On the page for my system Hayden, the equity curve for the line with commissions included seems to have dropped down rather dramatically. Has there been a change in the commissions calculation?
On my "other systems page" there is only a small gap between the equity curve and the equity curve with commissions on the small chart shown on that page. On the main page it appears to be quite large and definitely does not match what is shown on the other systems page.
This also got me wondering as to how you calculate the commissions. If the value of the system is $100 and you buy 10 shares of a $10 dollar stock that is $0.10 in commissions at $0.01 per share. If the "with commissions" value is $90 is the commission calculated for your system then $0.09 or $0.10?
Remember that we also include the subscription cost of the system on the fully-loaded cost curve. So if you have a monthly subscription price (for example), then every 30 days the cost will be applied to that fully-loaded cost curve.
Regarding how we calculate and include commission costs: You can see how commissions are calculated for each trade by choosing a broker in the drop down menu, then holding your mouse over the right-most P/L column for each detailed trade line down below, in the Recently Closed Trades section.
Thanks. I just changed the subscription cost, so that explains the difference on the main page.
I understand the commission rates and where to find them. My other question is, are the commissions based on the value of the non-commission equity or the commission equity. If it is based on the non-commission equity than the commission costs will be inflated, and the error will grow over time.
Commissions are based on the trades you make, and are unrelated to the equity in the account.
So a system like Gulfstream 10 SE. The commissions are calculated on the non-commission value of $230,000 rather than the $160,000 commission equity. So now this system is showing a commissions equity curve that has a commission rate over 50% higher than a new system? This could be the difference between this system appearing profitable or not.
I don’t understand what you are saying.
Most systems place trades based on a percent of the system equity. If you have system equity of $10,000 and you use 100% for each trade and you buy a $100 stock you are paying commission on 100 shares traded.
If your system equity with commissions is $9000 you could only trade 90 shares and so the commission should be based on 90 shares traded. I think what you are telling me is that it would still be calculated at 100 shares, which would be inaccurate for the "with commissions" equity curve.
The "with commissions" account value is smaller but is paying the commissions based on the larger "no commissions" account value.
I’m afraid I don’t understand your point.
Let me start with a basic principle. We assume money management is baked into a system. If your Model Account on C2 has $10,000 in it, then you are effectively making trade recommendations for people who want to trade that amount of capital. Thus people who want to devote $20,000 to the system can set their trade scaling to trade double the amount you recommend.
But that’s really beside the point. The point is this: when you recommend buying 1,000 shares of something (or 100 shares, or a million shares), C2 records the profit and loss of that particular recommendation. It also records what the commission costs would be for that particular trade.
That being said, I’mn not sure I understand the main point of this sentence that you write: "If you have system equity of $10,000 and you use 100% for each trade and you buy a $100 stock you are paying commission on 100 shares traded."
Well, yes. What you say is true enough. If a system on C2 recommends buying 100 shares of stock, then we are going to record the profit and loss of that recommendation, and we are also going to record what the commission cost of that particular trade would have been.
I guess I should have just asked if the profits, losses and commissions are scaled to the "with commissions" account value.
Thanks for your time and prompt replies.