Goodbye, $100,000

C2 gingerly enters a new era tonight as we formally announce that we have dispensed with fixed $100,000 hypothetical accounts.

Some of you may have noticed that for a few days now, we’ve quietly allowed trading system vendors to create new systems with any dollar amount up to $100,000 as starting capital (new users should know that, until recently, C2 required that every system start with $100,000 of cash). The new thinking is that $100,000 is a fine and necessary amount to trade some systems, but other systems can just as easily be traded with much less money – perhaps $50,000… or even $1,000.

We now encourage new system developers to start their systems with the smallest amount of capital that is reasonably required to trade the system. Using less capital rather than more capital benefits system developers for a few reasons. First, you’re more likely to garner subscribers when you tell them that your system can be traded happily with $2,500 instead of $100,000. (I know, I know. It’s true that most systems can be traded with almost any amount of capital; and all it takes is the ability to do a little division in your head to factor your brokerage account size versus the C2 hypothetical account size… but that can be scary to new users.)

The other reason that it is good to choose a smaller amount of capital when starting a new trading system is the exploding popularity of AutoTrading. While AutoTrading technology is getting quite good, and while you can set whatever “scaling factor” you like when AutoTrading, inevitably some rounding errors occur unless you trade with 100% (or higher) scaling factor. Since not all people trade with $100,000 in their real-life broker account, it’s much better for system developers to set their C2 hypothetical account size lower, rather than higher, so that more people can AutoTrade with 100% scaling. This will increase a system’s subscriber numbers.

Finally, it should be noted that if you set your initial capital amount lower, rather than higher, it requires smaller trade quantities to earn the same return on equity. And smaller quantities traded mean higher Realism Factors! So that’s yet another benefit.

Now, if you’ve already started a system, and regret choosing $100,000 as your starting amount, do not fret. I have created a new feature which allows you to “rescale” your trading system to a smaller initial capital amount. For example, if you started with $100,000 in your C2 system because C2 forced you to choose $100,000, but – actually – you think your system can be traded with only $10,000
well, then you can rescale you system and adjust the initial starting capital, and all historical trades, such that your historical record will start with only $10,000. This means, incidentally, that everyone will soon start seeing weird, fractional trade quantities on C2, such as a trade to buy 2.25 futures contracts, or 3.4 shares of stock. Do not fret. This is analogous to the way stock charts change after a stock split: i.e. while in historical fact MSFT never traded at $2.50 in 1982, when splits are factored in, it is as if it did.

If you are a system developer interested in rescaling your system, be aware of a few things. One: The feature is in beta test. I believe it will work fine, but be forgiving if it does something funky (and do report it to me if it does.) Two: Realism Factor scores won’t be changed in hindsight. With a smaller capital base, your RF will increase going forward, however. Third: Systems can only be rescaled downward, not upward – that is, you can give up capital, but you can’t increase your system’s equity if you lose money or change your mind. So be thoughtful about taking this step; once done, you can’t go back.

Still interested? The “rescale” function can be found under the Admin menu on your system page. Please don’t hesitate to ask questions, comment, or give me your feedback on this forum.


A cool feature it seems. May I suggest that C2 will give a warning first and add a delay of a few days once a vendor has decided to change the capital size, as auto traders will need to adjust their scaling factors accordingly in that case. Or is this the vendor’s responsibility?

I’m also wondering what is the effect of scaling down on the hypothetical commissions? You cannot simply scale them too I guess.

Great idea! I think this is eventually an important improvement, particularly for the realism calculations of systems that are meant for small trading capitals. It is very brave of you to open the can of worms that you desrcibed.

Great idea!!

I toyed with the idea of creating some kind of delay between initiating the rescale and actually changing the account. However, I thought the complications and confusion (and customer service needs) this would create would outweigh the rather slim benefit.

The main point to keep in mind is that rescaling is allowed only in the downward direction, not upward. So trade quantity recommendations will suddenly become smaller - never larger. It is true that AutoTraders will suddenly find themselves trading less of the system, until they update their trading preferences. I toyed with the idea of automatically adjusting quantities for AutoTraders, but decided as a matter of principle that C2 should never adjust trade quantities upward without human intervention, no matter how well-reasoned.

Finally, I do want to note that automated emails are sent to all subscribers and AutoTraders when rescaling is initiated.


So how are systems going to be compared? Based on annualized %? Specially in the competition department?

Also where can I find the intraday margins, specially for ES?? What would be the smallest tradable account for trading only 1 ES?

Competitions will be forced to use $100K systems.

C2’s daytime margin for @ES is (currently) $1750, and overnight is $3500.

Thank you very much, Matthew. Much appreciated.

Yes! Most thoughtful. GA