Technical Information about how tradersdevGROUP determines hypothetical execution prices
All results displayed on tradersdevGROUP must be regarded as hypothetical. Elsewhere on this Web site we warn you about the risks of relying on hypothetical results. Hypothetical results can be vastly different than the real-life results you can achieve in your trading account, almost always for the worse.
Since all results on tradersdevGROUP must be regarded as hypothetical, we believe it is useful to explain how these hypothetical results are calculated on this site. The purpose of this page is to describe with some technical detail information about how we gather and calculate hypothetical results.
How does tradersdevGROUP decide what "trade price" to use in hypothetical results?
The general way tradersdevGROUP works is as follows:
- Strategy Publishers enter buy and sell signals in real time. Strategy Publishers using tradersdevGROUP must transmit to us specific buy and sell information in real time. In other words, strategy publishers do not send us a historical "track record" purporting to show how they would have traded in the past. Rather, they enter into our Web site (or use electronic transmissions through our software API) a specific, actionable recommendation, at the time that action must be taken - for example: BUY 50 shares of IBM at Market, or SELL SHORT 1 E-Mini S&P futures contract at limit 2105.50.
- Once we receive this trade "signal," tradersdevGROUP does two things.
- First, it attempts to simulate how a real-life trader following the exact instructions of the publisher, at the exact moment that publisher makes the recommendation available, would fare. For this we use real-time quote feeds from various exchanges. Our simulation software uses the bid/ask spreads provided by these data feeds, where available. In other words, when a strategy publisher instructs us to BUY at market, we assume the trade will be executed at the ASK visible at the moment the signal is received.
- Simultaneously, at the moment the strategy publisher enters a buy/sell signal, the signal is relayed into the brokerage accounts of the AutoTraders who subscribe to that strategy.
- Some trading systems on tradersdevGROUP have no subscribers, or no AutoTraders. In these cases, the results shown on tradersdevGROUP will be based solely on quote-feed data, and are best-guess estimates of what a real trader might achieve.
- For strategies with AutoTrading subscribers, tradersdevGROUP receives electronic trade confirmations from the AutoTraders' brokerage accounts. These electronic messages inform us about the actual execution prices achieved in real-life trading accounts. In these cases, tradersdevGROUP displays as the hypothetical trade price the volume-weighted average execution price from all brokerage accounts reporting the specific execution in question. This data, while perhaps nominally more useful than hypothetical fills based solely on quote feeds, must still be regarded as hypothetical data, and the same dangers of relying on such hypothetical data still apply.
Please keep in mind that:
These results are based on simulated or hypothetical performance results that have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. Also, because these trades have not actually been executed, these results may have
under-or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated or hypothetical trading programs in general are
also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve
profits or losses similar to these being shown.
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.