Why Xtrends is a hoax... （又一个假股神）

Cobra

(The original post is here: http://mikevadon.blogspot.com/2009/10/why-xtrends-is-hoax.html)

 

 

I received a message from a trader in Russia asking me why I thought that Xtrends is a hoax.  The reason why I believe it is a hoax is because there is no way that Sol could have managed to meet the margin requirements with the wild swings on the ES.  In fact, it seems impossible that he could be trading these wild swings without a margin call by his brokerage.

Let me explain margin further with the following article:

http://commodities.about.com/od/understandingthebasics/a/futures_margin.htm

“If you are familiar with trading stocks on margin, this might be easier to pick up. You can trade stocks on up to 50% margin. So, you can buy up to $100,000 worth of stock for $50,000.”

“With futures contracts, it works in a similar fashion but the margin rate is much lower. Normally, you only put up about 5 – 15% of the contract value in margin. For example, if you want to buy a contract of wheat futures, the margin is about $1,700. The total contract is worth about $32,500 ($6.50 x 5,000 bushels). Thus, the futures margin is about 5% of the contract value.”

“Initial Futures Margin is the amount of money that is required to open a buy or sell position on a futures contract.”

“Margin Maintenance is the amount of money where a loss on your futures position requires you to allocate more funds to bring the margin back to the initial margin level. For example, suppose the margin on a corn futures contract is $1,000 and the maintenance margin is $700. If you buy a corn futures contract you will need to have $1,000 set aside for the initial margin. If the price of corn drops 7 cents, or $350, you have violated the maintenance level and need to add an additional $350 in margin to bring it back to the initial maintenance level.”

“Margin Calls – a margin call on futures contracts is triggered when the value of your account drops below the maintenance level. For example, you hold five futures contracts that have an initial margin of $10,000 and a maintenance margin of $7,000. The value of your account falls to $6,500. You will get a margin call requiring you to add $3,500 to your account to bring it back to the initial margin. You also have the option of closing your positions to eliminate the margin call.”

“How to Calculate Futures Margin

Futures margin rates are typically calculated using a program called SPAN. This program measures many variables to come up with a final figure for initial and maintenance margin in each futures market. The main variable is based on the volatility of each futures market. The exchanges do adjust their margin requirements occasionally based on market conditions.”

In Sol’s journal, you can clearly see where the market turned against him wildly many times and it seems impossible that he could have gone without a margin call.

I am not the first person to notice this, but there are many people on Disqus who have noticed it as well:

http://xtrends.disqus.com/shifting_stop_to_breakeven/

 

http://slopeofhope.com/2009/10/slip-sliding-away.html#disqus_thread

 

Atilla, Sol or anyone else is welcome to come to this blog to explain the inconsistencies that are within the Xtrends blog.  Until then, I will dismiss the blog as a hoax and hopefully is not part of a larger scam to defraud the public.

soulvirus

股神那么多， goldman sucks和金瓶梅怎么赚钱哈

Cobra

股神那么多， goldman sucks和金瓶梅怎么赚钱哈
soulvirus 发表于 2009-10-22 23:07

Xtrends曾经非常火爆的，你不知道吧。

manhattan

this guy has been shorting all the way up

epsom

soulvirus

班长， 偶是不爱看书读报的。。。惭愧。。。

Xtrends曾经非常火爆的，你不知道吧。
Cobra 发表于 2009-10-22 23:11

金牛银熊

老熊说一句到尽的话，谁也不会经常公开自己超过一百万的账户的具体操作情况的，别说是实时的啦，但偶尔吹个牛显露一下也是有可能的。
因为它太复杂和太隐私啦。

流动的建筑

1# Cobra

If there is indeed a working algorithm, the margin requirement is technical, which can be easily solved with calculated risk control. But it will definitely affect the return rate. I don't know the details, that's all I can say...

trueself