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I want to start a blog/newsletter and maintain a track record of trades I recommend. I have a never-expiring demo account for this purpose.

How do I keep this track record "honest"? Three months from now, someone can claim I backdated everything, made up trades, etc. Is there a well-known way to keep traders honest?

I'll be trading OTC FX spot options, so I have to use Saxo Bank, and can't use a generic site. Will this affect the answer?

I plan to take screenshots of my account daily, but I'm not sure that's enough.

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Someone can always set up 2^N accounts under different aliases. Through the magic of combinatorial iteration in the 2^N accounts, in one specific account N trades into the future, all N trades will go exactly as planned -- providing the priceless appearance of sheer genius.... Of course, using real money accounts instead of paper trading accounts could discourage this approach... –  Paul Mar 21 '11 at 8:07

7 Answers 7

One thing I can think of: On your blog/newletter, offer to send daily email updates of your results to them. That way no one can say that you backdate results, or otherwise altered results. And I'm sure everyone will appreciate your keeping things honest.

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I like this idea, but I don't currently have any subscribers. If I use blogspot or something, can I make blogspot confirm that I didn't tweak stuff after the fact? –  barrycarter Mar 20 '11 at 16:39
    
I don't think so. You would probably be better off going with some of the other options suggested. –  Ralph Winters Mar 20 '11 at 19:24

If what you're worried about is being accused of backdating, then you could try timestamping your articles by some trusted third party. This way you can certify that a document/article was created before a certain date and wasn't modified further on (so in this situation that you've come up with some conclusion/investment decision in the real past). In case of a non-professional context some free services might give you enough credibility:

But backdating is only one of the problems you may encounter when trying to reliably report your performance. For example, timestamping won't help the fact that you can selectively publish only the trades that went well or just erase your prior poor record if it wasn't already disseminated. You could try to minimise this risk by keeping the window between actual transactions and publishing recommendations small (no "past trades" popping up in your blog out of nowhere), but in the end I suppose it's a question of trust - do your readers (clients?) feel they should/can trust you and foremost what's at stake (if you're only blogging personally it's different than if you're managing a mutual fund).

Reliable reporting is a much more complex topic, there are numerous examples of real problems occurring in professional context, thus guidelines like GIPS were created. But still, I feel there's no ultimate solution to the problem. Most of the time it's a mix of legal regulations, business reasoning (you can't really "cheat" your track record that much if you have to later pay it out), professional/ethical standards and some good faith. But sorry, that was probably too much of a digression.

Going back to your question, I think the most important factor is what your goal is. Are you blogging and keeping your transaction journal just for "fun" and educational purposes? Do you sell services/systems? Or maybe this blog is connected in some manner to a financial services company (managing client investments)? Presumably it's the former, but otherwise this would dramatically change the situation, and you would need to think about a much more complete and stringent solution to the problem.

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I'm hoping to gain "subscribers"/viewers as time passes. I'll announce the blog right away, but no one might look at it for 1-2 months. I like the timestamper stuff above (it never occurred to me you could prove something happened before a certain time... after is easy). Question: in a blog, where would I put the timestamp? I can't put it in the body, since that changes the hash! –  barrycarter Mar 20 '11 at 16:46
    
You could timestamp only the article content (like: "all above this line is signed and trusted not to be modified since it's creation at ..."), put the stamp in a separate field or even use timeMarker's Notarize Link (example for this question: bit.ly/eRxVQ6). Though in the end it won't matter much how you do it. Simply showing your commitment to credibility should be sufficient for most readers (I doubt they are gonna check it either way). And those who don't want to trust you will still find a plentiful supply of reasons supporting their point. –  Karol Piczak Mar 20 '11 at 17:12

Occam's Razor: Setup a facebook account, or a twitter account, and post your trade recommendations there. They are time/date stamped, easily accessible to others, and cannot be backdated.

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I planned to tweet every time I updated my blog, but the tweet would just say "new trades: URL". Not sure I want to tweet trades (there can be a lot of them and they take quite a few characters), although it's not a bad idea.... –  barrycarter Mar 20 '11 at 17:36
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this doesn't work. you can back-delete, so just make a post with your trade going both ways and delete the incorrect one later. very easy to game. –  user628 Mar 21 '11 at 13:08
    
@barrycarter: tweets, brokerage statements, and attestation by a CPA will get it done. Assuming that this question is not purely academic... what you want is more subscribers, right? With social media, if your service is valuable you can get other subscribers to provide the social proof for you simply by providing valuable selections. They'll retweet, or repost, or whatever... and then the 100% non-repudiation isn't an issue. If someone follows you closely for any length of time, they'll notice if you are playing delete games with your tweet stream. Don't worry about it. –  glyphard Mar 22 '11 at 1:51

For third party tracking of trades, try these guys:

https://www.timertrac.com/Public/Default.asp

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I really like this, since it also does a bit of marketing. I've pinged them to see if they track FX SPOT options (though I'm guessing not, since these are OTC, not exchange-traded) –  barrycarter Mar 20 '11 at 18:25

My primary recommendation is: "eat your own dogfood". You can then share an actual track record. And have your trades audited by a third party.

One good example of this in the quant blogsphere is MarketSci (Michael Stokes), and I don't think that you could go wrong by following his example. He uses TimerTrac (mentioned by @bill_080) for some of the auditing (an example). He also offers managed accounts.

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Easy. Just put an MD5 hash of your complete text with your trade recommendation, along with its timestamp. Then, any reader can verify the exact date and the description of your recommendation.

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But if the hash is posted on your blog, what stops you from modifying the text and the hash at a later date? Unless there's some record of the hash held by a trusted third party so that it can't be modified, there's no real security. Plus, MD5 is basically broken. Use SHA-2. –  joshayers Mar 21 '11 at 18:21

Check out what these guys have done (hashes published to arxiv on fixed dates): http://arxiv.org/ftp/arxiv/papers/0911/0911.0454.pdf

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