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A few months ago I took a stab at picking some strategies that seemed promising. The time frame is short but, over that period the market was up about 13% while the average of the strategies was 3.51% with only one of the 14 strategies doing better than 13%.
Am I bad or is this a common do you think?
I scratched out the names and the allocations because I was just interested in the average percent etc.
Reveal you selection criteria and we’ll tell you. 
I just mean that do you think that the average C2 investor ends up doing worse than the market.
I think average investor is always doing worse than the market.
Sure, if he/she selects a losing strategy .
And yes, on any given week the S&P 500 will outperform some of the best C2 strategies, at least for a while.
I have to agree with you.
Imagine you started before the 2020 crash. I made a similar post about strategies I subscribed to about a year ago. Showing strategies I subscribed to over past 3 years. The result was 2 out of 17 was still active, all the others went private or crashed. Underperform was not even an issue, most of them stopped trading, gave up on c2 or crashed and went private.
@OSUTIA you mentioned that underperform was not an issue but they stopped and gave up on C2, Was there any particular reason for giving up on C2? When you said crashed, do you mean their strategies failed?
What criteria did you use?
No particular reason, these C2 system developers just left to pursue other interests I guess, or they were experiencing health or family issues.
As you know, trading is a very demanding and time-consuming endeavor, and can sometimes interfere with our personal/social life.
Were drawdowns high, they possibly terminated winning systems because C2 standards are too high.
Only picked a basket of things that looked promising at the time.
I’ve been trading since 1984, and a member of C2 since 2006. I tend to be a very abrupt and harsh person (perhaps due to my analytical nature), so I hope you’ll think about the following rather than taking offense at how it’s said.
You have no plan, therefore any outcome (good or bad) is valid. The stock market is temporal in nature (if you’re unsure of the exact meaning, I urge you to look it up)… your methodology was to pick systems that looked good at the moment (non-temporal analysis), and reflect upon those choices at a temporal moment in time (the future). It’s no wonder your results were a mixed bag.
I urge you to try and learn a new way of thinking and looking at the markets, that takes their temporal nature into consideration. Often times, the only way I can understand how to go about something is by starting at the end - looking at the outcome I wish to attain, and then moving backwards in time so as to understand the steps I’ll need to take. That’s why goal setting is so important.
Here are two more very important things that I constantly do, ad nauseum:
I answer the question that’s being asked, not the question I think someone should have asked. I am as brief as possible while conveying all the information necessary, but nothing more. In effect, I do not try to read someone else’s mind. If you were to ask, “Do you know of a good trading system?” my answer would be “Yes… I do” and nothing more.
I force others (as well as myself) to clarify their terms… and I do this whenever subjective statements are being made. In the above example, if you were to then ask, “Okay… what’s that system?” I would respond with, “A good trading system… good is subjective… what do you mean by good? What amount of draw-down would you consider good? What reward/risk ratio would you consider good? What profit factor would you consider good?” Lastly, because markets are temporal in nature, I ask, “… and over what time period?” It should be obvious that what I may consider to be good, you may not like at all. Also, in a temporal system, definitions change over time. What someone may consider good today could be considered bad later.
Most people never take these criteria into consideration, and instead act out of impulse (as you did). That used to drive me crazy… and it took more than 40 years for my attitude to change. Nowadays, I realize that if it weren’t for people like you (no offense meant - dive into the lesson), there would be less opportunity for me. No matter how much anyone else disagrees with this, it’s proven true - thanks to other peoples’ bad choices (putting their money in a bank CD paying 1.25% APR), the bank and I are given great opportunity (they can lend to me at 4.5%, and I can make 18% on a property flip). If people were smarter (or understood risk better), life would be more difficult for me, as would making money. Thus, whenever someone says, “oh, the stock market is a gamble!” or “futures trading is suicide” I not only agree with them, but try to discourage them by telling them of the hundreds of thousands of dollars I’ve lost in trading, over the years (which is true - I just omit the part about the gains I’ve made).
Most people are lazy, by nature. They will do just enough to get by comfortably, and no more. You need to choose what type of person you want to be - the one who does the bare minimum to grasp things, or the one who knows 10% more than others (which, ironically, makes you an expert).
How to apply this? Before simulating a system, decide on the temporal criteria that are important to you… how a system looks at the moment (i.e., snapshot) is not temporal. Then, learn enough about statistics to be smarter than the uneducated masses. Understand that a sample size of a few dozen trades is not statistically significant given the context. Understand the risks over time, the timeframes, and how a system manages shifting markets as well as black swan events. Make intelligent choices, which you can back up with facts.
Thanks! Do you publish any strategies yourself? Having been a trader since 1984 and a C2 member since 2006 I would be fascinated to see the returns you have had. If you do publish strategies can you share some links to them in this thread?
Basically, I would like to see how your statistical approach has done for you. Obviously statistics are important and useful, but any statistics in trading based on something less than a decade are based on a very small sample size. Of course, the vast majority of C2 leaders and users seem to fall well below the decade mark.
You seem to be one of the few that has been around longer than that. I would be far more interested in your results as a trade leader or subscriber than I am in my silly test over a few months. Again, I think statistics matter, but even if you have a 1000 trades over the course of a few months that doesn’t really tell me much about the staying power of a strategy over the next decade. Of course, you sharing your results is then just a sample size of one person, but I am curious are you as good as you imply you are at either leading or picking strategies?
@DwightSchrute - My history spans too many decades to elaborate on here. In the early days (1980’s), I was doing single-leg stock options (covered calls and puts) when the Pacific Stock Exchange was located in downtown Los Angeles, and I could walk over to it during my lunch break. I did well enough with that strategy that my mortgage broker considered my trading income when qualifying for a loan, and that was the day where only paper trade slips were available (prior to the Internet era). By then, I was using DBC Signal (delivering real-time quotes over the FM radio subcarrier) and Stan Lekach’s DollarLink software (link). In 1996 or so, I began using E*Trade, which was the first online brokerage firm, while still receiving quotes via (what became) FNN Signal and other hand-held gadgets, along with using DollarLink software on my workstation. I’ll jump ahead…
At the time I joined C2 (2006), I was mostly trading monthly option credit spreads. I did extremely well for nearly ten years, until then-President Obama began announcing economic news while the markets were closed. During that time, however, I did post my strategy on C2… but C2 was unable to properly compute draw-down for option credit spreads. For a while, Matthew would manually edit his data each month, but that soon became monotonous. Even today, I notice some futures strategies doing spreads (sell one future, buy another, keep the difference) yet their draw-down and win ratio is computed incorrectly.
I don’t really want to write a novel. A long time OptionsXpress user, I began futures trading when IB (Interactive Brokers) began offering them. My strategy (which I had automated, using a cluster of dedicated servers housed at what was then Time Warner Telecom - for $3,500/month) was described in a slide-show presentation I did for the Boise Stock Exchange (now defunct). My strategy, written using no trading platform (e.g., coded from scratch), scalped a few points off the emini on a daily basis. At the time, I was using IQfeed (I’ve been paying for their feeds for 14+ years), and ran QuoteTracker to watch the action. Even today, sometimes I use Medved Trader, the successor to QuoteTracker, to watch the action.
My interest in trading did not wane, but my time did, as I became a founding stockholder and software architect for a startup company (and relocated from Silicon Valley to Boise). I developed online payment processing systems and the Kount fraud control system, later sold to CVC Capital for $80M. I cashed out shortly thereafter, although I remain a stockholder in its parent company, Keynetics.
There’s still too much to cover… I’ve bought and sold (flipped) 30 homes over the past 5 years, I’ve been the subject of books, magazine articles, television shows, and one movie. Here’s a summary I did for the computer security community, which includes a link to the National Geographic TV show that interviewed me a few years ago.
Hi,
As a software architect, were you able to create and backtest a few mechanical trading systems?
I guess the one thing of interest is that I employ a hybrid method when auto-trading C2 strategies. I allow the strategies to initiate and close trades, but I manually set each strategy’s stop-limit shortly after trade entry. I then set (or override) exit limits (usually tiered) multiple times throughout the day, until the trade winds down or the market closes. The majority of the time, I will close out any open trades before the weekend, regardless of system signals. At this stage, I’m fortunate in that I have the time to monitor all auto-trading (in addition to the weekly and monthly stock option trades I still do manually).
@LewPayne very interesting life you’ve had. I was talking about an audited track records that you could just post a link or screen shot to, but if you don’t have access to your old C2 strategy, a simple TWR chart of your autotrading, or a simple TWR chart of your manual trading who would want to take the time to go back and add it up.
I’m not interested in making my finances too public, other than a few snippets here and there, along with what’s already part of the public record (like the $80M buyout, in which I’m a 10% stockholder). What I will illustrate, this one time, is the importance of trade management.
Here’s a snippet from one of the strategies I subscribe to, showing an actual loss right now…
However, since I insist on managing my trades (even auto-trades), I overrode their stops and scaled out on Friday (did not hold over the weekend - when bad economic news can destroy your position) and closed with some $3,000 in profits rather than the net loss other subscribers are now experiencing…
The moral of the story… manage your trades, even if someone else initiated them.
Nicely done. I am primarily being facetious. So don’t take this too seriously, but that seems like a small sample size.
