This
chart was produced by applying the CTT strategy to historical data,
which is something easily done with a computer and some charting
software. I use TradeStation, which is one of the more popular
platforms for charting and analyzing market data. It allows you
to put
your trading concept into computer code (Easy Language in the case of
TradeStation) and apply it to historical market data to see if your
idea works, and if it does how much profit it would make. It
also allows one to tune the strategy to optimize its performance.
This can easily lead to over estimating how well the
strategy will
work when put into actual practice. In extreme cases, it's
possible to "datamine" the historical record to produce a winning
strategy based on a completely meaningless concept. Anyone
considering trading futures based on a purchased strategy should be
aware that there is a high probability that the strategy will not work
as well in the future as it has worked in the past.
One
particular issue with the TradeStation strategy reports is that every
time the futures contract rolls over (4 times per year) the historical
market data has to be "adjusted" to make it agree with the data for the
current contract. As a result, the TradeStation Strategy
Performance reports will not reproduce the same exact numbers once the
futures roll over to a new contract and the historical data is
recalculated. This may not be true for every type of strategy,
but it is true for CTT. The further back you go, the less
reliable are the numbers, but of course, the further back you go, the
less relevant is the data. I only include it to show that the
basic concept persists over a long period of time.