Are Algorithms Losing Their Profitability?

Common concerns around marketing and advertising for the software we’re using to get an edge in our portfolio have arisen, and I’d like to address these concerns in today’s video. If one person is thinking about it, I’m sure many others are as well, so let me settle the score once and for all.

Welcome! If you’re new to the channel, my name is Matt Jimenez. I’m an entrepreneur who has worked with the greatest minds in finance over the last several years, and I’m here to share everything they’ve taught me. In today’s video, I want to address a specific comment that came in on a video.

This comment is from The Wealthy Dancer and it came in on a video regarding Jeff Singer’s mom, Judy, and me going over her results on her MyFXBook and tracking her software. The comment said this: “She did average 3.12% a month for 2024. That’s only a third of the results Jeff is advertising. You can see that over the last 12 months, the algorithm isn’t giving you the wild gains it did in the beginning of 2023. I think you should address this change in performance in your next video. I bet many people are wondering, is it the algorithm or is it the market? At this pace, another 6 months from now, it will drop to 1% a month, which will be comparable to what REITs are paying out. Anyway, thanks for the videos, man. Really appreciate them.”

The focal point of this statement is that he believes the software will continue underperforming, eventually resulting in returns so low that they could be found in REITs. If you don’t know what REITs are, they are essentially a way to be exposed to real estate performance without actually owning any properties. Secondly, his concern was how we can advertise one amount when this person only achieved a different amount. In this case, we’re speaking about Jeff’s mom’s account, called Judy’s Big Fed Bot. He’s saying the average monthly performance for Judy is 3.12%, while the advertisements showed 10%.

First, I’d like to address these points in the opposite order. Let’s talk about the averages. I will go over the definition of how to calculate an average because it is very important for you to understand this in order to follow the rest of the video. An average equals the sum of all values divided by the number of values. Let me explain that. Let’s say you have 10 people, all of whom have different monthly averages ranging from 2% to 20%. To find the average here, you would add up all 10 people’s averages and then divide that number by the number of values (in this case, 10). So if you add up all the numbers and get a grand total of 30%, you would take this 30% and divide it by 10, which would give you an overall average of 3%. This is how averages are calculated, this is how MyFXBook tracks everything, and this is how we conduct surveys to get our averages.

Now let’s go over a few different charts to illustrate what averages look like across the board, such as averages of 10%, 8%, 13%, and so forth. Remember, when it comes to averages, they are a continual moving scale. While an average over 12 or 24 months might be 10%, as time continues, the scale may change because it becomes weighted over 48 months, 72 months, and so on. This is how averages are affected. Longer time horizons introduce more variables and inputs into an average, which ultimately changes the percentage.

Now, back to his main point of saying Judy’s average was 3.12%. I will show her account in a moment. The average here is often observed over shorter periods, like 4 months, 6 months, or even a year, and might be lower. However, when you look at the lifespan of an account, the average tends to be higher. Which one is more validating? From a logical standpoint, would it be on a shorter or longer time horizon? For example, if my weight fluctuated between 170 to 180 pounds over five years but fluctuated between 180 to 190 pounds over the last 12 months, which average would you say is more likely to continue? The data over five years or the data over 12 months? Logically, I’d prefer the average over a longer time horizon rather than a shorter one.

With that explained, let’s look at the data across some of my accounts, other accounts, and the account he’s speaking of. Here is my $50,000 Fed Bot account, which I started technically in October, but active trading began in November. The video is not about my software; it is just going over my monthly average. My monthly average has been 3.5%. Every single account has different risk management settings, so some might be very aggressive while others might have low risk. This changes the average. While my average is 3.5%, some people have a 15% average and others 10%. An average is never an absolute; it must cover all variations to remain ethically correct and transparent.

Now let’s look at some other accounts. Over here is the one Jeff has, and as you can see, the monthly average is still 10%. Moving on to another trading software, this is the DIO, which is Jeff’s account again. The monthly average here is 18%. So should it be assumed that everyone’s average is 18%? No, each individual account’s average varies. That’s why we calculate an average for over 2,000 users (probably crossing 3,000 by the time you see this).

Let’s visit our Circle Community. Here’s one user’s performance: 4 months of manual trading using Fed. His monthly performance varies from 37% to 10%, so his average would be calculated by summing these values and dividing by the number of months. Here’s another user’s result for June: 4.78%. His average is 14.62%. This is his individual average, not everyone’s.

Now addressing Judy’s account, her risk settings are less aggressive than Jeff’s, so her average is different. But this does not mean Judy’s performance will be the same as anyone else’s. The overall average is 10%, considering all users. Here’s another account showing an average of 4.10%.

Back to Judy’s account. When the comment was made, her monthly average was 3.12%. It has since doubled to 6.38%. Monthly averages are moving scales and ever-changing.

Addressing whether the software’s performance will diminish over time: while past performance does not indicate future results, I believe the performance will only improve as the team grows and the software becomes more sophisticated. We are continually improving our software, including incorporating machine learning and AI. So, I don’t believe REITs will match the software’s performance; rather, the performance will remain strong or even improve.

If you found this informative, please like, comment, or subscribe. If you’re interested in licensing one of these softwares, hit the link in the description or comments. I’d love to see you in the Circle Community with all the other winners.

As always, my friends, peace.Please visit Are Algorithms Losing Their Profitability? to watch the full video on YouTube!

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