read more about PAMM here!
The Symbiosis strategy
So lets begin with some definitions, the one strategy I call Symbiosis. It is a hedging strategy with some parameters that are set and it also uses some indicators. It works because of the two inherit modes of the strategy where ultimately it is about controlling the amount of free resources on the account. While the strategy starts of in offensive mode, acquiring many positions, as it does so it starts to have some minor (and yes I mean very minor) draw downs. Where then these minor draw downs accumulate up to and beyond a certain point the strategy then goes into defensive mode, where it is very much less likely to take new positions but more interested in saving the ones that are there.
While in both modes the strategy makes money the beginner trader might think this strategy is somewhat dumb claiming things like “look at those draw downs, this can't work”. But as my live forward testing has shown over what is now 8 month, it does work.
The Tatsumaki strategy
The other strategy, and yes I do like them both a lot, none of them is my favorite they are both very very good. The “second” strategy however I dub the “Tatsumaki” strategy, it has very small draw downs and is very choppy. There are basically no indicators used and it is always in the one and same mode, so to speak. This strategy is what I used, and later won with, in my recent competition on instaforex. Although I was ranked 8 out of 53 the other people ahead of me, and my team, where disqualified due to a various number of reasons.
What about the real world though?
So the strategies are different but how would this work with a PAMM account. Let's say for examples sake that the PAMM randomly acquired new clients, 2-3 each month. This looks good so far but with the Symbiosis strategy we have zero way of letting new clients know if the strategy is in either mode, unless explicitly stated ofc. With the Tatsumaki however new clients could join at any time. At this point you'd think this is a no brainer .. but hold on. The way the strategies work we need to take into consideration how much risk they each can carry, out of the two the Tatsumaki strategy is the one that can carry the most risk but the problem is that the Symbiosis while using less money can create a much higher return. So we are left with a bit of a conundrum, which one to employ as they both are good enough.
When it comes to scale, both of the strategies would do well scaling endlessly really, as it should be with good strategies. But ok what about use-ability? Well it sadens me a bit and I guess we cannot have everything (at least so i've been told) so then the Tatsumaki would work better, in the real world. Unless we scale this up into the millions, since there the Symbiosis would work better (higher return) but while there it would not really need new clients since it is already providing a very decent return.
So which is it to be, usefulness or pure simple power (but less of if comparatively)
Read more about the two strategies here and make up your own mind:
I guess in the end what the real question is: when would i switch the strategies over, at what account size? That leaves me thinking..