I’m starting a new system where I will trade a single futures contract in a fixed account size of $20,000. At the close of every position, if system equity exceeds $20,000, I want to rescale the system to exactly $20,000. I plan to send orders via Tradestation.
I’d like to request a way to automate the rescaling on the closing of any position. I’d also like to be able to perform a rollover to a new contract month without doing that rescaling, so we’ll need a method of making an exception for this type of order, which I would be entering manually. Right now, to ensure rescaling (if equity > 20k), orders must be placed manually. That’s going to become a great nuisance…
Thanks,
Sam
Sam:
What you’re requesting isn’t really practical. Rescaling your C2 Model Account downward so that it has some smaller, user-specified amount of capital is certainly possible – but is a complicated endeavor that affects autotraders adversely, and thus is not something you’ll want to do regularly – let alone daily.
You should manage your system on a continuous real-life basis. Start with 1 contract and $20,000. You’ll win and lose day by day, or trade by trade, and so too will your autotraders. When your C2 Model Account reaches $40,000, add a second contract (or whatever your money management rules are). This way, thanks to C2 AutoTrading magic, people will be able to join your system at any point in time and trade the appropriate number of contracts based on their account size and their personal preferences.
Your job is to manage your C2 Model Account within the risk constraints you determine. So one day you might have $20,000 and should issue instructions as if you are trading $20,000. The next day (after winning) you might have $25,000, and should issue instructions as if you are managing $25,000. And so on.
When and if you get to a very large, and unmanageable, account size – say, $700,000 – then you can rescale back to $20,000.
I had figured that rescaling would give more consistent statistics, since they would all be on a per-contract basis with this method. The method you propose would lead to drawdowns early on becoming completely irrelevant in system statistics, for example. What might have been a 70% drawdown in the first month wouldn’t even classify as 1% later on.
If this is what you suggest, then it’s certainly easy to do; easier than rescaling often. I was just trying to keep the stats honest.
-Sam
"since they would all be on a per-contract basis with this method. "
No subscribers would normally rescale their live accounts continuously. If you want to trade one contract, then just trade one contract.
"wat might have been a 70% drawdown in the first month wouldn’t even classify as 1% later on. "
Only if you somehow expect to run your account up by 7000%. Believe me, that is not a problem for vendors here. And it would be the least of your worries.
Further as Matthew said, if the account becomes large somehow, you can shrink it down occasionally.
