Auto Trader - Equity?

C2
1

I’m new to this site, so a quick question which I’m sure is easily answered - but I just don’t see many help or descriptive documents to assist.

If I’m going to do $50,000 with a leader and use the auto-trade with IB, questions:

  1. Will they increase investments using margins or only the equity?
  2. If yes to (1), then do we select limits on the margin?
  3. The historical returns shown for each investor is based on equity or equity+margin?

Thanks!

2

C2 auto-trading requires you to set the scaling - percentage of the trade leader position size. 100% means that position opened at your account will be the same, 200% - twice position of the trade leader, 50% - half of the trade leader’s position etc.

Depending on your IB account size and position size you plan to open, you will use or not use margin. IB defines your limit on margin, therefore if position will be larger IB will not open it or maybe open partially (never did it so not sure).

Historical C2 trade leaders returns are shown in relation to initial capital of the trade leader. Doesn’t matter if trade leader used margin or not.

3

Also interested in this
Can anyone clarify the issue please

4

It does make a difference if a trade leader is using margin. If the leader does not use margin a 10% return on initial equity is just that, 10%.

However, if the trade leader uses full margin on say stocks at 2:1, then the return on equity is double less the cost of the margin loan or about a 20% return. Drawdowns are also magnified and are twice as large when using full 2:1 margin. This, of course, is always reflected in the C2 statistics shown on the system page.

5

Corey,

To the best of my knowledge, C2 has never deducted the cost of any margin loans from any of the returns of strategies that use margin.

Jim

6

Jim,

Correct, my statement was a blanket statement and I should have been more specific. But margins costs should at least be considered by an investor in their own accounts when calculating returns.

Corey