How to tell if a system works?


2 0
Hey guys,

Well like a million other people here I have a system that seems to be working well so far. I have been live trading it with a small account (5K USD) the last 3 months in the es emini futures with ~60% return in April, ~60% return in May, and ~30% return in June. My question: is there any way I can quantify the chances of this system working in the future? It seems to be robust (works well) across the futures and stock markets, not as much in forex. I can not really back test much since the time frame is 1 second and I only could find 6 months of historical data max for 1 second so even if I were to back test it would only be for 3 additional months than what I have with live trading now. And besides from what I understand back testing is not the best way of predicting success going forward. I know 3 months of live trading is not much data to work with at all but is there any way to run a stats analysis with the data I do have to see if something is "really" there. I hate to increase my account (25k) without having an idea what the chances of success in the future, but then again I also do not feel like trading a small accoount for 1-2 years to verify if it is indeed a good system.

Also the system has just one rule for entries/exits and stop losses so no curve fitting the data either...

Thanks in advance--


UPDATE: JULY1-- OK I have had a chance to read some of the threads (should've done in the first place). Would a Monte Carlo analysis be appropriate for what I am trying to do?


Last edited:


Junior member
32 4
Just forward test as your doing and don't get to worked up about back testing, for such a small time frame its impractical. (y)


Well-known member
465 61
If you had said your results were based upon the Daily or 4H time frame, I would say the results were skewed due to the ES being in a straight trend for the last 6- 7 months. June was a lot more choppy, but this was balanced by wide daily ranges. If you're trading off one second charts the system should surely cope with most conditions.

I would keep going with it and record as much as you can regarding market condition, session and daily ranges. If it fails you should be able to see what has changed and make the necessary adjustments.

Good luck.

The Leopard

Experienced member
1,877 1,020
You're making an average of 50% a month. I wouldn't worry too much.

Vasco da Banana

Established member
699 121
The man is a genius. He's not the world's only four star Michelin chef (speciality dish: turtle soup) for nothing.

Absolutely. He's such a hero that I've named my six children after him. Granted it gets very confusing at breakfast, but we wouldn't want it any other way.


51 1
As someone said above the results could be skewed somewhat as the ES has been very bullish for most of this year. It could be that your strategy is good for trend continuation trades but not for reversals or ranging markets for example?

I would keep trading low contracts until you have more experience in different market conditions but so far you are doing well with your returns.

I had the same nerves when I started trading the pipdaq setups. I started to profit and just wasn't sure if it would last! Over time you will realize that you have found the perfect method for your style when it continues to make you money!

If it's not so good in different conditions, then it may just need some tweaking or at leaast know you stay out of the market at certain times.

Keep up the good work!


Junior member
29 0
How to tell if a system works?

Check your bank balance.


Active member
246 7
Monitor volatility. Over the past couple of months it remains more or less constant which means price behavior is unchanged. When you see increase in volatility it will mean that price starts to make sharper and stronger changes. At that point you may need to readjust your system or at least you may stop trading and monitor for some time to see how your system generates signals under the new market conditions.


6 0
Why don't you try other automated system...?

It seems that you are not happy with your automated system, its better you go for other options available in the market. Why don't you try the Online Robotic Stock Trader System, This is one the best online trading system which allow you to make your own trading strategy and you do not need to spend time on these systems. They are doing trading on your behalf and at the same time you can do your other work without disturbing your trading.


Veteren member
4,112 714
If your winning more £ than your lose, agree with earlier poster, forward test it.

I use a set of statistics, formed off the basis of my trading plan, over time it built and continues to build a robust analysis of my system, gives me peace of mind and reassurance.
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