Year 6 £640,000 £850,560.0
Year 7 £1,280,000 £1,684,540.0
As the table above shows, starting with £10,000 and compounding at 100% per year gives a return of £1.28 million in 7 years (assuming that no capital is withdrawn during the 7 years).
One forum member has posted that 2008’s returns could only be achieved with massive risk and huge drawdowns. If we had been presented with these returns that would probably have been my reaction too, but that is not the case.
In 2008 no single trade incurred risk of greater than 2% (obviously there is always the possibility of slippage but this was not really a factor as most of the markets we trade are liquid). The maximum drawdown during 2008 was 47%. Bear in mind that 2008 was the most volatile trading year in a long time and that we had huge profits on the table, so I consider this drawdown to be acceptable, especially in view of the returns.
When drawdowns of this magnitude occur, it is because profits are being given back rather than losing original starting capital. If risk per trade is at 2%, one would need a run of 23 or so losing trades right off the bat to achieve such a loss from starting equity. This has never happened in back testing and it is highly unlikely that it ever will.
Another forum member posted that short term trading is a mugs game. We could not agree more and have yet to see a day trading system that is profitable in the long term. Our system is not short term and has an average trade duration of 6-8 weeks. In 2008 we had several trades that were open for more than 100 trading days, which is 5 months or more.
This member also went on to say that you require experience, inside information and luck. We would point out that you do need experience if you are trading on your own, but if you are following a successful trader then you only need the discipline to follow the signals that you are given.
Inside information is rarely of any use as it is either wrong or already priced in to the markets. Successful traders do not rely on this (and we are primarily trading commodities and not stocks anyway).
The last factor mentioned was luck. In our opinion, luck plays little or no part in trading if you have a good system which has an edge. Consider the roulette table at a casino. You know that the house has an edge as they are paying 35 to 1 on 36 numbers and they have zero. Over a long period of time, regardless of what system you use, the house will come out in front as they have an edge.
The LS trader system also has an edge and if followed over a long period of time, this edge will become prominent and the system will therefore come out in front over time.
The only time when luck plays its part is when you start following a system. For those that started following this system in 2008 could be called lucky as they started at a great time, but over a period of time, luck will not be a factor to trading success.
Finally, we thought we would touch on why we offer this service. The reasons for this are very simple.
• We trade the signals that the system generates, so we are already doing all the research for our own accounts.
• We have reduced trading to very little human involvement and can do everything required to trade my own accounts in a couple of hours per week. Therefore providing this service gives us something to do and some interaction with other people, which we enjoy
• The markets that we trade are liquid and are not affected by other people taking the same trades
• The best place for our money is trading the system and we am very much in to achieving large returns by compounding my profits and not withdrawing trading capital. Providing this service to other subscribers for a monthly fee enables us to do this.
• Finally, there are so many systems out there that simply do not work, with people pushing day trading and short term trading system on people that have little or no chance of success in the long run, that we wanted to provide a genuine system to the marketplace that actually works.
Finally, we offer a full 60 day money back guarantee that if the system is not what we say it is or is not for you for any reason then we offer a full refund of your subscription fees paid to that point. Can’t really be any fairer than that can we?
You will also see the reviews we have received from independent websites on the testimonials page, and I recommend that you read it at
Spread Betting Testimonials :: LS Trader
Lastly, we offer a free newsletter, so even if you are not totally convinced you can still subscribe to this newsletter and hear the latest news about our service. Just go to
Financial Spread Betting & Online Trading System :: LS Trader and enter your name and email address on the top left of the homepage. We have also put together a free MP3 track which we talk about the LS Trader system and how it works exactly. To listen to this, click on:
http://www.lstrader.co.uk/audiointro.mp3
You can also email us at
[email protected] and we can assist with any other enquiries.
Kind Regards
Robert Stewart & Phil Seaton
The LS Trader Team
Anyway, whilst all was bad in my market sector, I was in awe with some of the city traders that were making a fortune by shorting during 2008.
