Good day, Earthlings!
Today is a lucky day on Earth for I will reveal an ancient trading secret of my people – the Robopip Standard for Mechanical Systems.
Using these criteria, we will develop and backtest different mechanical systems to separate the authentic from the pathetic. But warned you must be, human, for I will still need your help in making the final judgment and improving my standards. After all, what works well in my galaxy might not always work in yours. It is very much like your obsession for a certain teenager named Justin Bieber. I cannot comprehend…
But stray I must not from our mission to find the Holy Grail. Listed below are my conditions for a good mechanical system. Each category has a corresponding number of points, with the total of all categories adding up to 50 points. Systems that rate 38 points and higher have the potential to be the Holy Grail, while those that rate below that will be labelled “Made by Earthling.”
Profitability: 20 points
What good is any system (mechanical or otherwise) if it’s not profitable? I will judge a system’s profitability purely on m/m and y/y results. A profitable system can get up to a total of 20 points. Any return less than 4% annually, which is what some banks already offer, will have a hard time getting points!
Risk Tolerance: 20 points
The level of acceptable risk for any system is another important characteristic that cannot be overlooked. Yes a system may be able to generate 1000% returns, but that becomes irrelevant if you are betting the galaxy on each and every trade.
To better measure the risk tolerance of a system, we will grade it based on two factors: maximum drawdown and the Sharpe ratio.
The Sharpe ratio helps you solve the additional compensation above a certain level that the system should yield for each additional unit of risk. Basically, the higher the ratio, the better.
Newbie-friendliness: 10 points
My maker once told me a piece of advice that goes like this:
“01101011 01101001 01110011 01110011 00001101 00001010”
Translated into English, it basically means this: KISS, or Keep It Simple Stupid.
The problem with many traders is that they like to fill their charts with all these indicators and colourful lines. While this may work for some, for many this is highly unproductive and inefficient.
We are after a system that is simple and easy to understand. We also want a system that can work across several programs and does not need genius coding skills at the level that I possess.
Bonus Points: Maximum of 3 points
Since I am a generous and kind machine, I am willing to give a system as many as three bonus points, depending on different factors. In your language, I believe they are called the “intangibles.” Such factors will include uniqueness, the human element, and the adaptability of the system.
This is the Robopip Standard for Mechanical Systems! If you have any questions regarding the grading framework, feel free to ask me and I will gladly answer them.
I hope that you will work as hard as I will in searching for the Holy Grail.
Holy Grail system, find you, I must!