This article outlines the way in which we calculate and report the performance of the EWO trade alert track record. It is also intended to help you understand the purpose of our trade alert service and how best to interpret the results that are presented.
The Track Record is Hypothetical
The track records presented on this website should be considered hypothetical.
The trade alert track record is calculated based upon the entries, exits and any adjustments issued as part of our service. These alerts are available on the website and evidenced by their specific time / date of sending.
The company does not maintain a trading account, either separately or combined, in which we trade the alerts issued as part of the alert services we offer.
The track record is not reporting the balance of a trading account, but rather the balance of a hypothetical portfolio based upon the trade alerts issued under our services.
In order to make this theoretical portfolio as realistic as possible, rather than report the price recommended in our trade alert, we endeavour to use a confirmed fill price achieved by our subscribers for each alert.
Where a confirmed fill price is available to us, as reported by a reliable third-party broker, we’ll provide the label “Fill” next to each individual price in our track record. In this way, anyone reviewing this track record can be certain that this was an actual price achieved in the market.
Calculation of Results
The track record presented on this website represents the net result of all completed trades in our track record as at the reported date. This means that the track record includes all trades that have been open and closed prior to the reported date.
The reported date is typically the end of each month. We endeavour to update the track record for all trade alerts services within a reasonable time-frame after the end of each monthly period.
The track record does not include trades that are still open and ongoing at the reported date. This means that there is generally additional unrealised profit or loss in open trades. These unrealised profits and or losses will be incorporated into this track record during the period when those trades are completed.
Consequently, there is typically an amount of capital at work (at risk) in the market that is not accounted for at the reported date. This amount of capital is typically less than the recommended amount of capital recommended to trade the strategy.
Our track record assumes that all trades are executed at the value issued in the trade alert. All of our trade alert values are issued at less than US$500. Initial debit for a trade entry. This allows us to ensure that even subscribers attempting to follow trade alerts with a minimum recommended account balance do so within the money management/risk management parameters suggested.
The track record reported is non-compounded. This means that at the beginning of each annual period, we assume that the amount of money in the portfolio is always the same as the recommended account value required to trade the strategy. In this way, we believe that the reported track record is more realistic for any individual to reference the performance that would have been achieved, regardless of where they may start along the reported track record.
Where we report figures for Return On Capital (ROC), we use the formula: ROC = (Profit or Loss) / (Trade Entry Cost + Initial Margin)
In line with the above formula, our figures for ROC are based on initial cost of capital, rather than total cost of capital. We compare our total profit to the initial cost of entering the trade including margin. Therefore, where trades are adjusted and additional capital is added, despite the fact that trades are limited risk trades, total reported loss may be in excess of 100%. We represent individual trade results on our site this way so that a simple inspection of the ROC chart provided for each trade will allow a determination of whether additional capital was added to the trade.
We note that ROC (or ROI) reported on initial capital will differ for adjusted trades in that both % losses and % wins will be larger than those calculated using total capital, however analysis has shown that the average % trade win or loss reported for the portfolio is similar using either method.
What our Track Record is Not
Our track record is not intended to be a detailed accounting of actual trading profits that either we or our subscribers have achieved.
We do not have any visibility into the trading accounts of our individual subscribers and do not control which of our trade alerts, if any, they choose to trade.
Furthermore, for those trade alerts that our subscribers do choose to follow, we do not have any visibility as to how and at which price they execute the trades, whether they may be assigned, or any other actions that may occur within their trading accounts.
Trades Prior to February 2019
The current track record includes trades that were issued prior to the current EWO technology platform being available.
These trades have been added to the track record manually, and consequently do not contain reported Fill prices.
Evidence of these trade alerts is available in videos on the EWO website from 2017, 2018 and 2019.
Changes to the Track Record in November 2021
In November 2021, we made changes to the risk management approach use in the EWO Volatility Strategy. In line with that change, we also adjusted our hypothetical track record historically at the time to reflect more accurately what subscribers to the service can expect to experience.
Details of that change were announced and provided to subscribers at the time. You can refer to that documentation, here.
Members can also review a video of the announcement here.
Accordingly, subscribers to the EWO Volatility Strategy trade alerts services experienced substantially greater losses during 2020 and 2021 than represented in the current track record.
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This site and the information provided on this website is owned by Financial Systems Pty Limited ACN 105 216 340 (Trading As Elliott Wave Options) and the holder of an Australian Financial Services Licence (No: 241060) (“EWO”). In providing the information on this Website, EWO is not providing advice and does not take into account the investment objectives, financial situation and particular needs of any particular person. Investments in securities or derivatives involve risk. Before making an investment decision, an investor needs to consider, with or without the assistance of a Securities Adviser, whether the information on this Website is appropriate in light of their particular investment needs, objectives or financial circumstances. By using our website you acknowledge you have read our full Risk Warning disclaimer located HERE.