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Copy Tip Of The Week – Quick Trade Analysis of the Strategy Provider

Posted by Fullerton Markets on November 25, 2021 at 6:08 PM


One of the concerns of Strategy Followers (SF), when analysing a Strategy Provider (SP), is how to get an overview of their trades. You can find the information in the Trading Statement section, but you must look at most of the statistics before getting an overview of the SP's risk, return and holding time. In today's article, we will share with you how to get an overview of an SP through the Profit vs Duration chart.

Here is a chart showing the correlation between order frequency, % profit and loss per order, and order holding time.

The Chart is composed of 2 axis and dots:

  • The vertical axis shows profit and loss in %. For each SP, the percentage will be different.
  • The horizontal axis shows the number of hours trading orders are held. The split ratio also varies with each
  • The dots represent trading orders. Each dot shows the correlation between profit and duration. The highest dot density indicates the area where most orders were closed.

Here, we will give you some examples:

  • Profit ranges from -17% to 15%.
  • Density is mainly from -5% to 5%.
  • The longest holding time is 250h (1 week 3 days).
  • Regular order holding time is less than 150h (6 days).
  • Many breakeven orders are lasting more than 150h (1 week).
  • Maximum stop loss is 17%.

Verdict: Balanced returns and risk. However, the risk per trade is relatively high, large stop-loss orders can affect your account when following this SP.

CTOW 20211125 Image 2
  • Profit ranges from -3% to 1%.
  • Density is mainly from -1% to 1%.
  • The longest holding time is 120h (5 days).
  • Maximum stop loss is 3%.

Comment: The risk of fluctuations on each order is low, this is a safe level. No large stop-loss orders affecting the account. However, the R/R ratio for losses is higher than for profits.

CTOW 20211125 Image 3
  • Profit ranges from -4% to 5%.
  • Density is mainly from 0% to 2%.
  • The longest holding time is 1700h (2 months 1 week).
  • Regular order holding time is less than 500 hours (2 weeks).
  • Orders held for more than 1000 hours became losses.

Verdict: The density of profitable orders is very good. The risk of orders is low, this is a safe level. No large stop losses are affecting the account. However, there are many losing positions that last for a long time showing negative equity and increasing swap fees.

CTOW 20211125 Image 4

 

  • Profit ranges from -1.7% to 1.5%.
  • Density is mainly from -0.5% to 1%.
  • The longest holding time is 500h (2 weeks).
  • Regular order holding time is less than 100h (4 days).

Verdict: The density of profitable orders is very good. Very low risk of orders indicates safety. No large stop losses are affecting the account.

Above are some examples of how to quickly evaluate an SP based on the Profit vs Duration chart. The chart will give us a better understanding of SP's trading practices, as well as trade density, risk and return correlation. However, this chart is only a part of the analysis. You will need to consider other factors to have a more accurate judgement when choosing an SP.

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Fullerton Markets Research Team

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