indeed, I expect that’s what’s happening quite often. At the very least I’d expect many greedy subscribers pay their fair share in risk education before becoming more rational about trading and investing. And who knows, maybe it’ll benefit them in the longer run.
To what extent C2 should have a more proactive role to educate subscribers is an open question. I personally think C2 should provide the data but leave the interpretation to individual people, because people vary in terms of their appetite for risk and might have different investment goals. In addition, subscriber reviews, “My Analyst” pages and this forum all provide many hints at the dangers and pitfalls of certain systems. Maybe we should start a Wiki and collect all the advice given on this forum in a more structured and permanent environment to give newbies some guidance, although I expect discussions and rants will never end.
Systems on C2 are like mutual funds. Study their returns, and the correlation of those returns to various market cycles, and time them accordingly. The statistics are in plain sight.
How do venture capital firms make any money, investing in so many loser companies (equivalent to systems)? When you understand the answer to this and think about my prior statement, it might help you form a clearer idea of an alternative approach for selecting and utilizing systems on C2.
sure, but what is the benefit of trying to time C2 systems versus timing mutual funds or–for that matter–any company traded in public?
at least for the latter two you have access to a lot more information about their management, financials, and in many cases decades of returns data.
"Systems on C2 are like mutual funds. "
Mutual funds are regulated. There are government debates going on right now about whether hedge funds should be regulated. C2 systems are several orders of magnitude higher risk than hedge funds.
"How do venture capital firms make any money"
You are suggesting that potential subscribers should be venture capitalists? No wonder the best systems only attract 36 subscribers.
My belief is that if the land mines were cleared and more credible annualized returns were showcased then more subscribers would be at this site.
"My belief is that if the land mines were cleared and more credible annualized returns were showcased then more subscribers would be at this site."
I would mostly like to see a limit on leverage for C2 systems. I have seen several studies that indicated optimal high leverage for things like futures trading is about 7 (1 dollar controlling 7). I do not know/trade forex.
But I see system equity curves here that have gone below negative $100K. I see systems that are gaining or losing $5 million plus, a couple of months after they start. I see scalping systems with large gains yet autotrading customers who don’t even break even off from the same trades. I see systems trading 30% of a stock’s daily volume at a time, and having subs do the same? I see systems throwing all caution to the wind to climb the C2 charts. I see occasional outrageous “Hold & Hope,” & “Averaging Down” and the systems that successfully do it get high ratingsand visibility, and then imploding a month later, along with some subs, who must get frustrated with C2.
I would like to see all the lists (Grandma’s, Best Systems, this week’s/month’s gainers. The Grid, etc.) eliminate all the systems that blatantly game the system. If they don’t get featured, they might avoid the behavior. I would propose making systems with very low realism, APD, and/or whatever other stats never appear. They drive quieter, good systems (like TMG before the big DD) into the background.
My belief is that if the land mines were cleared and more credible annualized returns were showcased then more subscribers would be at this site.
The main problem with the annualized returns is that they are extremely unreliable for young systems. You can see a similar effect in the Sharpe ratio. If you sort by Sharpe ratio then most of the systems that come on top are very young. But then, if you inspect the lowerbound of the confidence interval, you see that these are often negative. The reason is that the estimates are very unreliable for young systems. So there will always be some young systems with an extremely high estimate because of sheer luck, and these will come on top. I expect that the same happens with annualized return and many other statistics.
In case of the Sharpe ratio there is a partial solution: Sort on the lowerbound of the Sharpe ratio instead of the estimate itself. You can’t do that in the Grid, but the information is available on C2, so you can do it manually.
This solves only a part of the problem - although a big part. Another part of the problem is that even the lowerbound is superficially high for young systems, because such a system likely encountered only a limited set of market conditions (e.g. only a bull market). Another part of the problem is that relatively infrequent events (like 2/27) will probably not be included in the history of the system. I don’t know any solution for the latter two problems.
Still another problem is that these statistics are based on the best case fills. Well, C2 provides some statistics about that, like the Realism factor and slippage results. These are perhaps not optimal but at least they give some indication about what may be expected.
So basically the most relevant information is available. It is rather the presentation that might create unrealistic expectations. Three suggestions:
1. Show the Grid with the lowerbound of the Sharpe ratio instead of the point estimate.
2. Also display the lowerbound of the annualized return (I can add that in a next version of the advanced statistics program).
3. Make a feature by which people can compute their own combined statistic in the Grid, and where they can attach their personal weights to the input statistics (e.g. Ross thinks the Realism factor is important, but I would give it 0 weight).
"When you understand the answer to this and think about my prior statement, it might help you form a clearer idea of an alternative approach for selecting and utilizing systems on C2."
I have no incentive to argue with anyone about the two abstract concepts I presented, nor to perform the mental equivalent of wiping your ass for you. Those who cannot think in abstract terms will fail to grasp the underlying concepts behind my statements, setting their own road block in the process. I have neither the intention nor desire to help you remove that roadblock.
I don’t have a feel for realism one way or the other. I doubt that giving it 0 weight is realistic either, I am sure it has some distinguishing value in a blunt force way. My point is, I think there it would be best to come up with some standards to eliminate systems from public view, that take wild risks simply to become popular or visible.
The cases like Flying Pink Pigs, Matthew Grahams and Jon L’s (and things I mentioned above) who have lousy stats or found ways to game the system to get impressive equity curves needs to stop.
If they never appeared on the list, then the incentives to behave this way would stop. Limiting leverage (like futures to around 7 or 10 x) and using minimal Sharpe, APD, or whatever stats to even MAKE any list would be a good start.
For example, why was Big Cat with its (once) 0.08 APD so highly visible for so long??? or the Pig??? They should not even had made any of the lists. And as Sam C said re: Palsun - “open DDs don’t count but Open profits do”? C2 should be about real-world trading, but sometimes it looks more like a side show or flea circus. The performers and elephants often get more attention than the serious
I just am pushing to make some minimal standards, so the systems with potential don’t appear well down the list.
"I have no incentive to argue with anyone about the two abstract concepts I presented, nor to perform the mental equivalent of wiping your ass for you. "
Defence plan (1) - … no incentive to argue with anyone…
Defence plan (2) - insult
Once you tally up the results (of your two abstract thoughts) over time you might find you aren’t doing any better than investing in an equity mutual fund but assuming a lot more risk.
Some time ago I made a suggestion to C2 to set up some “model” accounts for newbies. The idea would be to create model accounts with different starting capital. Each model would subscribe to five systems that could be auto-traded. The results (capital appreciation/depreciation, drawdown, etc) would be published on C2. Any Newbie would be able to clone the setup and be able to start trading almost immediately. This would seem logical to attract new subscribers to C2 if the concept actually works. Never heard back regarding the suggestion.
I’m sorry that I misrepresented your opinion. But my general point is that people can have different opinions about how much weight should be attached to various factors, and that this will make it impossible to design a combination formula that satisfies everyone. I think it is relatively easy to make a feature in which people can assign their personal weights to several statistics.
I agree that nonsense systems still come too easily on top - although the Grid is a substantial improvement. I would not go so far as to eliminate public visibility alltogether for such systems.
The wiping your ass comment was not intended as an insult. It was a metaphor intimating that I’m not interested in engaging in hand-holding. A few of the responses to my recent post are a perfect example of why… they so much miss the point and divert on a tangent that it’s just not worth it.
"Some time ago I made a suggestion to C2 to set up some “model” accounts for newbies. [They subscribe to 5 systems and the results of their picks are posted…]
This is an excellent idea and, no doubt, one that would create its own set of problems. Nonetheless, it is idealistically still a good idea.
Jules Ellis
But I will be happy with 5% monthly. That is 80% annual and $10M when I’m 55. Hmm, that still sounds like a dream…
lol Pls, mention that expectation of hard core profit is only one point where I don’t agree with Lew. I think it’s general mistake of any C2’s subscriber.
Lew Payne
Systems on C2 are like mutual funds. … How do venture capital firms make any money, investing in so many loser companies (equivalent to systems)?
In general it’s better, because you’re paying small fees for something that might be over profitable and you don’t have limitation of mutual funds or “angels”.
From other side your risk is increasing, but it’s increasing with expectation of probable profit. The same story as for VC.
Eu
If the best system over two years old has an annual return of 46% and you average over several systems (a la venture capitalists) then it is quite possible that you won’t do better than a mutual fund. The mutual fund limitations are called government imposed regulations…
…Ok but how subscriber a good TS (really, not phantom trades!) can have?
Eugenio - you are in a similar position as me. I have a long term system. It takes a long time and lots of patience to get subscribers. For a long term system you need to be prepared to trade for 1 - 2 years with an excellent track record before you will attract subscribers.
I have now offered free service for the next year and this has helped me get some subscribers although they pay nothing. My hope is to demonstrate good profits at low risk over the next year and then maybe I can convert some to paying subscribers.
I will also be setting up my own website to attract outsiders. I suspect (I hope?) that there is more of a subscriber market on the web than currently on C2 for my type of system.
Steve Auger
If the best system over two years old has an annual return of 46% and you average over several systems (a la venture capitalists) then it is quite possible that you won’t do better than a mutual fund.
I wouldn’t agree. Forming of portfolio of systems is dirty cheap on C2. You can try to estimate it by comparisons of necessary TC for forming portfolio of CTAs.
Actually, from my point of view, C2 is first on a market for giving the kind of opportunity to retail hmmm… people.
Ok but how subscriber a good TS (really, not phantom trades!) can have?
If you trade goos system you don’t need any money from C2’s subscribers. So number of subscribers are irrelevant for you.
Hmm…
There are two ways of C2’s future IMHO of course 
:
1. C2 attracts (I don’t know how) serious system vendors. Probably, it’s not a money, but blood bath where you can be first and we start speaking about prestige.
2. C2 attracts short term mushroom grabbers.
Eu
P.S. If there were IPO of C2 I would short.
I have started researching results of hedge funds. When you account for the high attrition rate and unregulated reporting, on average they underperform the stock markets. Given that C2 system providers are not trading with real money and probably consist of many non-professional money managers, I suspect that on average C2 systems will also underperform the stock market.
As with mutual funds the uninformed subscriber will subscribe to the "best" systems in recent past only to discover the phenomenon of reversion to the mean.
I tripped over a website a while ago - I will not mention the name. This website tracks credible Futures trading systems and will trade them for you. The absolute best system they track returned 33% last year. This leads me to believe that there are many non-credible trading systems at C2 and expectations which are way too high.
there are a few tracking services - Attain, Striker (one of them is SystemRank.com I think), and some others. They usualy seem to feature systems that have a great backtest, and fall apart under live testing. And of course, Futures Truth (which is suspected by some as being incompetent - people constantly report they cannot reproduce the results Futures Truth that reports).
I am definitely not in this for up to 33% annually. But for many people, that would be a superb return. But the new traders come in looking for a system and a trading methodology so they can retire in 6 months. Many of us probably have sat down at least a couple of times with a spreadsheet/calculator and figured "now, if I average 1% a day, and keep leveraged to the max, compounding it daily, then I should have my $25 million in 7 months…" A pretty equity curve must be like a porch light for these moths…
I do not personally subscribe to "reversion to the mean" philosophy. I have never seen evidence that the markets remembers how a system does (well or poorly) and then average it back to "normal." I would say that systems that do well in their infancy and fall apart, only demonstrate that they had some initial luck, and then reverted to randomness. Some vendors also manage to drive a system into the ground rapidly, because they exercise poor money management.
I hate to educate people. Would you sorry me?
http://www.hedgefund.net/reports/HFN_Est_Perf_Dec06.pdf
Take it for free lol As well as the site. They are bastards.
I’m sorry for being a sexist for politically correct idiots . There are guys and girls on the market. In other words, there are people who fuck and others who has being fucked. I’m really sorry for the politically incorrect words for fucked 
This leads me to believe that there are many non-credible trading systems at C2 and expectations which are way too high.
Your assumption is correct. So what? Idiots are the market meat lol
Eu
I will say that Ross is onto something, as part of what he’s explaining is touching upon my two earlier comments. Systems tuned for certain market conditions exhibit reversion to the mean because of changes in market patterns. Given a constant stimuli, the reaction (results) would be similar. But they’re not… the market is dynamic and breathing.
Those who recognize what’s going on with C2 systems can ride that wave cautiously, limiting draw-downs and losses in the process, and as with mutual funds switch to the next rising system as the current one begins to fail. There’s more to it than that, and I leave it as an exercise to the reader to discover same.
