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Annual Return |
The percentage annual return is
based on the change in value of the VAMI. The value of the VAMI begins with
a hypothetical
$1,000 investment. This amount is then compounded using the
service's monthly
returns from January through to December. The actual percentage
change in the value of the VAMI from one year to another
(effectively, from the December value of the previous year to the
latest value in the current year) gives the Annual Return of the
service. |
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Annualized Return |
This is the rate of return that
the service could be expected to earn if its performance for the
rest of the year matches its performance to date. If the latest data
is for this year, it is shown as the Current Year Annualized Return.
If the latest data is prior to that, it is shown as the Latest Year
Return. |
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AutoTrade |
This tells you whether or not you
can AutoTrade the service's recommendations. |
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Bank - Default
Trading Profile |
This is the amount of initial
capital that was used to generate the service's results. For most
services this is set at $20,000, though there could be circumstances
in which this is altered, e.g., when a service trades a particular
number of stocks per trade. In that case, the Default Profile will
be adjusted accordingly to reflect this. |
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Bank - Your
Trading Profile |
This is where you can enter your
capital amount (that is, your starting bank) in order to personalize the
service's results. When you then press the recalculate button, the
results will then be recalculated based on your capital. |
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Brokerage/Trade -
Average $ |
This is the average brokerage you
would have paid per trade. This gives you some idea of what your
costs will be in order to replicate the service's results though, as
all our results are net, brokerage has already been taken into
account. |
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Cost/Trade - Average $ |
This is the average cost per
share that the service traded, either short or long. For option
services, it is the average cost per option contract (bearing in
mind you have to then multiply that 100 to get the actual cost of
the trade). |
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Coverage |
This section tells you two
important things about your trading profile:
First, it tells you what percentage
of the total number of trades done by the service per month you
would have been able to do given your current Trading Profile. To
calculate this, it takes the average number of trades done by the
service each month and then compares it to the number of trades per
month you would be able to do based on your % Per Trade. For
example, 5% Per Trade would allow you to do 20 trades/month, 10% Per
Trade would allow you to do 10/moth, etc.
Second, it tells you what
percentage of the average number of open positions held by the
service you would also have been able to maintain. Just because you
can do all the trades the service does (the first part above)
doesn't mean you'll be able to maintain them as open positions.
First, we work out the average number of Open Positions held by a
service, and then compare that figure with your % Per Trade in the
same way as we did in the above example. |
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DOW 30 |
DOW 30 stands for The Dow Jones
Industrial Average, one of the worlds best known Indexes. It started
its life back in 1884 when Dow Jones published it first average of
US stocks in what was the forerunner of The Wall Street Journal. It
differs from the Standard & Poor's Indexes (which are capitalization
weighted Indexes) by being an average of the prices of the 30
included stocks. The actual Index value is calculated by multiplying
the average price by a scale factor, which changes over time. |
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Downside Deviation |
This measures downside volatility
against a predetermined Minimum Acceptable Return (MAR). The MAR
used in our calculations is 5%/annum or 0.42%/month. The Downside
Deviation is a measure of the degree to which the service's results
have deviated from that level of return, but only on the downside.
In other words, it doesn't measure positive performance, only
returns that are LESS than the MAR. |
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Drawdown - Average
% |
This is the average percentage
drawdown experienced by the service throughout its lifetime. |
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Drawdown - Longest |
This is the longest drawdown, in
months, that the service has experienced. |
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Drawdown - Maximum |
This measures, as a percentage,
the maximum loss that the service has experienced and is taken from
the top of the particular move (the time when the losing trade/s
began) to its bottom (the time when the next profitable trade
happened). Basically, it tells you what percentage of your bank
would have been lost before you began to recoup that loss. The unit
used to measure the loss is the VAMI. |
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Drawdown Ratio |
This is the ratio between the
average percentage drawdown and the largest percentage drawdown.
Generally, a ratio of 2.00 or less is acceptable, otherwise, the
largest drawdown may be larger than you can comfortably bear. |
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Free Trial |
This tells
whether or not the service offers a free trade period. |
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Investment/Trade -
Average $ |
This is the average dollar
investment per trade that the service makes. In other words, this is
what you could reasonably expect to have to invest each time you
entered the market if you wanted to replicate the service's results. |
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Largest Monthly
Gain |
This is the largest single one
month gain that the service has achieved in its lifetime. In other
words, of all the returns shown on the Monthly Returns graphs, this
is the largest. |
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Largest Monthly
Loss |
This is the largest single one
month loss that the service has achieved in its lifetime. In the rare cases where a service has had no
monthly losses, it is the smallest monthly gain. |
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Largest Win/Average
Win Ratio |
This is the ratio between the
largest win by the service and its average win, and indicates
whether the largest win was an aberration (and therefore unlikely to
be repeated) or whether it is something you could expect to see if
you traded with the service. Usually, if the ratio is less than 3.00
there is a fairly good chance the largest winning trade will be
repeated. |
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Monthly CROR |
This is the Monthly Compound Rate
of Return. It is the actual rate of return you would have achieved
had you used the service, and is therefore a key statistic. It is
calculated such that, if $1,000 were compounded each month by this
rate for a period equal to the number of months the service has
traded, the result would equal the current VAMI figure. |
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Monthly
Returns |
The Monthly Returns graphs gives you the
net monthly return achieved by the service based on the Default
Trading Profile. The formulae used for calculating this is:
((Gross Return - (Brokerage +
Subscription Fee)) / Capital) x 100
When you enter your Trading
Profile, it will then recalculate these results according to your
parameters. |
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NASDAQ 100 |
The NASDAQ 100 comprises the top
100 companies listed on the NASDAQ stock market, as measured by
market capitalization. |
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NASDAQ Composite |
Whereas the NASDAQ 100 is
comprised of only the top 100 companies on the NASDAQ, the Composite
Index contains all the companies listed on the exchange, giving it
over 3,00 components. |
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Profit Factor |
Profit Factor measures the gains
made from all the service's winning trades verses the losses made
from its losing trades. It does so by summing the total dollar gains
and dividing it by the sum of the total losses, thereby giving a
ratio between the two. A Profit Factor of 2.00, for example, would mean
that twice as much money was made from the winning trades as was
lost on the losing ones. |
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Profit/Loss -
Average Monthly |
This is the average monthly
profit made by the service, and is the Total Net Profit/Loss divided
by the number of Service Months. |
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Profit/Loss - Total
Net |
This is the total net profit made
by the service over its lifetime. It is the gross return minus costs
of brokerage and subscription fees. |
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Range of Monthly Results |
This gives the service's Range
for each year, which is the largest monthly gain vs. either the smallest
monthly gain or the largest monthly loss. These figures are taken from the Results - Monthly
Returns table. |
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Risk - Default Trading Profile |
This is the percentage of the
initial capital that was risked, per trade, to generate the
service's results. The default values are:
- Stocks - 20%
- Options (Short) - 15%
- Options (Long) - 5%
- Timers - 100%
These defaults are
sometimes adjusted, though, if they need to take into account the service's
trading style. For example, Short Options services that only trade
once a month are allocated 100%. |
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Risk - Your Trading Profile |
You can continue personalizing
the results by entering the percentage of your bank you wish to risk
per trade. Please note that when you INCREASE your risk, you also
DECREASE the number of individual trades that you are able to do
and, consequently, the number of open positions you are able to
maintain. When the number of open positions you are able to maintain
is LESS than the service's average, it will begin to DECREASE your
returns. |
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Risk Adjusted
Monthly CROR |
In calculating
the Monthly CROR, it is important to remember that it is a
"smoothed" figure which can give the illusion that there is a steady
growth rate in the value of your investment. As you know, this is
not how brokerage accounts grow. Trading can be
extremely volatile, and to get a true picture of what would have
happened, you need to take this volatility (or risk) into account.
That is what the Risk Adjusted Monthly CROR does. |
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Russell 2000 |
The Russell 2000 measures the
performance of the small-cap segment of the US equities market. It
includes approximately 2,000 companies and their membership is based
on a combination of their market capitalization and their index
membership. The average capitalisation of a company in the Index is
$0.5 billion. |
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S&P 500 |
The S&P 500 Index, which is
produced by Standard & Poor's, covers the top 500 companies in the
US as measured by their weighted market capitalization. As it covers
over 80% of equities, it is considered a reliable bell-weather for
the market as a whole. |
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Service Months |
This is the number of
months that a service has been operating. Depending on how often
they trade, it will sometimes different from Trading Months. |
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Shares/Trade -
Average # |
This is the average number of
shares (or contracts) per trade that the service either buys or sells (depending
on whether they trade either long or short) each time they enter the
market. |
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Sharpe Ratio -
Annual |
The Sharpe ratio is a
risk-adjusted financial measure developed by Nobel Laureate William
Sharpe. It compares a service's return (that is, any return in
excess of what is deemed to be the Risk Free rate of return) to a
specific measure of risk, in this instance the standard
deviation. The Risk Free ROR used in our calculations is 5%/annum. |
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Sortino Ratio -
Annual |
The Sortino Ratio is also a
risk-adjusted ratio, this time measuring reward verses the downside
deviation (or semi-deviation) rather than the full standard
deviation as used in the Sharpe Ratio. |
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Standard Deviation |
This measures the degree by which
the monthly return figures deviate from
the Mean Monthly Return. It is therefore a measure of volatility (or risk)
of the monthly return results. |
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Sterling Ratio -
Annual |
Like the Sharpe and Sortino
ratios, the Sterling ratio is also a risk-adjusted financial
measure. It differs from them in that it uses the Maximum Drawdown
as its measure of risk. |
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Strike Rate - Average % |
The percentage of trades
recommended by the service that were winning trades. In other words,
it is a direct measure of their ability to pick winning trades. |
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Strike Rate - Required |
The is strike necessary for the
service to break even, given both their average gain per winning
trade and their average loss per losing trade. |
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Strike Rate Ratio |
This is the ratio between a
service's Required
Strike Rate (RSR) and their Current Strike Rate (CSR) which measures the
degree to which their CSR is sufficient for them to be
profitable. |
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Top Trader
Index |
The Top Trader Index (TTI)
uses 26 different parameters to assess a service's overall performance.
The best service in that category is given a score of 20, the second
best a score of 19 and so on down to 1.
These individual scores are then
totalled to give an overall rating of a service's performance. As
there are 26 categories, it means the best possible score is 520. |
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Trading Months |
This is the number of months for
which we have returns for the service. In other words, it is the
number of months when they have had closing trades, thereby allowing
us to calculate a return for that month. It will sometimes differ
from Service Months depending on how often they trade. |
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Trading Profiles |
This section is
divided into Default Trading Profile and Your Trading Profile. The
former tells you the parameters we have used to calculate the
services results, while the latter is where you can enter your own
parameters. When you the press Recalculate, it will recalculate the
results according to your trading profile. |
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Trading Strategies |
This section is
divided into Reinvestment Trading Strategy and Income Trading
Strategy. Reinvestment
Trading Strategy - This tells you how much you would have earned had
you reinvested your profits. You need to enter your Investment
Period (in Months). When you have done this, it takes the other two
parameters (My Beginning Capital and Monthly CROR) from your current
Profile and calculates your Ending Capital.
Income Trading
Strategy - This tells you how much cash profit you would have made
each month from the service. You don't have to enter anything in
this section. It calculates its results automatically once you have
entered your Capital figure. The result is a Net figure, taking
into account brokerage and subscription costs. |
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Type of Trades |
This gives you the type of trades
that the service normally does. For stocks, they will either be long (that is,
buying and then intending to seel at a profit) or short (that is,
selling the shares into the market and then buying them back for
less). For options, there are any number of trades types executed by
the services. See the link for details. |
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VAMI |
The Value Added Monthly Index
(VAMI) measures the performance of a hypothetical investment of
$1,000 over time. Starting out at $1,000, its value is added to each
month by an amount equal to the monthly percent return. Essentially,
it measures the effect of compounding your returns. The VAMI is
useful as it allows you to easily measure one service against
another as both begin from the same starting point ($1,000). |
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Win Loss Ratio |
The ratio between the number of
winning trades and the number of losing trades. |
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Winning Months |
This is the percentage of winning
months that the service has had for each year it has been in
operation. |
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Winning/Losing Months |
This is the number of winning
months that the service has had for each year it has been in
operation. |
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