I tried searching for answers to these questions but after a while I gave up.
I’m new to C2 and would like to test out some systems. But before I do, I need ask some questions:
1-Once a system is introduced to C2, it starts generating data for a portfolio which then shows up in the hypothetical results charts. Can a system be changed (recoded/improved) after introduction and if yes, what changes are allowed to be made?
2-Can the system admins turn the system on/off so that it stops generating signals and thus creating a “flat line” on the chart?
3-Can system admins cancel signals manually (since i’ve seen some signals cancelled) or do the systems do it automatically and there is no other way?
4-Some hypothetical results charts look like they are going up, but then they have a few downward spikes. I’m not sure what they mean. When I looked very carefully at the “Recently closed trades” table there were no negative trades reported at those times. Could it be the trades were open for a longer period and thus visible on the chart, and in the meantime the PnL of the portfolio was hurt by the underlying oscilations?
Thanks
Addendum in relation to Q4:
-Is there any possibility for system admins to delete negative trades from the "Recently closed trades" table?
Without knowing a specific example, it’s hard to comment on this, other than generally. But the most likely explanation is this: You must remember that Monthly Subscription Costs (or weekly or quarterly or whatever) are included in the charts and monthly results. This is why you can see a negative month even if all the trades seem somewhat positive.
Hi Mathew.
Thanks for your answer but you only adressed part of question 4.
Would you mind looking at questions 1, 2 and 3 and the other part of 4?
I hope those are not controversial questions, but either way you won’t loose me as a customer regardless of the answers. In fact, system admins cancelling signals manually is probably a good thing!
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To give you a more specific example as you asked, lets look at PIPALERT chart, around July 12 2011.
Here is an image of that part of the chart and a downward spike I am talking about
http://imgur.com/SRWyn
In the trades section there was a BTO on July 8th, and then a STC on July 14th. It is likely the system made corrections and that during that period the actual C2 portfolio lost value briefly because the system has made a BTO too early. This is encouraging, meaning that the charts probably track the portfolio value which takes into account losses of any open positions. I may have just answered my own question, but feel free to confirm.
Hi Ivan,
I’ll have a go at some answers:
1) C2 just tracks trades made my a system. The system algorithm is run by the vendor separately from C2 and feeds trades into C2. Some systems will post trades to C2 automatically, others will generate signals that the vendor then enters into C2 manually. Still others are not algorithmic at all - the vendor decides on a trade and enters it into C2.
In all these cases C2 only tracks the actual trades made and doesn’t care how they were generated.
So the answer is that the system vendor can make any changes they like to a system. Only going forward mind you, not retrospectively! Trades already made cannot be changed, just as they cannot be changed once executed in a real brokerage account.
2) Yes. The vendor (system admin) can choose to stop sending signals to C2. Assuming all positions have been closed, the equity chart will flat-line. Well, not quite - it will go down slowly as the subscription fee is subtracted every month.
3) Yes, if the signals are posted outside trading hours or if they are limit or stop orders. A signal which deemed executed cannot be cancelled any more, just as a trade order in a broker account cannot be cancelled any more once it has been executed.
4) The closed trades section only reports trades that were opened and then fully closed. In the meantime the open position can gyrate a lot in some cases (e.g. if it is highly leveraged or if the traded instrument is very volatile) and these gyrations do affect the equity curve and stats.
The equity curve is updated at the end of every day and several times intra-day as well. Stats such as max drawdown are calculated daily AFAIK.
If that position represents a large percentage of the account equity, or if the various separate positions are highly correlated, then quick short term drops will result in the down spikes you see on the equity chart. This is typically seen most often when a system makes highly leveraged trades, usually with FX or futures since those instruments allow very high leverage.
On a side note, personally speaking such sharp spikes are to me a warning sign of over-leverage and unwillingness of the system to cut losers in the hope that they eventually turn into winners. One day an unusually severe spike can cause your account to be automatically closed by the broker due to insufficient margin… and bang, wipe out in the blink of an eye! This has happened to many systems before and will certainly happen many times again.
You must be aware of this possibility when you are weighing up how much to scale your trades by and/or whether you trust the system (or system vendor) to intervene in time and in a sensible manner.
Thanks for your time Dean, that was very helpful. It answers all my questions.
I have seen some systems using what looks to me like martingale trading (esp in forex), and so I will probably use only a small amount of risk capital for a while to allow it room for rescue if needed and to limit my exposure until I understand the system(s) better.
Cheers.
