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BIG BIG system problem!

I have a few questions that impact my trading after a subscriber has joined my strategy.

After a new subscriber has joined my strategy, I couldn’t trade the usual way I trade.
First of all, I don’t understand why when in the suggested minimum capital (Collective2 does that) is written 300,000 suggest capital AND; I write in my strategy description that please CONFIRM with the strategy leader before subscribing to the strategy, he still can subscribe to my strategy with capital that is third of my requirements.
Now, I understand that there is a scaling option to the strategy, but why YOUR system doesn’t monitor that and can let the person sign in. I can wipe out a big portion from his account, and he will not recover, but I did my trading based on 300K capital and now 100K.

The second problem is as soon as the new subscriber subscribes to my strategy, I was limited in trading products, meaning I could not trade products that I could have done before.
Now here is a situation, why if I have five people from the UK and I trade the GOLD for them, I couldn’t trade this product anymore because a US person joined my strategy ( you cannot trade GOLD commodity in the US, from a personal experience that I had )
In that case, this new subscriber was limiting me from trading for the OTHER clients that joined this strategy. Most of the time, half of the people here don’t know what they can or can’t trade.

Third, and this is just a bloody JOKE! Why can I buy 30 contracts of future Gold that worth a hundred thousand in Margin, but I can buy only 2 E-MICRO-NQ? Why can I buy 100,000 stocks of AAPL, but I cannot buy more than 3 contracts at S&P future?

Basically, I understand that the client limits me on what I can or cannot trade.
Where is the strategy owner’s power?? When a new subscriber joins the strategy, my clients need to adjust based on this person’s capabilities? Why is there no confirmation of something from my side when it affects other clients???

I understand that you want to protect the client in a way, but there is no power for the strategy owner. Why can I not cancel my subscriber that subscribes to the strategy with listening to my and your requirements for the strategy? Why is there no monitoring for the scaling system??

Also, I’m managing 300,000 with profits on average of +10% monthly, why I cannot ask more than 595$ for my subscription? From a business perspective, that is also beneficial for you, but it’s not beneficial for me to work for just 595$ with those results; why can I not increase it??

I would like to please a professional answer; I talked with one of the representatives and didn’t have the answers for anything mentioned above.

Here are some pictures to illustrate this craziness. How I can buy 100K stocks of apple but not 4 contracts of NQ.
Or why I can buy only 4 contracts of NQ and NQ mini???

Try the September contract for now

Hi, Avi:

The restrictions on trading size are imposed on us by the CME, the exchange where futures are traded. They are not really meant to protect investors that follow your strategy (although we love the idea of trying to protect investors in general, when it’s possible). They are meant to protect you, the strategy creator, from being hit with very large fines by the CME. For example, Collective2 paid a fine to the CME when too many orders were placed for a strategy that traded futures contracts without sufficient liquidity.

The size restrictions have been worked out with the assistance of CME regulators. They are based on the AutoTrade volume that follows your strategy, and on the trading volume of the futures contracts in question. So one solution for you, as a strategy developer, might be to focus on very liquid futures contracts. Or, alternately, trade things other than futures, since the CME regulators are more concerned about this than are other exchanges.

Regarding your other questions:

Our software suggests the appropriate “minimum” capital for potential subscribers. This is based on what your strategy trades, its trading performance to date, and the “divisibility” of your trade quantities. A strategy that only trades onesies or twosies of futures contracts, for example, is less “divisible” than a strategy that trades more units, and thus subscribers would see more tracking error if they were to try to trade at, for example, 10% AutoTrade scaling. The solution for you is to “rescale” your strategy downward, so that your Model Account has inside it the amount that you consider the proper Minimum Capital.

Finally, regarding your desire to increase your subscription price above $595: by default, we cap the monthly subscription price for most strategies at $595. This is because Collective2 bears a larger credit risk as subscription prices increase. However, when Strategy Managers establish a good track record on C2, and demonstrate responsible behavior, and also seem like good partners of C2, we do consider individual requests to increase subscription prices on an ad hoc basis. My suggestion here would be: try to establish your track record on C2 as both a good strategy manager, and - to be candid - a good partner to Collective2. The behavior we’d look for includes not trying to set up multiple accounts under multiple identities, trying to work within the regulations imposed on the platform, bringing issues up in the appropriate venues (i.e. help desk versus forums), etc.

With that in mind, I’m sure the help desk will be able to help you further if you’d like to dig into these issues more: help@collective2.com.

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Hello Matt,

Thank you for your reply.
Based on what you answered regarding the futures; what I don’t understand is why at the previous month contract I can trade 47 contracts but at the current one is 4?
Yes I have checked the volume and it’s 100K for the previous one and 300K for the current one.
So how in that case the volume doesn’t go in my favor?

Also, for general understanding.
Why I can buy 100K of AAPL stock but there is a limitation on the futures products?

Thank you

Hi, Avi:

Great question. When I wrote:

The size restrictions … are based on … the trading volume of the futures contracts in question.

I should have been more clear that the “trading volume” isn’t solely the aggregate daily volume of the contract, but also the minute-by-minute distributions of trade sizes.

So, for example, imagine a contract that has a high daily volume, but where almost all of the trading volume takes place at the market-open, and then the rest of the day sees very little volume. This contract might have a lower allowable trading size than another contract with a more even distribution of trade volume across the day (but a lower aggregate daily volume).

Also, just note that these size limits are re-calculated every day based on rolling data, and so in theory, as the leading contract becomes more popular and liquid, you should see trading-size limits increase.

MK

PS Regarding: Why futures, but not stocks? - Because the CME regulators have decreed it.

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Hi Avi and matt, i hade all the same questions for my strategy ES-US as you Avi, and thanks Matt for the clarifications. And apparently for Example ESU had a larger position limit than ESZ the last days before settlement. But there is a problem that we can not see the limits in the previous contract as soon as the new one shows up. So for 15 followers example we could guess that there is margin to trade the previous contract until settlement day but if you have 50 followers this will become a large issue. Especially the day after settlement if the new contract is still low on the limits and your systems trades 2-3 contracts at a time. In these case we would need to either lower the size these days, or not trade at all for a couple of days aeound rollover or limit the number of followers. I dont see any other solution.

Regards

Alen (sweden-trader)

Thanks Alen,

We thought about the same thing, the volume of the new contract can create a problem. We don’t have 50 subscribers (Yet…) but yes this a problem that we need to resolve somehow, because also If a client rescales your strategy for more he basically takes a spot like another client.
@MatthewKlein I know you are regulated and all but is there an option to solve it? because also trading for 3-4 contracts on a portfolio of 300K can be an issue. I know you do the average volume of the contract but it may affect ours and the client’s performance as we potentially couldn’t trade.

@avibutz, if you want to trade larger size why don’t you trade the minis instead of the micros? Also you can take several (scale in) trades to add to your size if your trading non liquid hours.

And if you want to get more wild you can trade the full SP futures or ND futures. :stuck_out_tongue_winking_eye:

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The problem that in both of them I’m limited to 2 contracts, and it’s funny in a way because I can trade 2 micro and 2 mini make no sense…

I would trade the full SP/NQ future but my clients doesn’t have enough capital so I don’t want to risk, my portfolio enables me to do that but not my subscribers.

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