Concept FX

[SandyW]

Hi All,

Just been looking again at the Concept-FX historical results, as published on the Concept-FX website, to get a sense of the potential loss during the early stages of a buyer using the system.

If you had started trading at the same time as the results start, on 1 Apr 2004, then you would have quite quickly gained confidence in the system with fairly regular steps up in your trading capital and after 25 or so trades, ie by October, you would have doubled your money. Nice.

If you had started trading on 14 Feb 2005, after only 14 trades your trading capital would have reduced in a near straight line by over 40% within 3 months. So you would have had to have a lot of confidence in the system not to mention very strong self discipline, to keep going. Most likely you would have stopped trading and slagged the system off mercilessly.

Yet again, to illustrate the potential, if you had started trading on 27 May 2005, after around 25 trades you would have increased your initial capital almost fourfold. You would likely have been urging all your friends to get onto the easy money machine. Not to mention being blinded by the dollar signs flashing around in your eyes. The temptation for me would have been to double my stake, and some, every trade!!

You can see why the vendor says there is no question of a short term trial of the software, and that they take a long view. They are not copping out, but just not willing to make themselves hostages to fortune. You either put your faith in the figures and buy into it. Or forget it.

Those of us starting now, must be ready for a possible draw down of at least 50% in the first months. That is not to say there is absolutely no risk of a total wipe out. That's trading. Equally, if the system does take-off for us we need to stay cool.

An interesting question. Should you reduce your staking level in the event of a big draw down? I am far too lazy to do the maths, but the conventional wisdom is that you should not, because if you do you will never recover. You cannot reasonably expect to recover the losses incurred staking at one level, by staking at a lower level.

Maybe this is stuff you guys have already sussed for yourselves, and you think I am a bit slow. I'm just trying to get my own mental/emotional ducks in order, so that I don't lose my nerve, and so fail all over again.

 

[jason0181]

Sandy

I did a very similar thing with all the historical data. My logic was that if a 5% stake is always waged, then there can be no more than 20 losses in a row before the bank is completely wiped out.

I looked at 20 trades over many periods, especially the really bad times with lots of losses. Even during these, there was an overall pip profit. That was enough for me to be convinced that you need to stick with the system, and do what it says.

I have only had the two trades so far, one win, one loss, but am in profit by 150 pips. Hopefully there will be some more triggers soon, so that the confidence can come back to everyone.

 

[GMP]

An interesting question. Should you reduce your staking level in the event of a big draw down? I am far too lazy to do the maths, but the conventional wisdom is that you should not, because if you do you will never recover. You cannot reasonably expect to recover the losses incurred staking at one level, by staking at a lower level.

Maybe this is stuff you guys have already sussed for yourselves, and you think I am a bit slow. I'm just trying to get my own mental/emotional ducks in order, so that I don't lose my nerve, and so fail all over again.

You should ideally keep your stake level constant regardless of results. A big drawdown or a big run of profits are often followed by a string of the opposite. Sticking to a percentage per trade is the only way to evaluate a system properly, and 5% is the upper limit of what most professionals would consider prudent.
If the system's profitable over time, that 5% will be worth more and more in real terms, so you're not "missing out" on profit.
Sounds like Jason has the right approach - figure out what you can afford to risk, decide on what percentage of this you want to stake per trade and check Concept's results to see if you'd have been knocked out of the game in the past. It doesn't preclude being knocked out in the future, but it does give you a better idea of what to expect when the waters get a bit choppy.
Never change your system right after losing (or winning) a huge trade - the emotions distort your perception of reality and generally set you up for a fall. (In my experience anyway!)

 

[SandyW]

You should ideally keep your stake level constant regardless of results. A big drawdown or a big run of profits are often followed by a string of the opposite. Sticking to a percentage per trade is the only way to evaluate a system properly, and 5% is the upper limit of what most professionals would consider prudent.
If the system's profitable over time, that 5% will be worth more and more in real terms, so you're not "missing out" on profit.
Sounds like Jason has the right approach - figure out what you can afford to risk, decide on what percentage of this you want to stake per trade and check Concept's results to see if you'd have been knocked out of the game in the past. It doesn't preclude being knocked out in the future, but it does give you a better idea of what to expect when the waters get a bit choppy.
Never change your system right after losing (or winning) a huge trade - the emotions distort your perception of reality and generally set you up for a fall. (In my experience anyway!)

Hi GMP,

Of course it should be a constant 5%. The hypothetical question was meant to be "5% of what?" The original (or subsequently increased bank) or a current reduced bank. So, if in the event of profits my trading capital increases to (say) £8000 then I raise my stake to 5% of £8000. But if I subsequently suffer losses and my capital goes back to (say) £4000, I continue to stake 5% of £8000. So the stake will always ratchet up or stay level, but never be reduced. That is the approach I always take.

 

[jason0181]

It would be great to see the bank growing 'exponentially' like Concept showed in their first year results.

 

[anddy26]

concept show 5% of 3k 4k 5k 6k etc..ive set up a spread sheet where we risk 5% of the bank at any one time...feel free to use this.

 

[SandyW]

It would be great to see the bank growing 'exponentially' like Concept showed in their first year results.

Funnily enough, if you graph the gross capital, ie the bank with withdrawals added back, it continues to curve up, getting steeper after the stake was capped at 5% of £25,000 than when the stakes were being ratcheted up! It "should" be more like a straight line. I would love to know what caused this. Just the quirks of the market, or tweaking of the system?

 

[jason0181]

Andy

I did almost the same spreadsheet today. It does take good accounting skills to keep on top of all the trades, but is a great way to know how much stake should be placed per trade.

 

[jangroom]

concept show 5% of 3k 4k 5k 6k etc..ive set up a spread sheet where we risk 5% of the bank at any one time...feel free to use this.

Thank you far better than using a basic calculator.

One concern I have is depending on the spread betting company you use I am with CMC you cannot bet in fractions of less than £1 increments. How are people getting around this rounding up or down based on your bank size or moving to a company that does allow fractional betting. Potentially this could skew the win loss rate in either direction depending on the rounding calculation i.e round up and bet more on the losers and round down bet less on the winners is a possible scenario.

Simon

 

[pearo86]

Is there anyway that maybbe four people could chip in and split the cost of the system four ways! I must admit the system sounds very interesting. I just cannot afford to chuck £4000 out of the window!

Any suggestions anyone???

 

[SandyW]

Rounding Stake

Thank you far better than using a basic calculator.

One concern I have is depending on the spread betting company you use I am with CMC you cannot bet in fractions of less than £1 increments. How are people getting around this rounding up or down based on your bank size or moving to a company that does allow fractional betting. Potentially this could skew the win loss rate in either direction depending on the rounding calculation i.e round up and bet more on the losers and round down bet less on the winners is a possible scenario.

Simon

Hi Simon,

I usually trade with CMC, and have only just started using Concept-FX. My intention is to simply round up/down to the nearest. It obviously won't change the entry and exit or win/loss ratio (the ratio of the number of winning trades to losing trades). But it might as you say slightly skew the profit/loss levels. Roughly speaking, Concept seems to place trades fairly evenly over five of the pairs, and they each have roughly the same win/loss ratio. The pair with least trades, the most adverse win/loss ratio, and the most erratic results historically, is the EURJPY pair.

 

[SandyW]

Is there anyway that maybbe four people could chip in and split the cost of the system four ways! I must admit the system sounds very interesting. I just cannot afford to chuck £4000 out of the window!

Any suggestions anyone???

Hi,

Yes £4000 certainly is a lot!

As I understand it, the terms of the contract/licence with the Concept-FX vendor is straightforward. It is for one user, and any "sharing" is directly contrary to the agreement. Any cheating could result in the withdrawal of the licence, and I imagine forfeiture of the initial £4000. For that reason, on this thread we are all very careful not to be specific about current trades or pending orders. You could approach the vendor with your idea, but I don't imagine you are the first, and I doubt they'll play ball.

Try negotiating the price. It's not unprecedented.

 

[anddy26]

Thank you far better than using a basic calculator.

One concern I have is depending on the spread betting company you use I am with CMC you cannot bet in fractions of less than £1 increments. How are people getting around this rounding up or down based on your bank size or moving to a company that does allow fractional betting. Potentially this could skew the win loss rate in either direction depending on the rounding calculation i.e round up and bet more on the losers and round down bet less on the winners is a possible scenario.

Simon

Hi Simon..if you use IG index they let you put £2.45.£1.78..instead of £2 and £2 ..as i assume this is the way you would round up and down.

 

[Arek Okrasa]

Hi Anddy

One of our horses triggered already...any suggestion how it may go...right...or like the last time...?

Arek

 

[Arek Okrasa]

Hi LookUpLeg

I hope you aren`t on meeting now..or (it is probably dosen`t matter) but...one of our horses have started to run already. Maybe you have any suggestion about that one. How it will probably go? Right or againt us...as it happened last time

I know - you can see more than me
Arek

Damn what did I miss!! Been in a meeting and then lunch, and EUR/USD gone through the roof. I actually wanted to close the trade this morning as my charts were saying 'up' rather than concepts 'down', however as you guys have already pointed out, you gotta stick to the system.
Oh well, have a good weekend folks.

 

[jason0181]

Arek

Have patience as soon as the trade come on. The trigger is done in advance, so it has to meet the lowest point before coming back up. If they could send more alerts, it could be that they could get more accurate and alert as soon as it trends the other way. That is why you will see a negative in your account to start with.

The price for this pair is almost at its lowest for a year, where it did rally last time to close 500+ pips up. As long as the stop loss does not come in first, this could be a good one, but then I think that of all the trades.

 

[anddy26]

Hi Arek...i think it probably has a decent chance this one...its going to go to support near april..then retrace back up....but i knew i wouldnt need concept..lol....joking aside..in our wee chat room last night..i took a pair and we thrashed out a scenario...it was eurjpy...i put an order on to buy once it hit..168.68....jason said i was brave...i think there is an upward trend..and its going to retrace back up to its all time high.......btw arek......dont look at ur bank while trade is on...this lets in emotion....uv put the trade on knowing ur going to at worse lose 5% of your bank....its in the red at the moment..and when u see it go to -£90...-£120 its nerve racking..so just look at ur chart package and not ur spread betting account.....wish i could follow my rules..lol..

 

[LookUpLeg]

Hi LookUpLeg

I hope you aren`t on meeting now..or (it is probably dosen`t matter) but...one of our horses have started to run already. Maybe you have any suggestion about that one. How it will probably go? Right or againt us...as it happened last time

I know - you can see more than me
Arek

Hi Arek,

No meeting today, I'm on holiday for a week

I must admit, I'm not feeling comfortable with the trade that's just opened. With all the Fannie Mae and Freddie Mac stuff coming out of the US (along with IndyMac), we would easily get knocked out with the slightest bit of bad news being released, and indeed it was due to the news about Fannie and Freddie that ended our trade last Friday.
On the plus side, technically the trades look a good setup so fingers, legs, arms and everything else is crossed!!
I'm actually heading out for the day today so I defo won't able to look at the charts. Be very wise if you could do the same (not look at the charts I mean), because if you're like me, you will tie yourself up in knots by watching, especially if it starts heading the wrong way.

Good luck to all of us who are in it!

 

[anddy26]

Arek im an optimistic pessimist..and my mind set is....think the worst of every trade and you will never be dissapointed

 

[Arek Okrasa]

Thanks, thanks, thnks
Arek