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Wealth-Lab: System Testing Software for Trend Followers

Wealth-Lab was founded by Dion Kurczek & Volker Knapp. They recently agreed to an interview to discuss an assortment of trading system related issues.

Q: How did Wealth-Lab get started? What’s the story? There were many different trading software packages out there already. How did you know what you had to offer was needed?

Dion Kurczek:

Because all of the other products I tried to implement my trading system ideas I found lacking. In particular, I wanted to test systems that could maintain multiple positions of varying share/contract sizes independently. I found this impossible to achieve using the existing tools. Also, I realized the value of testing a system against a portfolio with true portfolio-level position sizing rules and risk management. So I started developing Wealth-Lab to implement my own trading system ideas. It evolved into the commercial product and the web site.

Volker Knapp:

Before I discovered Wealth-Lab I had purchased software for over $10.000 and was just considering buying an add-on for TradeStation from RINA-Systems. After looking at Wealth-Lab and talking to Dion Kurczek, the mastermind behind Wealth-Lab I knew that I was talking to one of the most talented software developers and that I had to search no further. BTW, at that time the desktop version of Wealth-Lab was at version ONE and was US $300 at that time.

Q: How much do you attribute the “community” to Wealth-Lab’s success?

Dion Kurczek:

I’d say it was a most important factor. It’s great to have an active online community that can help answer questions from newer users. Also, our community shares and refines trading strategies via the web site, resulting in a unique form of trading system evolution and development.

Volker Knapp:

We are very proud of our active, friendly and helpful community. Trading is often an isolated business, and system trading can be even more isolating. With the Wealth-Lab web site we have created a platform for all traders worldwide to exchange ideas, improve the ideas they’ve collected and share information about the latest in the industry.

Q: Tradestation has been around forever. Why do I want to consider Wealth-Lab? How are you making my day-to-day trading life better?

Volker Knapp:

It is interesting that you ask. Like most people interested in a trading system you think you have to buy the expensive stuff because you want the best. So I bought TS2000i. If you stick around for long enough and still feel challenged to “read” the market with a system, you realize the limitations of TS. One of the major limitations of TS is the ability to perform true portfolio level backtesting. This was a feature I personally was waiting for many years to be added by Omega Research. Until today they were not able to add this most important feature to their system trading. So then I bought Excalibur (for Windows) from Futures Truth but soon found out that the portfolio backtesting was limited and the programming language (C or C++) was quite a challenge. I also bought Behold. Behold is a Mac trading software developed by Jim Payne. Behold has a similar programming language and I loved it but it had several limitations and Jim Payne was not able to keep up with the demands of fast changing technology. Later I bought several other products as well. Finally I came across Wealth-Lab. Wealth-Lab has so many unmatched features. For a none programmer I would mention the following:

1. Creating custom filters just with drag and drop.
2. Creating trading systems just with drag and drop.
3. Create indicators and indicators of indicators with drag and drop.
4. Test strategies on a whole portfolio with true portfolio level backtesting.
5. Optimize a whole portfolio and apply the best values to each symbol with a single mouse click.
6. Applying optimized value on symbol/system combination and on all relevant tools.
7. Powerful scanning/filter tool.
8. Real time scanning for systems.
9. Automated Trading Execution via Fidelity.

Q: You talk a lot about “strategy testing at the portfolio level”. What do you mean exactly? Can you give an example?

Volker Knapp:

Michael, you know the best how important strategy testing at the portfolio level is. A lot of people who start out in system trading develop one system for the S&P mini or some individual stocks. The truth is that even though the markets have certain characteristics, you only know if a strategy is valid if you have tested it on a portfolio. With Wealth-Lab we have a tool called ChartScript Scanner, it can scan the whole published system database of Wealth-Lab (over 1000) and show you exactly which system performed the best on one market (or even on a portfolio, since we are geared towards portfolio testing). But that results only tells you half of the story or even less. You need to apply the right money management or position sizing strategy to your portfolio too. Only then you see your real risk and possible drawdown and profits.

Q: Everyone talks about risk management and money management. How does Wealth-Lab tackle the issue of adding to positions and controlling risk?

Volker Knapp:

With Wealth-Lab you can scale in and out to your current position. There are several pre-programmed money management methods. To see the effect of position sizing you don’t need to change the whole code. You just key in a number in the appropriate field. In fact for programmers we developed several interesting features. For example you can create your own money management strategy (called SimuScript) and apply it to any system on a portfolio level by just clicking on it. You can create your own performance report metrics by using the PerfScript tool. I believe that, besides Wealth-Lab covering the most important methods natively it also gives extremists the power to extend the program to their needs.

Q: What instruments can I NOT trade with Wealth-Lab?

Volker Knapp:

I cannot think of any instrument that you cannot trade with Wealth-Lab.

Q: Do you have links to reviews that I can read?

Volker Knapp:

We have been reviewed in Stocks & Commodities, Futures magazine and Active Trader magazine. Our rating has always been excellent and so has the rating on the EliteTrader web site.

Q: Now that Wealth-Lab is a part of Fidelity — what does that mean for me?

Volker Knapp:

US citizens cannot buy Wealth-Lab direct. But there is good news! Fidelity is marketing the Wealth-Lab Pro to their Active Trader clients (120 trades per year) and offering free real time data, free end of day data plus the extremely helpful automated trading feature. So it actually means that instead of spending approximately $1000 for real time data you get it for free when you trade with Fidelity.

Q: What information can people find on your web site?

Volker Knapp:

Our web site www.wealth-lab.com is all about system trading, designing and testing. The desktop offers much more power and more features but the web site also offers some unique and interesting features. You can program your strategy on the web site, save it in your “personal only for you” accessible folder and test systems on a portfolio of stocks or individual stocks although to test futures or FOREX you would need the desktop version. You can even scan your systems for tomorrow’s signals. You can do paper trading on our web site and note your entry and exit points. The entry and exit points will be displayed on the corresponding chart. Besides these features we have one of the most active web site focused on system trading with a very active and friendly community. Community members also have the opportunity to publish systems (currently over 1000) on the web site. These systems often become part of discussions and have great potential for our community members after they customize them to their personal preferences.

Thanks guys! As a side note, I have had the opportunity to spend time with both Dion and Volker. You could not meet two more passionate individuals. They live and breathe Wealth-Lab and it shows in their work!

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