Lesson 1 Chapter 1
In December 2014, I made a trip to Chicago to visit with John Hoagland and Conor Meegan with the idea of discussing the establishment of a relationship with OTG and the team at TopstepTrader.
My objective during this meeting was to work out a way where we could expose the traders here at The Oil Trading Group to the benefits of trading a fully funded account…more on this later. So, it had been a while since I had gone through a TopstepTrader Combine and I wanted to get the experience of going through one again.
Ok, I am going to warn you…I have a tendency to be an aggressive trader…and at no time was this more evident than during this combine I completed back in January 2015.
While this screen shot is no doubt sexy, it doesn’t tell the complete story….what is the complete story you ask?
Well, I will tell you.
In statistics, there is a term called “Regression toward the mean”.
Here is Wikipedia’s definition: In statistics, regression toward (or to) the mean is the phenomenon that if a variable is extreme on its first measurement, it will tend to be closer to the average on its second measurement and if it is extreme on its second measurement, it will tend to have been closer to the average on its first. To avoid making incorrect inferences, regression toward the mean must be considered when designing scientific experiments and interpreting data.
Ok, blah blah blah right? Sounds like a foreign language… I get it…let me try and put this in baseball terminology.
Let’s say a batter who has a career batting average of .285. During the next 10 games he is 25 for his next 50 at bats….that is an average during that span of .500. Well, his reversion toward the mean would indicate that during his next 50 at bats, he might go 8 for 50 to get back closer to his lifetime career average of 28.5% or .285.
My point here is that while I am aggressive trader and this combine looks fantastic, there are going to be some bigger drawdowns to deal with (see the $2,811 losing day) as we begin to revert back toward the mean. Make sense?
So, the bottom line here is that I needed to develop a strategy that was more in line with what the average retail trader might consider an appropriate trading and risk strategy.
The Oil Trading Group. (“OTG”) does not hold itself out as a Commodity Trading Advisor (“CTA”). Given this representation, all information and material provided by OTG is for educational purposes only and should not be considered specific investment advice.
Trading performance displayed herein is hypothetical. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.
Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones' financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not indicative of future results.