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I appreciate firms that offer people a chance to trade with money that is not theirs. No doubt their efforts add to the industry in terms of knowledge and, more importantly, liquidity.
One of the metrics combines use is a 'consistency' evaluation.
We all know the adage “cut your losses and let your winners run”. The combine firms repeat it all the time. However, in practice they actually penalize you for it. It is their business, and it is their money. So I understand that they can do what they want. But I think they would be better served if they used a different approach.
Let's try a sports analogy.
Your star basketball player is lighting it up on the floor. The player averages 20 points a game and has scored 28 points tonight. You are not only a coach but you have an amazing mathematical mind and you realize that he is scoring 2 standard deviations above his average.
The rest of the players on the team realize he has a hot hand tonight. They start passing him the ball and running plays where he is open for easy jump shots. But the player passes the ball instead of taking the shot. This happens over and over again.
As coach you call a timeout. The team congregates around you and you ask your star player why he is passing the ball when he has a hot hand and the team is running plays that make sure he gets an open shot.
He replies, “if I score too much in one game I will be penalized in the draft. Scouts will look at my scoring and discount any additional points I have in this game. I want to maintain my shooting percentage. My agent says it's better to be consistent.”
See my point?
This whole consistency metric penalizes traders who follow a trend for big scores while cutting losses that can add up in choppy markets.
IMO, would be better to use a aggregate combiner profit figure combined with a Reward/Risk threshold.
That's my two cents.
You are making an interesting point. However, it is basically the same point you already made in the main TopStep thread today, although this time you added in the basketball analogy, which is also not bad.
The thing is, we have a proliferation of split topics already in the forum, and traders especially seem to like to make new threads about TopStep and the other funding companies, alone and in combination, which makes it harder for people who are interested in a topic to find what they are looking for. It is much better to keep related posts together, and especially to use a vendor's review thread for posts about them.
I am closing this thread to prevent creating a split topic. Anyone interested in the subject of the thread should see @Poosman's similar post in the TopStep AMA thread:
Hi Michael, I've been on step 2 now for a few months. Your staff is fabulous and I thank you for creating TST because without it, I doubt I would have had the nerve to do this and I really enjoy it.
Suggestion:
The 'consistency' metric …
Thanks.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
