Q&A ORSS

BarroMetrics Views: Q&A ORSS

First off, a big welcome to those that availed themselves of the opportunity of investing in ORSS. We sent out an unadvertised bonus on Oct 5.

In the video, we considered 3 instruments that were shaping up as a potential trade.

Also, not that the one-day turn around in the US$ shows the strength of ORSS: it is able to avoid many of potential whipsaw situations.

In today’s post, I’ll be answering questions raised by those interested in ORSS. I have summarised the questions and paraphrased them – think of this blog as a FAQ.

Q1:  I am a day trader, is ORSS suitable for me?

A1: No. You should invest in ORSS only if you are a swing trader and someone who has a liking for mechanical systems. ORSS comes with 5 rules that are designed to be applied in a disciplined fashion. The four weeks (60 weeks for the first 50) of email support and 4 weeks of video support will ensure you understand its application.

Q2: Will I need special software, charting packages etc. in order to trade it?

A2: No. While Market Analyst will make it easier and quicker to plot, we provide all you need to implement ORSS on your trading platform.  It will take you 3-4 mins per instrument to plot on your platform.

Q3: Do you intend the system to only be traded on FX

No, ORSS can be applied to all class of instruments. In the bonus I sent out on Oct 5, we looked at Gold, Crude Oil, S&P and a FX pair,

Q4:  How do I know ORSS will work?

I’ll answer that question on two levels.

First, the technical……We have back tested the system. I have shown you the results of that when we launched ORSS.  te

We also have had real-time confirmation of the testing results.

The beta-testers Group 1, have shown better results, because the current trading environment favours the system. You could classify the back testing as the worst results you could expect. As you know, the back tested results showed a result with a strong positive expectancy.

Group 2 have yet to complete the testing.

Secondly, the psychological……The underlying question is whether you can trust us. The unfortunate truth is:  our industry has its share of false promises so that the reality after the investment falls short of the promises.

You will have to make up your own mind on this  aspect.

I have been trading for over 30-years have the respect of my peers. Those who have taken my training know that I do all I can to help my students succeed.

Q5: I have bought many systems and they have not worked; how can I be sure ORSS will be different?

The results you generate may due to the negative expectancy of the system (i.e. the system is at fault) and/or due to your failure to execute (i.e. your discipline has to improve).

ORSS does not fall into the first category – it has a positive expectancy. As for the second, the current blog series will suggest a couple of excellent books; or you can try a trading coach.

Q6: I have been unable to find a commercial money management program. Can you recommend one?

I’ll be happy to send you a link where you can download the suggested vendors – just drop me an email with the subject: “Money Management Journal”.

34 thoughts on “Q&A ORSS”

  1. Questions:
    1. No trading system works perfectly or with positive expectancy in all market conditions?

    2. If the above statement is true, is it advisable that ORSS traders should purchase at least another trading system from Ray
    – so as to use the system that best suited the current market conditions?

    3. When ORSS do not work for say 6 months,
    a. How do the traders decide that ORSS no longer works and needed to be replaced by new system?
    (No system work perfectly eternally)

    b. Would Ray inform ORSS traders about that?

  2. Hi Paul

    Thanks for your comments. Answering your questions….

    1) 1. No trading system works perfectly or with positive expectancy in all market conditions?

    RB: I’d agree with ‘no trading system works perfectly’; and disagree with ‘positive expectancy in all market conditions’.

    If you added ‘at all time’in front of ‘positive expectancy’, I’d agree with that.

    In other words, there are some systems that, at times, will work under all conditions – Like ORSS.

    2. If the above statement is true, is it advisable that ORSS traders should purchase at least another trading system from Ray
    – so as to use the system that best suited the current market conditions?

    RB: I think this is one of the most important questions facing unsuccessful traders. And, unfortunately, the traders consistently find the wrong answer.

    Your question assumes we can avoid losses – if one system is losing money, let’s turn to another that is making money.

    In short, newbie traders are focused on finding ways that will prevent losing runs.

    Instead, what they should be doing, is finding a way or ways to accept that losing money is an inevitable part of the business of trading.

    [We have had this discussion before (about losing and about the existence of a 100% WinRate method). I believe we have agreed to disagree].

    The way I see it, if you are, at present, not making consistent money, the first step is to find a method (discretionary or mechanical) where consistent execution provides a positive expectancy.

    The statement implies we know the method’s strengths, weaknesses, assumptions, and what constitutes acceptable losses. This is especially true of mechanical systems.

    All implications,(except that of ‘assumptions’), is made clear in the backtested ORSS results. And, I cover this topic again at the end of the four weeks.

    Once a newbie knows that he can consistently make money, then and only then, would I recommend he search for new ways to improve his bottom line.

    The reason is: it’s tough enough to become consistently profitable without adding additional inputs and thus complicating matters.

    3. When ORSS do not work for say 6 months,
    a. How do the traders decide that ORSS no longer works and needed to be replaced by new system?
    (No system work perfectly eternally)

    b. Would Ray inform ORSS traders about that?

    RB: (When ORSS does not work say 6 months)…

    It’s not the number of months (time), but the relationship between the two parts of the expectancy formula that tell a trader whether a method is behaving outside the norm e.g. whether he is in a LTCM situation or normal drawdown.

    RB: a. That is answered above.
    RB: b. I go one better – I show the ORSS trader how to determine for himself whether the losses are, or are not, within norm.

    Relying on me is not so advisable. At my age, I am just as likely to pass away tomorrow as not. (G)

    Finally as an aside:

    …..words like ‘forever’, ‘perfect’are not in my trading lexicon. Rather, I see the key issue for the mechanical trader as being (said above but worth repeating):

    * whether a drawdown is normal (approriate action reduce size), or
    * whether a drawdown is beyond normal boundaries (stop trding system).

    To be clear….the latter would require:

    1) a suspension of trading of the system; and
    2) an examination of the system’s underlying assumptions.

    If newbies learn these lessons, then they will know when the appropriate action is to stop trading the system, and know when the appropriate action is to reduce size.

    Hope my answers have been helpful….

  3. Ray:

    Is this a black-box system or an open system with all rules/formulas available to the subscriber? The reason I ask this question is that I would like to implement it on my platform (AmiBroker) and run back-tests to see the results and build confidence. I am a student of Wyckoff and Drummond theories and I understand this system has something to do with Wyckoff and thus are interested.

    Thanks,

    – Mark

  4. Hi Mark

    ORSS is an open system with all rules etc disclosed.

    But, ORSS has nothing to do with Wyckoff.

    Ultimate is the course you are thinking of. This course uses a discretionary approach, and runs for for 20 weeks (at least 6 weeks of self-study Theory), 2-day seminar (summary of essential comments) and 14 weeks of webinars (application)).

    So, Mike love to have you onboard ORSS but, will understand if you pass.

    BTW from whom did you learn P&L Dot methodology?

  5. So the ORSS is something expanded from Toby Crabel’s ORB idea to longer timeframe? That would be interesting. I have tried to build my own mechanical system without much success. I am learning P&L from the old man directly.

  6. Hi Mike

    Yes that’s right- took Tony’s idea as a base, built around it and expanded it to a monthly timeframe.

    I learned P&L from Bob Stevens who retired from teaching to advise a hedge fun. I loved the ideas behind the method but could not use them to make money.

    Classic example of a good method that did not suit my personality.

  7. I would like to post comments regarding my prior experience of Ray and ORSS.

    I knew about Ray’s reputation as far back as the 1990’s and attended a talk given by him in Sydney, Australia. As a result I called him on the phone and subsequently I and a fellow “trader” met him in person as a result of that call.

    From the get go Ray did not sugar coat anything. I actually have my had written notes from that first meeting in his office at 101/25 Market Street, Sydney still today.

    Much as I knew at the time (an aweful lot and despite the fact that I already knew people making real money from trading markets) I walked away knowing that I had a mountain ahead of me if I was to trade real money for myself.

    Not only that, I had actually achieved extraordinary results with real money by investing with another trader so I had an idea of what was possible (FYI not a Madoff type situation in that we actually withdrew our money at one point for other reasons).

    Ray laid out the reality of it all in less than 30 minutes. As far as me trading my own capital I believe Ray probably saved me a 6 six figure amount (actually multiples of that).

    Ray is very grounded and made it all “real” IMO.

    In all the time since he has never tried to sell me anything not even 1 centino.

    To this day he has always answered my questions, never shirked or deflected a difficult question (I can be very direct).

    Rather than making this specific comment too long I will finish with the following:

    Trading Success or anyone else cannot make it happen for you.

    The brutal truth is that it is incredibly hard to make real money after all “costs” via trading your own capital.

    My belief is that via ORSS Ray is offering something with an edge, the rest is up to you.

    P.S. I went out on a limb here and Ray has no idea that I was going to post this.

  8. I should have also said that what Ray has shared in emails and on his blog is incredibly valuable in its own right.

    In other words, not only has he not tried to sell me anything but he has given a tremendous amount.

    How often do you hear reality from an entity that makes real money over a significant period of time?

  9. Paul said, in October 7th, 2014 at 6:05 pm
    Questions:
    1. No trading system works perfectly or with positive expectancy in all market conditions?
    2. If the above statement is true, is it advisable that ORSS traders should purchase at least another trading system from Ray
    – so as to use the system that best suited the current market conditions?
    3. When ORSS do not work for say 6 months,
    a. How do the traders decide that ORSS no longer works and needed to be replaced by new system?
    (No system work perfectly eternally)
    b. Would Ray inform ORSS traders about that?
    My initial thoughts and response to Paul are:

    Re your Q1: Is your comment a statement or a question? Please be explicit.

    Re your Q2: Why would you restrict your purchase of another system from Ray? It is clearly stated that Ray does not offer other mechanical systems.

    Given that do you have any personal recommendations that you have personally traded with real money?

    Re your Q3:

    “How do the traders decide that ORSS no longer works and needed to be replaced by new system?
    (No system work perfectly eternally)”

    Paul, can you share your own ideas and personal experiences with respect to your Q3?

  10. hi Ray,
    Thanks for the very detailed reply.

    You are really a very “detailed” person, and your mastery of words,
    – as expected from a qualified lawyer! 🙂

    1. Yes I missed out “at all time” by words, but not in my mind while writing.

    2. I did not “assumes we can avoid losses”.

    What I mean is that should we have a system for volatile uptrend market, another for volatile downtrend market, and one for quiet sideway market, one for …

    ORSS works best when the market is …

    3. As written by you:
    “If newbies learn these lessons, then they will know when the appropriate action is to stop trading the system, and know when the appropriate action is to reduce size. ”

    Ray, to me, these are very very important lessons not only for newbies, but successful experienced trades as well!

    Did those Turtle Group traders know in time that their trading system did not work nowadays?

    Your answers should be helpful (reminder) to all your students and course graduates.

    A good book on what are being discussed (by Ray) will be a great X’mas gift for the traders! 🙂

  11. hi Chris Jackson,
    Q1 My personal statement, hoping to be endorsed by Ray (as a question).

    Q2 I could only recommend Ray as he will give you his detailed trading results.

    Of course, if other successful traders provide that, use their trading systems at your own discretion.

    Personally, for Forex, I bought a few systems from Kathy Lien, Dean Morone.
    – just to satisfy my curiosity
    – when they advertised their products, they did not give detailed info of their past results as Ray did.

    Q3
    My suggestion:
    Read “The Universal Principles of Successful Trading” by Brent Penfold

    (in addition to what Ray has shared)

    For back and forward testing, use a standard contract size for each trade to plot the equity curse
    – so that the results are not distorted by the position size strategy.

  12. Hi Ray,

    “At my age, I am just as likely to pass away tomorrow as not. (G)”RB

    Could you please remember me in your will. lol

    cheers Baz

  13. Hi Ray,

    I agree that the ORSS package is a very good offer.

    On a value basis and given your background and ethics I would snap it up but for the fact that I do not believe I would stick with a system that has had 16 losing trades in a row. I would suspect that will be a problem for others as well. I know losses cannot be avoided.

    Curious if you have had feedback along similar lines from others.

    Chris

  14. Hi Chris

    First off, thank you for the wrap you posted on the blog.

    Turning now to the issue you raised about consecutive losses…..

    *The theoretical losing streak is 9.4, say 10.
    *The theoretical probability of a 16 consecutive loss is ‘0’%

    So, the 16 is an outlier – BUT it did happen in the testing period. Probably a situation where the assumptions behind the system changed for that period.

    ORSS students would be taught when to suspend trading the system and when to restart.

    The questions for those who take up the system is whether they can accept the max theoretical consecutive loss.

    I did receive a two enquiries along your lines. I gave the same reply.

  15. Just touching on Paul’s point about system result analysis/stats. With the increasing power of computers etc there are in fact a number of vendors who can show very good numbers with incredibly detailed analysis of the results.

    Ray would be better placed to comment but more analysis/stats based on system results are not necessarily better per se IMO.

    Nowadays the field is quantitative trading. Very powerful software is available at little cost to the man on the street.

    The analysis of any kind of data is a whole area of specialization in itself. With respect to market data/trading results the best source available to Joe Public that I know of is Howard B. Bandy. He has a lot of info on his blog/websites. His intro video will give u an appreciation of his pedigree. One can learn a lot just by reading his free info and sample chapters IMO.

    As an aside, the system trading part of AmiBroker software gives a very long list of standard metrics.

  16. Ray,

    Can you expand on:

    “Probably a situation where the assumptions behind the system changed for that period”.

    No comprende Amigo.

  17. Hi Chris

    Every mechanical system assumes an underlying condition; if that changes and you are unaware of the change, losses follow; e.g. the quants in 2007 crash lost a bomb because their assumptions about 2-way markets and volatility were no longer operating.

    ORSS assumes that when the opening range (however defined) breaches one extreme, 80% to 90% of the time, the opposite extreme will hold. It also assumes that diversification of instruments is in play.

    If these assumptions change, and you are not attuned to the changes, you set yourself up for ‘black swan’ series of consecutive losses.

    Hope this helps.

  18. hi Ray,
    1. What have been discussed could be very theoritical to many.

    If there is a book which gives real examples of what you have said will be very useful.

    Say many years ago, you use the Turtle Group trading system. You have your equity curve. You would tell/show us when it was normal drawdown – so reduces the position size. When you were in he flow/ebb states. The periods when you suspensed the system. Finally, when you gave up the system – or faded the system.

    Or you could do it likewise for the ORSS trading system users (minus the “gave up …” 🙂 as a on-going education.

    I strongly believe that will be very value for money lah!

    2. If at any time, we trade 2 trading systems together, which are not co-related in their trading results,
    would it reduce the total account drawdown at any time
    – just as we are advised to diversify in our investments in non-co-related stocks?

    Should we diversify our trading systems?

  19. Thanks Ray and that does clarify your response.

    A small caution in my mind with respect some of this discussion:

    The label “quants” covers all sorts of “methods”.

    The label “discretionary” covers all sorts of “methods”.

    Re: the quants I agree a subset of them got nailed in 2007 and on many other occasions. However so did many discretionary traders then and on many other occasions.

    The term Quantitative trading as used by me in my earlier post is reflected in the concepts, rigor etc covered in:

    http://www.quantitativetradingsystems.com/

    Just clarifying so newbies do not assume anything.

  20. Hi Chris

    Thank you.

    I agree. Many discretionary traders got nailed in the 2007 crash – the quants have no mortgage in that respect.

    The point I was making was the reason why the quants got nailed. Recall at the time, the quants were being held as the next ‘holy grail’.

    Also agree that quants and discretionary encompass many methods and disciplines.

  21. Hi Paul

    If it suits the trader’s personality, by all means diversify systems. I knew a Macquarie Bank traders who used something like 10 systems. Too much for me!

    (Actually even one mechanical system tests my brain).

    But, it worked for her. Her P&L as fabulous. Goes to show that in this game, there are many ways to skin the cat.

  22. FWIW.

    Bandy says that it is hard to tell if a system is broken if it has less than 2 out of 3 winners.

    He is very particular about the language and terminology that he uses so it may well be that this statement reflects his “strict” definition of broken.

    He and the traders that are heavily influenced by his work use the term system health check.

    Re: ORSS

    Given it has a lower win rate than that mentioned above I think a critical and very valuable part of Ray’s offering is that he will show his version of the above with respect to ORSS so that going forward people trading ORSS can do it for themselves.

    “* whether a drawdown is beyond normal boundaries (stop trading system).

    To be clear….the latter would require:

    1) a suspension of trading of the system; and
    2) an examination of the system’s underlying assumptions.

    If newbies learn these lessons, then they will know when the appropriate action is to stop trading the system, and know when the appropriate action is to reduce size”.

    Chris

  23. Hi Chris

    Thanks for the comments.

    Interesting that Bundy requires a 67% winrate to be robust. Is he speaking only of day trading systems?

    A 67% win rate for EOD is exceptionally rare.

  24. CW says:

    Hi Ray,

    For this ORSS system,
    1) Do I need to use special software like Market Analyst? Can I use MT4? For MT4, depends on which time that the chart is using (NY or UK time), the daily chart may have 5 or 6 candles per week, is that OK with ORSS system?
    2) I saw the expectancy data that you have shown in your video. I would like to know on average how many trades we have in a year for markets that you have tested.

    Regards
    CW

    (Sorry CW accidentally deleted – reposting the question)

  25. Hi CW

    1) You need not use MA. If you know how to code MT4, you could code what you need for MT4. Otherwise you can manually draw what you need on your platform.

    2) About 10 trades pa per instrument.

  26. So if the conclusion is that the system is broken then the question I then have is as follows:

    The system has note coped well with recent market/s activity (price patterns, volatility changes or whatever) and the decision is made to stop using the system.

    But then we do not know what the future holds so by tomorrow/next week/ a few weeks ahead (for example) the markets may well move in a way that perfectly suits our system.

    In the same way we cannot know in advance that it is broken i.e. we have to wait until it is broken then we cannot know in advance what is next so we could be sitting on the sidelines during a period that is perfectly suited to our system.

    Above was written when I am a bit rushed but I hope it is clear enough 🙂

    @Ray – It would be great to get your thoughts on this.

    @Others – anyone else have direct personal experience with system health checks, when to stop trading a system, when to start trading it again then please chime in.

  27. Hi Chris

    Difficult question to answer in the forum because the answer would involve incorporating elements for which ORSSers have invested their hard earned i.e. I would be giving away for free what ORSSers have paid for.

    What I would say is this: we can’t tell the future. Any device to solve the problem has to be backward looking which means any solution will be late.

    The trick is to find a solution that is not so late as to be untimely.

  28. Hi Ray, Your observation that
    “80% to 90% of the time, the opposite extreme will hold.” thats a valuable piece of info.
    I have been evaluating a breakout system myself but instead of using the bias from the stretch, I have been using currency strength alone.Its early days but expectancy is positive. The funny thing is, when i first heard of you, several years ago,I was in Brasil and heard your interview and it followed an interview from a trader who uses a simple breakout srategy. So for me it feels like synchronicity that your now using ORSS. I guess its ORSSes for courses! cheers Baz

  29. Ray,

    Thanks for that. Get that. Was only after high level thoughts and not keys to the kingdom 🙂

    Like everything a balancing act of sorts and unlike many system vendors you have at least addressed the issue.

    Chris

  30. i Ray,
    As you wrote:
    “Relying on me is not so advisable. At my age …”

    I believe you will leave a legacy for the traders by writing a book that tell us:

    1. How to evaluate a trading system, its statistics
    2. The considerations required to choose a trading system that matches one’s personality, objectives etc.
    (haha, is ORSS for me?)
    2. When to increase/decrease the position size
    3. When to suspend a trading system and when to restart
    4. When to give up a trading system

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