AutoTrader Performance Guarantee
ZoneTraderPro is introducing a AutoTrader performance guarantee for its customers using the AutoTrader. The AutoTrader performance guarantee is not a guarantee that you will make money trading in a live market because that is beyond the control of ZoneTraderPro. The AutoTrader performance guarantee says that using a defined set of parameters using 2 contracts on the ES market, the ZoneTraderPro AutoTrader will generate $3000 in profits after commissions using the NinjaTrader Market Replay.
ZoneTraderPro will publish the parameters used for a Green day and a Yellow day. The system will not trade on a Red day. At the end of the month if those parameters do not produce $2000 in profits after commissions (using $3.40 as the rate) the next month is FREE. If the system produces between $2000 and $3000, $100 will be deducted for every $200 below $3000. For example, if the system produced a $2650 profit, then $200 would be deducted from the following months lease.
Why ZoneTraderPro doing this? There are 2 reasons. The 1st reason is that ZoneTraderPro believes in its system. The 2nd reason is because if market conditions cause the system to be unprofitable, ZoneTraderPro does not want to force its customers to trade in bad market conditions. For example, during the early summer months of 2015 the market became extremely volatile due to the conditions in Greece, Russia, and China. Because of these external news events there were a disproportionate number of red trading days during this period. We also took losses on green and yellow trading days when news events occurred while trading. The overnight ranges and the gaps foretold extremely volatile trading days. ZoneTraderPro does not want its customers to make a bad decision and trade on these risky days and risk blowing up an account.
Now look at October 2015. With all of the problems of China and Greece in the rearview mirror, the market returned to normal trading as evidenced by the fall in the VIX. The profit for ZoneTraderPro system number 27 using just 2 contracts was $11,901 for the month of October 2015. This systems cumulative total for the year of 2015 is $47,785 after commissions. However in May 2015 system 27 only produced a profit of $1,360 after commissions. These cumulative numbers reflect trading all days regardless of color. That is an average of over $4,700 per month with no optimization or bias to the type of trading day. Trading on red days accounted for only a $1,646 profit of the $47,785 total. There have been 52 red trading days so far in 2015. That is only $31 a day profit trading on a red day. You would probably have better luck betting fantasy football, if they didn’t allegedly have people that used insider information to cheat.
So how would the AutoTrader performance guarantee have done in 2015?
These results are based on trading from 0945 to 1600 hours (un-optimized) and have no stop loss parameter working. Only the 2pm Fed days trades are removed.
These results are not optimized in any way and the parameters do not represent a trading plan. Why is this not a trading plan? The ZoneTraderPro AutoTrader has the option to timeout and not take trades 3 times during the day. The testing has shown that there are significant drawdowns over a consistent timeframes during the day. An optimized system would likely not trade during these known periods. An example of this using system 27 shows that trades taken after 1535 hours EST lost $3578 during the year.
The 2nd reason that this is not a trading plan is because of the odds involved on green and yellow days. On a Green day long trades are favored and on a Yellow day short trades are favored. It would be illogical to trade the same number of contracts short on a Green day as you would trade long, and vice a versa for a Yellow day. Below are the year to date profit results for test 27 showing a 2:1 profit advantage for trading long on a green day. the last consideration is that there have been 70 green day and 82 yellow days. On 12 fewer trading days the green days have made $4744 more in total profit.
Here are the profit totals for the same test on a yellow day. We again see the same 2:1 ratio, except it is reversed in favor of the short trade.
The last reason this is not a trading plan is based on the above picture. On a yellow day, trading long and short, you make over $1000 more trading from the -1 position (Postn2 on the worksheet).
The ZoneTraderPro AutoTrader Performance Guarantee rules
- ZoneTraderPro will publish in the blog what systems are used on a green and yellow day.
- There is no trading on a red day.
- The start and stop times for each system will be published.
- There are no trading timeouts.
- Any trades after 2 p.m. on a Federal Reserve announcement day will be disregarded.
- 2 contracts will be traded long and 2 contracts will be traded short each trading day.
- The contracts are traded from the -2 and -1 positions.
- A commission rate of $3.40 per round trip will be used.
- A $700 stop loss on each side of the trade is active.
- The illiquidity filter is active and set at 900.
- The NinjaTrader Sim Stop is active and set at 150.
- ZoneTraderPro will make available a trade list and trade results to all of its AutoTrader customers on a monthly basis.
- If the system results are less than 2000 in profit the following month is free.
- If the system results are between 2000-2199 there is a 500 discount the following month.
- If the system results are between 2200-2399 there is a 400 discount the following month.
- If the system results are between 2400-2599 there is a 300 discount the following month.
- If the system results are between 2600-2799 there is a 200 discount the following month.
- If the system results are between 2800-2999 there is a 100 discount the following month.
- There are no guarantees that using this system in a live market will generate a profit.
ZoneTraderPro reserves the right to change a trading system or parameters as new features are introduced into the AutoTrader. Any changes made will apply to the guarantee the following month and not retroactively for a current month. For example, in the previous ZoneTraderPro blog post I talked about a new feature involving the order flow ratios being developed for the AutoTrader. This feature could significantly change the winning percentage of the systems and would be utilized after it has been tested and when it becomes available to ZoneTraderPro AutoTrader customers.
Remember ZoneTraderPro offers a free month of the AutoTrader to all of its new customers. The AutoTrader performance guarantee even applies if you are on your free month and a new customer. ZoneTraderPro customers also have access to all of the trading parameter tests.
Starting systems and parameters
For a Green day ZoneTraderPro AutoTrader performance guarantee will use system number 30 to trade long and system number 27 to trade short. System number 27 will start trading at 0950 hours and end at 1535 hours. System number 30 will start trading at 0945 hours and end at 1535 hours.
For a Yellow day ZoneTraderPro AutoTrader performance guarantee will use system number 27 to trade long and system number 27 to trade short. System number short 27 will start trading at 0945 hours and end at 1535 hours. System number 27 long will begin trading at 0945 hours and end at 1535 hours. Below is a picture of the individual test parameters that will be utilized.
The AutoTrader performance guarantee is not a guarantee or representation that these systems will make money trading in a live market. The AutoTrader performance guarantee and the testing results talked about in this blog entry are hypothetical because they are tested in Market Replay. You should be aware of the hypothetical trading disclaimer found here.