As a trader almost everyone of us who are in the phase of “the search of holy grail” could have tried exploring the so called PAID indicators and often ends with wrong indicators which has no edge in the market. Probably 98% of the PAID indicator providers are snakeoil vendors who polish a open source code by changing the color of the indicators and some little tweaks in the codings and parameters and present it as a colorful, exotic future forecasting stuff by guaranteeing enormous amount of returns (Most of the times it beats Warren Buffetts CAGR record).
If you are still in the stage here are some of the ways where you can protect yourself from ending in wrong hands
1)Ask the PAID indicator provider to provide backtest report for the past 5 years for your favorite instrument which you are willing to trade. Most of the snakeoil vendors dont even have enough data.
2)Take a Demo of the PAID indicator and backtest yourself (or ask him to backtest in-front of you) across your favorite timeframes you are willing to trade. Make sure you are adding all the trading cost(Brokerage, Slippage, Turnover Charges…etc). Most of the cases the snake oil vendors doesn’t have enough skill to do even a simple backtest.
3)Observing a trading system live for 3 days or a month will not going to help you to fully understand the nature of the trading system. And if you are going to judge the system based on the short span results of-course you are making a big mistake.
4)If the PAID indicator provider is going to backtest only for the past month with 15 or 20 trades and claiming more than 75% winning ratio and probably you insist him to provide results for last 500 trades or last 1000 traders. Only observing a huge number of trades can give you an overall idea of the trading strategy performance across different style of markets(Bullish,Bearish, Sideways) and its riskiness involved in trading it.
5)If the PAID indicator provider is showing your only the snapshots of the indicator which shows that it predicted the future perfectly then you have the repeat the steps 1-4 again. Most of the cases if he is guaranteeing you a sure shot returns after trading his system then most probably he is a snake oil vendor.
6)The one who is not speaking about losses or risk involved in a trading system is a snake oil vendor. Neither you are not interested in understanding the risky nature of the trading system nor the PAID indicator provider doesn’t want to reveal you the risk involved or dont have sufficient knowledge to explain you the riskiness in the trading system.
7)Its quite easy to figure out a snake oil vendor who generally show various charts that made huge profits with their contact numbers embedded over the charts.
8)Now there are enough snake oil vendors entering into the Algo trading segments as newbie traders feels the algo trading can be the real money making machine as it can forecast better than him. He feels he can sit back and relax , do shopping ,concentrate on his day job or attend family functions during trading hours. Which is ideally not going to be that easy unless you have enough experience with Statistics, Programming, Understanding the nature of Market dynamics and of course Trading Experience.
If you have any other snake oil vendor prediction mechanism you can write it down here 🙂
14 Replies to “Things you need to know before buying PAID indicators”
So true, there are vendors posting a snapshot a a macd curve or atr line on a trending day and say that only their trading indicator gives such returns. But tell them to apply it for a year at a stretch and it will be giving trades every now and then and end with losses. Few even use the zig in amibroker to make it look like Elliot Wave.
Geat article as always but I think the first point should be :
If a PAID indicator provider highlights keywords such as Free, 100%, High Accuracy. or using names of legends like Jhunjhunwala Buffet, then it surely means it is the first warning signal of a snake oil vendor.
yes . really true. anyone is giving 100% accuracy why should sale the service.? i visit one site . they are discussing about the service. most of the traders said they are loss money the service also very worst.
Thanks for the chart help provided to investors like us. Can it be possible to put up a system which can do a chart scan and give us the result of buy or sell signal as per your indicator.
May be a pop up listt stock wise as the signal be. This will eliminate going thru each and every stoch to search and trade. This may be for a given criteria.
Also can we add some popular technical indicators into your chart for extra advantage.
Thanks for your help.
Your really amazing it’s very helpful to make profit.
Thanks for your chart
where i can get demo of amobroker software, Is it available from your website or from your office before i purchase.
As I am an old visitor of your site,It is found that many people commenting (+ ve) occasionally in the site tradingview.com.about your trading signals.
I think it is a better idea to publish your trading ideas in that site also on a daily basis.
I post my ideas here https://www.tradingview.com/u/rajandran.r/
Dear Sir. I wish to have a demo of your system. How can it be possible. Regards.
Try registering here http://www.marketcalls.in/demo
Sir, Thanks lot for your valuable articles, sir, i am interested in derivative segment, what i shall do ?
Why nifty future charts with buy sell signal is not seen in my computer as well as mobile
doing good job ,keep it up rajandran