ForexSpirit

No matter how many times we come across the warning phrase “past performance may not be predicative of future returns” it seems we are doomed to ignore it. Past performance data seemingly ends up the most misused information in the investment business.

I am going to list my past performance trading forex using the 4×1 methodology. There are potentially many uses for this information. For example, it could be used to compare my performance to that of other forex traders or benchmarks.

Do not overweight my historical returns in any equation used to predict future performance. According to Mark T. Finn and Jonathon Finn, in an article titled ‘The Triumph of Hope over Long-Run Experience’ (contained in the book ‘Just One Thing’) past performance should only get a 4 percent weight when assessing a trader’s future performance.

The authors of the article give prior beliefs about the range of skill of traders in general a 35 percent weight. In other words this is your belief as to the abilities of all active forex traders in general.

Top of the list, with a 61 percent weight, is information about the trader excluding past performance data. This other information includes the process and philosophy employed by that trader. This sort of information about myself is contained within the numerous other articles and posts that I have written on this blog, so feel free to browse through the rest of the site to get a better understanding of what my process and philosophy are.

A few good articles to start with include:
Keys to trading success
Look! No indicators
Seeking clarity

After that roundabout introduction here are the relevant statistics:

March 2006: 7.14% (demo)
April 2006: 7.1% (demo)
May 2006: 5.65% (demo)
June 2006: (1.128%)
July 2006: 8.92%
August 2006: 3.68%
September 2006: 4.145%
October 2006: (3.9%)
November 2006: 3.25%
December 2006: 0.5%
January 2007: 9.5%
February 2007: 6.6%
March 2007: 3.66%
April 2007: 3.05%
May 2007: (1.50%)
June 2007: (4.69%)
July 2007: 3.59%
August 2007: 2.05%
September 2007: 19.78%
October 2007: 50.08%
November 2007: 1.91%
December 2007: (79.09)%
January 2008: 7.9%
February 2008: 19.91%
March 2008: (17.68%)
April 2008: (43.08%)
May 2008: 2.52%
June 2008: 11.39%