C2 risk and drawdown

I got a private message from my subscriber, Please help me

answer this question, Matthew.


Hi David I am a subscriber of your system and believe it will work well for me long term. Your trade posted on 2/3/06 showed that you went long at 1674. You also set up a stop order at 1666. The low of that day was 1665.5. How come C2s track record does not show the trade being stopped out at 1666? I was stopped out on that day. Did you get stopped out? If not, why did I get stopped out. Am I interpreting your stop order incorrectly? Or is C2s track record wrong. Please advise.


I go back and check my system log file:

I really find that I set up stop loss limit at 1666.04.


Then I go back to check email from C2:Trade Signal Update: Goofiz Foliage’s Future ATM,

18312894 2/3/06 9:33 Likely fill @1674 09:34 Buy to open 40 @NQH6 E-MINI NASDAQ 100 STK IDX MAR 2006 @ stop 1666.04 DAY

It meets my log file, but why C2 did not triggered my stop loss?

If my stop loss can not be triggered, Can C2 get correct entry

price and close for the trade? Does this impact slippage and

realism factor?

I notice that “risk &drawdown” feature was added these days,

It has 5 levels:Low, Normal, High, V.High, Extreme

Someone also added another level “reckless”.

Does my single trade include C2 system’s risk and drawdown?

I check some trading system on C2, in a certain period,

the trade’s risk and drawdown is very high. Is this caused by

C2’s “reckless”? (Stop loss not triggered?)

I think you are not fully understanding how to use the API with stop orders. You sent an order to C2 to Buy To Open at stop 1666.04. That means: "Initiate a long position as soon as the price crosses above 1666.04."

That does not initiate a stop-loss order, which I think is what is confusing you. The only thing you specified was to open a long position. You did not specify a stop-loss (that is, you did not tell the system to exit when a price has been reached).

Once you issue a Buy To Open, then you must initiate a separate Sell To Close order. Here you can specify the stop-loss price. A stop price when attached to a sell order means: "Sell when the price goes below my stop."

So, if you want to establish a long position and then set a stop-loss, this will require two different orders: A Buy To Open, and then a Sell To Close (with a stop price).

Currently your system has no stop-losses.

I agree with you because you are a rule maker on C2.

My broker Scottrade, MB trading, Ameritrade all use "stop"

for stop loss, use “stop limit” for stop limt buy or sell.

They all support one order for opening a position and seting up

stop loss. I need to learn new rules on C2. But it is easy.

First question: I see following on C2

"stop= 20.10 Only use if this is a stop order. For market orders, do not use either stop or limit parameters. "

I use market order along with stop=XXX, according to you rule,

My order command is wrong, why my order can go onto C2?

Do you do error checking?

Second question: If I place a market long order, then place a limit

order to close(stop loss), If Limit order for syop loss is not

triggered, After I place a market order sell to close, will my Limit

sell order (stop loss) be still there or not?

One more question:

If I open a long position NQH6 at 1700 using market order,

Assume current price is 1700, then I send STC with limit price

1665 to set up stop loss, my understanding is that once

NQH6 price croseeover 1665 from up, the STC (stop loss)

was triggered. Later on, NQH6 price is 1705, and NQ price is

keeping rising. I set up STC limit order at 1704, because

NQ price is rising, it can not crossover 1704 from up, so my STC

limit order can not get fill. Do you think it is ridiculous?

A “Stop Loss” order is not the same thing as a “stop” order. They are related, however: all “stop losses” are a special kind of “stop order.” Specifically: Stop losses are “stop orders” designed to exit a position at a pre-determined loss. However, note that you can use stop orders to enter a position as well.

To learn more about stop and limit orders, please see the Frequent Questions link. The explanation of stop and limit orders is at the bottom of the page.

I probaly know now. I will try them. Thank you very much.

in your FAQ page:

"You might buy IBM when it is at approximately $80 dollars, and place a stop loss order to Sell To Close IBM at stop $80 – in other words, to sell IBM if the stock ever goes below $60 dollars. "

Do you need to change from “$60” to “$80”?

Thanks. That’s a typo. I will correct it.

It might be useful to calculate each system’s Kelly value. Systems with high Kelly values should arguably take more risk per trade. Ultimately, that K value could be a part of the risk equation, whereas two systems that both had same % risk per trade are rated differently due to vastly different Kelly values.