Holding losing positions to protect current month stats a common practice?

I subscribe to two strategies here and have six figures allocated to each. The second one I recently subscribed to typically holds 10-15 positions at a time, and gets in and out pretty quickly (ROI wise) for small profits or small losses.

However, the strat manager has been holding one position for over two weeks that is getting absolutely crushed (in a freefall since opening, -20% and over $3500 down at the moment), which is WAY out of line with all of his other trades (again, typically small gains and small losses) that exit losing positions relatively quickly. It appears that the strat manager is holding this position to the detriment of his subscribers in order to preserve his (barely) positive ROI for December, as I’m assuming the stats for a strategy only reflect closed trades. If he closed this trade in December, far and away his worst trade in the life of his strategy, it would take his overall December ROI significantly in the red.

Is it common practice here for strat managers to hold losing positions through the close of the current month, to the significant detriment of their subscribers in this case, in order to preserve their strategy’s stats for that month (hoping to make up for it next month)?

I believe monthly ROI is calculated based on the equity changes which includes all positions: closed and open.

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Thanks, I noticed that the current month’s ROI stat changes based on the performance of any open positions, but I wasn’t sure how the C2 system handled the monthly ROI stat when a month closes. I guess I’ll find out in 24 hours for sure…

Did you message the strategy manager directly to see what the plan is?

Yes, I had earlier, and just heard back from him. Here is his response (and my subsequent response) which I am satisfied with.

Personally, I don’t care about my December ROI stat and I would never try to hurt my subscriber’s, especially to make a deceitful move like that.

Here are my thoughts and they will be direct, but don’t misunderstand them as mean or offensive.

The system is trading exactly as it’s been tested to do since 1992. The system has a CAGR of ~75% and a MaxDD of ~23%(Portfolio DD).

This is why I harp on my subscriber’s to position size properly. If executed properly, 1 position down 15% is only 1% of their account size. Since MRNA is 2 positions then it would be ~2% DD. I could care less about a 2% DD. Trust me, you aren’t the only person contacting me, but a big problem with small trader’s is they STRUGGLE with DD’s and probably shouldn’t be trading their own money because they can’t control their emotions.(Not saying this is you, but many small traders)

And my response:

Thanks for your reply. My question wasn’t so much about a $3500 DD (I think I have like $150K allocated to your strat and I don’t use leverage for trades I don’t manage, and yours is not the only one I trade six figures here), it was the fact that MRNA seemed so out of line with your other trades, AND I was more trying to discern if this seeming anomaly had a technical explanation, or if was there an ulterior motive behind holding it. I don’t know your character, which is fine, we’re not going to pick out curtains together or anything, but the out-of-the-norm appearance of this position compared to how it looks like you normally trade looked like the possibility of a self-serving motive that was not in the best interest of your subscribers, so I thought I would ask. Hopefully no offense taken by you, but I would be remiss not to ask the question. Thanks for responding and explaining.


The monthly stats include all trades, both closed and open trades.

I’d be curious which strategy this is.

The strategy is Alpha Capital Compound. I’m subscribed to it. It looks like a good strategy so far. And Moderna is just one of 15 positions so the drawdown is hardly anything. And even with this drawdown the return for December is slightly positive.

Personally I think the pullback in MRNA seems overdone for a company that is one of the leading researchers of messenger RNA technology and is also selling over a hundred million corona virus vaccines. After such a big pullback, I’m also considering buying it in my non-autotrade account.

I know that the C2 return stats are based on the account equity (open & closed positions ) so it’s not accurate to say that closing the position would “would take his overall December ROI significantly in the red.”.

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Still don’t know what the eventual margins will be for MRNA, so for me it’s damn near impossible to assign it any value at all. Gonna trade with the hype machine until things get clearer, plain and simple.

As for Alpha Capital Compound, looks like solid returns so far. But I’ll be curious what happens with an intense drawdown, since it basically started from the market bottom and it’s long only.

@ChrisPage, I also assume you are referencing Alpha Capital Compound and I am a subscriber, as well. I do not believe the strategy developer is attempting to game the stats but is simply following his methodology. He has only had 14 closed trades with drawdowns greater than or equal to 2% of the portfolio value out of 293 closed trades since inception.

It appears the trade with the largest percentage drawdown, ULTA, was 4.93% of the portfolio and the trade was open for 17 days. The longest holding period for a DD above 2% was REGN and was held from Nov 10, 2020 until Dec 15, 2020, or 30 days. See the Excel worksheet below showing all trades >= 2% of portfolio ranked by DD from smallest to largest.

C2 itself describes this strategy as sector rotation and short-term reversal so we could expect it to attempt to find stocks to buy low and then sell higher after some degree of mean reversion. However, the markets are neither compliant nor predictable, and stocks can continue to drop and remain oversold for some time.

Alpha Capital Compound seems as if it might be some variant of Larry Conners RSI mean reversion strategy based upon a relative strength indicator. This could explain why all the trades on the worksheet were sold after regaining some of their value – they had bottomed and were sold after nearing an overbought level on the developer’s indicator.

The 14 trades on the worksheet display a win percentage of only 28.57% and a cumulative loss of $8,235. It appears trades with more than a 2% portfolio DD substantially reduce the likelihood of a favorable outcome. You may want to consider setting a stop loss on open positions at about 2% DD based upon the developer’s total portfolio value for the strategy.

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