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Glossary
 
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Annualized Return This is the rate of return that the service could be expected to earn if its performance for the rest of the year matches its performance to date. If the latest data is for this year, it is shown as the Current Year Annualized Return. If the latest data is prior to that, it is shown as the Latest Year Return.
 
Annual Return The percentage annual return is based on the change in value of the VAMI. The value of the VAMI begins with a hypothetical $1,000 investment. This amount is then compounded using the service's monthly returns from January through to December. The actual percentage change in the value of the VAMI from one year to another (effectively, from the December value of the previous year to the latest value in the current year) gives the Annual Return of the service.
 
AutoTrade This tells you whether or not you can AutoTrade the service's recommendations.
 
Bank - Default Trading Profile This is the amount of initial capital that was used to generate the service's results. This is set at $20,000 for all services, regardless of whether they are Stocks, Options or Timers.
 
Bank - Your Trading Profile This is where you can enter your capital amount (that is, your starting bank) in order to personalize the service's results. When you then press the recalculate button, the results will then be recalculated based on your capital.
 
Brokerage/Trade - Av This is the average brokerage you would have paid per trade. This gives you some idea of what your costs will be in order to replicate the service's results though, as all our results are net, brokerage has already been taken into account.
 
Cost/Trade - Av This is the average cost per share that the service traded, either short or long. For option services, it is the average cost per option contract (bearing in mind you have to then multiply that 100 to get the actual cost of the trade).
 
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Coverage This section tells you two important things about your trading profile:

First, it tells you what percentage of the total number of trades done by the service per month you would have been able to do given your current Trading Profile. To calculate this, it takes the average number of trades done by the service each month and then compares it to the number of trades per month you would be able to do based on your % Per Trade. For example, 5% Per Trade would allow you to do 20 trades/month, 10% Per Trade would allow you to do 10/moth, etc.

Second, it tells you what percentage of the average number of open positions held by the service you would also have been able to maintain. Just because you can do all the trades the service does (the first part above) doesn't mean you'll be able to maintain them as open positions. First, we work out the average number of Open Positions held by a service, and then compare that figure with your % Per Trade in the same way as we did in the above example.

 
Downside Deviation This measures downside volatility against a predetermined Minimum Acceptable Return (MAR). The MAR used in our calculations is 5%/annum or 0.42%/month. The Downside Deviation is a measure of the degree to which the service's results have deviated from that level of return, but only on the downside. In other words, it doesn't measure positive performance, only returns that are LESS than the MAR.
  
Free Trial This tells whether or not the service offers a free trade period.
 
Gain/Winning Trade - Av This is the profit that, on average, the service makes each time it completes a winning trade.
  
Investment/Trade - Av This is the average dollar investment per trade that the service makes. In other words, this is what you could reasonably expect to have to invest each time you entered the market if you wanted to replicate the service's results.
   
Largest Monthly Gain This is the largest single one month gain that the service has achieved in its lifetime. In other words, of all the returns shown on the Monthly Returns graphs, this is the largest.
 
Largest Monthly Loss This is the largest single one month loss that the service has achieved in its lifetime. In the rare cases where a service has had no monthly losses, it is the smallest monthly gain.
 
Loss/Losing Trade - Av This is the loss that, on average, the service makes each time it completes a losing trade.
 
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Maximum Drawdown This measures, as a percentage, the maximum loss that the service has experienced and is taken from the top of the particular move (the time when the losing trade/s began) to its bottom (the time when the next profitable trade happened). Basically, it tells you what percentage of your bank would have been lost before you began to recoup that loss. The unit used to measure the loss is the VAMI.
 
Monthly CROR This is the Monthly Compound Rate of Return. It is the actual rate of return you would have achieved had you used the service, and is therefore a key statistic. It is calculated such that, if $1,000 were compounded each month by this rate for a period equal to the number of months the service has traded, the result would equal the current VAMI figure.
 
Monthly Returns The Monthly Returns graphs gives you the net monthly return achieved by the service based on the Default Trading Profile. The formulae used for calculating this is:

((Gross Return - (Brokerage + Subscription Fee)) / Capital) x 100

When you enter your Trading Profile, it will then recalculate these results according to your parameters.
  
Open Positions - Av # This is the average number of open positions that the service maintains at any one time.
 
Profit Factor Profit Factor measures the gains made from all the service's winning trades verses the losses made from its losing trades. It does so by summing the total dollar gains and dividing it by the sum of the total losses, thereby giving a ratio between the two. A Profit Factor of 2, for example, would mean that twice as much money was made from the winning trades as was lost on the losing ones.
  
Range of Monthly Results This gives the service's Range for each year, which is the largest monthly gain vs. either the smallest monthly gain or the largest monthly loss. These figures are taken from the Results - Monthly Returns table.
 
Return/Trade - Av $ This is the average dollar return per trade achieved by the service.
 
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Return/Trade - Av % This is the average percentage return per trade achieved by the service.
 
Risk Adjusted Monthly CROR In calculating the Monthly CROR, it is important to remember that it is a "smoothed" figure which can give the illusion that there is a steady growth rate in the value of your investment. As you know, this is not how brokerage accounts grow. Trading can be extremely volatile, and to get a true picture of what would have happened, you need to take this volatility (or risk) into account. That is what the Risk Adjusted Monthly CROR does.
 
Risk - Default Trading Profile This is the percentage of the initial capital that was risked, per trade, to generate the service's results. The default values are:
  • Stocks - 20%
  • Options (Short) - 15%
  • Options (Long) - 5%
  • Timers - 100%

These defaults are sometimes adjusted, though, if they need to take into account the service's trading style. For example, Short Options services that only trade once a month are allocated 100%.
 
Risk - Your Trading Profile You can continue personalizing the results by entering the percentage of your bank you wish to risk per trade. Please note that when you INCREASE your risk, you also DECREASE the number of individual trades that you are able to do and, consequently, the number of open positions you are able to maintain. When the number of open positions you are able to maintain is LESS than the service's average, it will begin to DECREASE your returns. 
 

Shares/Trade - Av #

This is the average number of shares (or contracts) per trade that the service either buys or sells (depending on whether they trade either long or short) each time they enter the market.
 
Sharpe Ratio - Annual The Sharpe ratio is a risk-adjusted financial measure developed by Nobel Laureate William Sharpe. It compares a service's return (that is, any return in excess of what is deemed to be the Risk Free rate of return) to a specific measure of risk, in this instance the standard deviation. The Risk Free ROR used in our calculations is 5%/annum.
 
Standard Deviation This measures the degree by which the monthly return figures deviate from the Mean Monthly Return. It is therefore a measure of volatility (or risk) of the monthly return results.
 
Sterling Ratio - Annual Like the Sharpe and Sortino ratios, the Sterling ratio is also a risk-adjusted financial measure. It differs from them in that it uses the Maximum Drawdown as its measure of risk. 
 
Sortino Ratio - Annual The Sortino Ratio is also a risk-adjusted ratio, this time measuring reward verses the downside deviation (or semi-deviation) rather than the full standard deviation as used in the Sharpe Ratio.
 
Strike Rate - Av The percentage of trades recommended by the service that were winning trades. In other words, it is a direct measure of their ability to pick winning trades.
 
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Top Trader Index The Top Trader Index (TTI) uses 19 different parameters to assess a service's overall performance. The best service in that category is given a score of 20, the second best a score of 19 and so on down to 1. These individual scores are then totalled to give an overall rating of a service's performance. As there are 19 categories, it means the best possible score is 380.
 
Trade Performance Index The Trade Performance Index (TPI) assess a service's trade performance irrespective of other issues such as bank size or percentage risk. It looks specifically at the return a service achieves on its trades using a standard bank of $10,000. 
 
Trading Profiles This section is divided into Default Trading Profile and Your Trading Profile. The former tells you the parameters we have used to calculate the services results, while the latter is where you can enter your own parameters. When you the press Recalculate, it will recalculate the results according to your trading profile.
 
Trading Strategies This section is divided into Reinvestment Trading Strategy and Income Trading Strategy.

Reinvestment Trading Strategy - This tells you how much you would have earned had you reinvested your profits. You need to enter your Investment Period (in Months). When you have done this, it takes the other two parameters (My Beginning Capital and Monthly CROR) from your current Profile and calculates your Ending Capital.

Income Trading Strategy - This tells you how much cash profit you would have made each month from the service. You don't have to enter anything in this section. It calculates its results automatically once you have entered your Capital figure. The result is a Net figure, taking into account brokerage and subscription costs.
 
Trades/Month - Av # This is the average number of trades executed by the service each month.
 
Type of Trades This gives you the type of trades that the service normally does. For stocks, they will either be long (that is, buying and then intending to seel at a profit) or short (that is, selling the shares into the market and then buying them back for less). For options, there are any number of trades types executed by the services. See the link for details.
 
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Ulcer Index The Ulcer Index was developed by Peter Martin in 1987 and is designed to measure downward volatility (as opposed to the Standard Deviation, which measures it in both an upward and downward direction). It does this by measuring both the depth and the duration of drawdowns (measured as a percentage) from previous highs. The greater the drawdowns, and the longer it takes to recover from them, the higher will be the Index, so a low figure is best.
 
Ulcer Performance Index The Ulcer Performance Index is created by inserting the Ulcer Index into the Sharpe ratio to replace the Standard Deviation. In the Sharpe Ratio, the Standard Deviation is used as the measure of risk. By inserting the Ulcer Index in the formulae, the risk therefore is only downside volatility, not upside.
 
Value for Money Index The Value for Money Index (VMI) is an extension of the Trade Performance Index and measures the relative value a subscriber gets for their monthly subscription fee and, in doing so, answers the question, "Where is my subscription dollar best spent?"
 
VAMI The Value Added Monthly Index (VAMI) measures the performance of a hypothetical investment of $1,000 over time. Starting out at $1,000, its value is added to each month by an amount equal to the monthly percent return. Essentially, it measures the effect of compounding your returns. The VAMI is useful as it allows you to easily measure one service against another as both begin from the same starting point ($1,000).
    
Winning/Losing Months This is the number of winning months that the service has had for each year it has been in operation.
 
Wins/Year - Av This is the average number of winning trades that the service has made each calendar year it has operated.
 
% Winning Mths This is the percentage of winning months that the service has had for each year it has been in operation.