You know, I’m thinking about improvement C2 I don’t know why. Two major problems at the moment (from my point of view of course) it’s bad payment models (it’s not C2 fault, because the company is limited to US laws) and lacks of simulation (it’s again not C2 fault, because you cannot simulate correctly some things until you put your money to the market. I.e. market orders at stocks, orders at market open and so on). From other side C2 position itself as auditing authority. Maybe there will be some mean if C2 will have audited systems. Audited not “hypothetically”. I’ll try to explain. Main business model of C2 will have no changes. C2 will add “based on statements” systems. It means that C2 receives one time per period (week/month) broker’s statement from a system vendor. To avoid any falsifications C2 might request audited broker statement. (Audited statements are costly, so probably C2 has to explain why it was requested). Also C2 shows trading capital of a system that is based on the statements. Parsed statements are shown at C2 as usual for any system
What we have finally: System vendor shows his/her real results that doesn’t depend from C2’s hypothetical fills and have a deal with subscribers payments him/herself. I.e. it’s not necessary to register anywhere in the states if you have a deal of management others money under 100K. Any audited system are shown as regular C2’s system. C2’s have listing/auditing fees and stays under US regulations.
It’s probably very raw idea, but I think it covers two major current issues at C2 at the moment.
Eu
Any thoughts?
Forgot to say. I would offer a system at C2 at described conditions. Just for prove that I’m not kidding.
Eu
Remember if you have a successful stock system with 100 subscribers you are going to be responsible for some decent sized orders going into the market in potentially thinly traded stocks, the vendors 10k account at his broker’s buying 1 share at a time is not going to accurately reflect the real life fill and slippage involved so using the vendors statements is completely irrelevant to me and C2’s own version of hypothetical fills and real-life slippage ironically represents a greater reality.
It’s exactly a problem that I crossed. Even if the system sizes were calculated by very stupid way i.e. recommended size should not be more than percentage of volume from recommended size multiplied at number of subscribers. And even the formula made some problems in reality. My assumptions was: because there were significant difference in subscribers brokers and deals between a subscriber and broker. So one subscriber has full fill at exactly low and other cannot have a fill even when price moved 50c below limit order. Gosh. How to manage the difference? Of course I choose a route by last subscriber out and from the point I have a situation with permanent unsync of portfolio. I.e. when people are waiting some unlucky person. C2 cannot reflect the situation due to it’s limitation of simulation. In reality I would have a deal with partial fill/no fill.
It’s better and simpler to have everything at one account.
Eu
I agree that the biggest unknown with C2 stats is the degree of real slippage that would occur if the trade were executed in the real maket place instead of C2’s hypothetical market place.
But there already is a way to see that impact without the added infra-structure of book-keeping real returns. Break out the real market fills that C2 already receives from auto-traded accounts. That one simple change to C2’s stats would give enormous insight into how much slippage a strategy really incurs.
For a subscriber, the biggest unknown is whether the C2 stats are indicative of future results in the subscriber’s own account. Part of this problem is indeed how much slippage a subscriber will face compared to the slippage reported by C2. Some sort of audit mechanism, either the current ‘hypothetical’ C2 stats, or a more official audit as proposed by Eu, is a solution to this problem.
However, the much larger problem is whether the C2 stats are indicative of future results (regardless of slippage). The recent collapses of Mutual Fund Trader and RT Forex North are yet another example that even statistics based on a 2-4 year history have little to offer in terms of future success.
"However, the much larger problem is whether the C2 stats are indicative of future results."
There is no stat, C2 or otherwise, that predicts whether a program will continue to make money. The recent failures of some of the finest money managers in the world attribute to that.
What makes it worse here is the fact that subscribers aren’t satisfied making 30 percent a year, a return that most astute investors would covet. That means the vendor has to jack up performance to compete and when that happens, the risk of failure grows exponentially.
If the C2 statistics have no predictive power, what’s the purpose of reporting and using them in the first place? I can fully agree that no statistic can give a 100% accurate prediction, and this is not something we can expect from the C2 statistics either.
However, what subscribers should be allowed to expect is that there is at least some predictive power in the C2 statistics–otherwise subscribers might as well throw a dice in selecting which systems to subscribe to.
The higher the predictive power of the C2 statistics, the more valuable C2 is.
System statistics:
Although GOOD stats in things like profit factor, max DD or Sharpe may not predict GOOD longterm results,
There have been many examples where BAD stats predicted BAD results (and helped see through an attractive equity curve), such as when a vendor was averaging down or holding&hoping.
Anyone signing up for a system with a 70% max DD and profit factor of 1.2, even though the equity curve looks good, is asking for trouble.
I found one big problem that c2 needs to address, is when getting setup initially as a subscriber, who wants to autotrade.
First you need to subscribe to c2 in order to see almost anything.
Then you need to sunscribe to a system in order to even see the autotrading setup screen.
There are no "official" free systems, so you have to subscribe as a dummy.
Then, there are no systems that provide "test signals", ie ones that would appear in your autotrading brokerage, but would not do any damage - eg BTO ES at 1100. There again, maybe that order would get filled the way things are this week.
So to get started autotrading, you need to take a leap of faith, signing up to c2, subscribing to a system, and hooking it up to your broker - and then just hope everything works without losing your shirt.
Strategies fail for a number of reasons. We saw a number of FX systems go under when the Yen carry trade started to unwind. We saw a number of long-only stock systems heavily damaged when the current financial crisis began. And we’ve seen a number of strategies go under that “average down” into trades.
For some of these causes, C2 stats have no predictive power. The stats don’t know when the market is in the wheelhouse of the strategy, or when the market is about to change so that the strategy is no longer profitable. Stats just report past performance. In those cases, it’s up to the prudent investor to determine whether something has fundamentally changed to cause the system to stop working.
C2 stats do show up other potential causes, the most prevalent example is overleveraging.
I believe that systems with over a one year track record, and a sharp greater than 2 are much more likely to perform well in the future, but there’s no guarantee some will eventually fail.
"There are no "official" free systems, so you have to subscribe as a dummy. "
there are almost always systems at 0 cost. Some are young, and do so to attract customers.
Would you hook any of them up to you live broker account in order to do an end-to-end test of the setup? Thought not.
I think we can all agree that C2’s stats cannot predict future returns. The power of C2 is that it equalizes traders onto the same 3rd party playing field so people don’t go off claiming 339% annual gains without proof.
Rather, the issue is that the C2 results are heavily dependent on the leverage ratio and initial capital stated by the system owner. Which could be very different than the settings used by the actual trader. Real-life costs of leverage, costs of commissions, and costs of membership fees should be included in the return calculations for a true apples-to-apples viewpoint onto trading systems.
In any case, that’s my point - sure there are some systems that happen to be free, and lots of systems that offer free trials.
But that’s all a bit hacky and kludgey. There should be a straightforward path to getting new subscribers all setup, which should include an official “test” system - in fact several of them, in order to test different markets - stocks, futures, fx etc. One solution might be to guide users through setting up their own system, which they then subscribe to themselves - but I don’t know if this is possible in c2 at the moment.
I have done so
So as a newcomer to c2, the first thing you did was subscribe to a free system, hook it up to your live trading account, and wait for a signal to hit, to show that everything was working correctly? Then you’re a damn hero, and I salute you!
Others may not wish to make that leap of faith, and frankly, why should they have to, this should be easy to fix?
You could start your own system, hook it up and make a trade yourself with a small amount as to not lose much if it went against you. Just an idea. There are also demo accounts you can hook up to "real" systems.
Craig
A new trader who jumps in, funds their account, and throws everything up without investigating and asking appropriate questions is an idiot asking to lose their money. No pity is deserved.
Imagine that same person decided he wanted his own business, walked up to a roofer, and offered a load of cash, had never done roofing, took over the business and failed. And then blamed the roofer.
You need to take a deep breath, take the chip off your shoulder, and chill out. Many people offer suggestions to Matthew to consider. But some think they know better and demand that Matthew make "an easy fix" now.
Take some Xanax and calm down, dude...
Index, I don’t think you grasp my point. I’m not talking about investigating systems, and whether or not they can make money, etc.
I’m talking about the technical setup of c2 autotrading to your broker. ie will an order, placed by a c2 system, any system, actually show up correctly in your broker? There is currently no way to test this setup, other than actually subscribing to a real system (free or not), and waiting for an order to hit.
This is indeed very easy to fix - simply provide, and document, a “test” system that people can use for the purpose of getting the end-end connectivity setup, and sort out any technical issues.
I don’t know if you can subscribe to your own systems, but this might be the way to do it.
