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Another question about the requirement for minimum of 1% deployment of capital.
Since futures are traded virtually 24/5, is this calculation any different than if you are trading stocks, which are only traded 6 1/2 hours 5 days weekly (since C2 doesn’t allow premarket or aftermarket stock trading).?
Thanks!
Jim
No, there’s no difference in the calculations. The math is the same in all cases: we average the capital that is deployed across calendar days, regardless of instrument-specific market hours.
Marie:
In the case of futures, we use the initial margin requirements of the futures contract as the amount of capital that is deployed.
So to take a simplified example, if a futures contract has initial margin of $10,000, and you open a long position in 2 contracts for exactly one calendar day, we will treat that as 24 hours with $20,000 “deployed.”
Matthew,
So you are using 6 1/2 hours as a calendar day for futures as well as stocks?
Jim
Not exactly. We say there are 24 hours in a day. It doesn’t matter if the day is a Monday or a Saturday.
So here’s a simplified example. Let’s say your Model account is $50,000.
You open a position that requires $5,000. You hold the position open for 6 hours.
You have deployed 10% of your account. ($5,000 / $50,000).
But you have deployed this capital only for 6 hours (out of 24).
6 hours / 24 hours = 25%
So for this one single day, you “deployed” 25% of 10% … which is 2.5%.
In real life, of course, we don’t ask “how much of your capital did you deploy today?”
We ask: how much of your capital have you deployed across all the time you’ve been in the program?
But the math is the same.
You can read more here: https://collective2.com/c2star/minimum-capital-deployment
Matthew,
Based on this method of calculating the 1% minimum capital deployment, I believe it would not be possible to be met by intraday trading, which is the only was to meet the other max drawdown criteria, in my opinion.
For example, with a $50,000 account, say I trade 2 NQ contracts with initial margin requirements totalling $16,000. That would be 32% of the total account value.
But my trades are intraday and probably would only last 15 minutes. Say I make 2 trades a day, for a total of 30 minutes. So my subscribers are getting value at 2 trades a day, which are presumably profitable, since I have to also meet the profitability requirements as well.
In this scenario, your calculation of capital deployment would only be 0.67% (32% X 0.5 hours / 24 hours), therefore I would fail the 1% deployment calculation, even though I made 2 trades daily and happen to be very efficient with my trades.
Therefore, I think you should also have a criteria of number of daily trades or weekly trades OR the 1% deployment of capital to meet that criteria.
Your thoughts?
Jim
So I need to have that position open for 24 hours? But you said you are looking for people focused on trading short time.
No, Marie, you do not need to hold the position for 24 hours. Hold it for however long you want. We will observe how long you do hold it open as part of the math that decides if you are deploying capital.
You can see your results in real-time on your C2Star dashboard, so you’ll you know how you’re doing over time.
Ok Thanks! As long as it says more than 1% im okay right?
I don’t agree.
Look, subscribers pay you to manage capital. If you’re not deploying at least 1% of a Model Account across time, then you’re not doing what we want you to do.
Using a blunt-force “number of trades” in this calculation will lead to gaming the requirements and wild gambles.
As always, the program is new, and I will observe it over time to see whether requirements need to be tweaked. It’s obviously not right for you and your trading style, and that’s cool – but I think it’s right for others and I will continue to iterate and improve it.
Absolutely.
And you’ll be warned with plenty of time to correct the situation if you start to use “too little” capital.
Finally, even in those cases where you don’t meet the requirements, the strategy is not kicked out of the program. You’ll have the chance to continue and raise the average amount of capital deployed over time.
“Based on this method of calculating the 1% minimum capital deployment, I believe it would not be possible to be met by intraday trading, which is the only way to meet the other max drawdown criteria, in my opinion.”
Given this type of strategy, I suspect you would have to setup some form of a low risk hedged trade that you leave on for extended periods. Unfortunately, the system only allows you to trade one of stocks, futures or forex so you can’t use something simple like a treasuries etf.
I took from the first minute of the first day (of my new inscription) 10 lots AUD/JPY, margin requirement = $2,000 representing 4% of my capital ($50k), I was hoping to read on the page "C2StarStatus-deploy minimum amount of capital " a number superior to 4% (as i took other trades ). The trade still open after 4 complete days and C2StarStatus-deploy < 3%.
There’s a hidden condition we need to know it.
Thanks
Hi, Hiam -
I looked into this, and I found there was indeed an error in the way C2Star calculated capital deployment for AUDJPY (well, more specifically, for non-USD denominated forex pairs). This error is now fixed, and the capital deployment rates will be corrected retroactively. Thanks for bringing to my attention.
Hello,
Really thanks…just saw the result, now it seems very logical.
