Conservsystem has an annualized return of over 1000% with a draw down of about 16%. The monthly fee is $29. They only trade ultra liquid markets, their sharpe is over 5 and 90% of trades are winners.
This is our competition …with the kind of fees that C2 charges developers…now called trade leaders…where is our break even point??..how devastating is the new fee structure??..what do we need to do to compete??
Can we at least go back to the old fee structure for developers?
What is the real world slippage like? What happens when there is an unexpected violent move?
If there is no slippage and it can survive a shock event, then I would say there is no “beating” that sort of result. I’ve been around long enough to know, that either 1000 percent doesn’t factor in real fills and/or some underlying risk is being taken that simply hasn’t shown up yet, and when it does show up it is going to be really bad. I’ve seen people doing triple digit returns and then they go to 0 (or less than 0) in one move. Don’t forget with forex you inherently will have some big leverage on as compared to say stocks.
It doesn’t have an annualized return of 1000%, and it averages in as the trade goes against it. It can easily be annihilated on one bad news event once averaged in hard enough.
The system is very similar to Zip4x which is still on here. 95% trades were winners, but has huge drawdowns once a year or so (if you look closely at the trade logs). Sometimes they were 100% of the account size but because it was intraday, C2 allowed it to survive that shock. Subscribers’ brokerages called them in and let them know their entire account was wiped.
This system is mean reversing, with not a bad timing for entries. It trades often. Execution and slippage in this case are not an issue, it’s not aiming to scalp a few pips.
He does double down quite a lot on losing positions, which is a pity. This system can do well in my opinion also without doubling down that much and it will survive longer that way. Of course, the results won’t be as smooth and perfect as they seem and that will look less attractive to subscribers.
I follow this system but limit the maximum lots it can trade, and add a stoploss that in normal conditions doesn’t get hit. This means I am ready to take more losses then the system does, but my risk is always well defined. Starting all trades with 2 lots and getting to over 10 lots in the ones that don’t initially work out isn’t acceptable in my book.
Sure looks like Zip4x 2.0. Good luck.
The break even point for developers is not the problem. You need 1-3 subscribers to cover your cost, depending on your booked plan and system pricing. That´s not too bad.
The real issue for serious developers is that 90% (my guess) of incoming investors go to the high flyers like the one you mentioned and loose a serious portion of their investment within 12-24 months. After that most of them leave. So every developer who does not wish to be part of that game has to compete over the other 10% of investors.
My understanding is Zip4x was mechanically doubling up losing trades. ConservProfit is displaying signs of a lot more intelligence than that in his subscription announcements. I.e. there’s a limit to how far he will go into a single trade, and he has fundamental reasons for his trades. Yes, he’s doubling up farther than I’m personally comfortable given the amount of capital, but there’s a way you can control that as GalBarak said.
That said, one definitely needs to be aware of the amount of leverage that strategy is using since there’s a non-zero probability it will blow up its (and your) account.
Zip4x was being “smart” as well and not just mechanically doubling up losing trades. He was successful here for years even though his “smart” over-leveraging was the undoing of his subscribers multiple times. People made excuses for what he was doing just like on this thread. Notice he’s still running and might come out of his current drawdown and in a year or so might gain subscribers again who don’t mind the huge drawdown stat (just as they didn’t last year).
The real issue is over-leveraging, not the particular method you arrive at being over-leveraged. Once you’ve cornered yourself in that dead-end-of-doom, where you really really need the market to go your way, you’re already living on borrowed time. If it didn’t catch you this time, it will in the future.
IMO a strategy needs to avoid over-leveraging and take losses before they get out of control. The 90% win rate is a red flag. Nobody can keep a 90% win rate without either holding losers until they turn around (which is a problem too though lesser), or adding to losers, or both. If you’re leveraging up on losers you’re gaining a high win rate (which really is irrelevant) in exchange for a big ugly loser tail event at some unknown point in the future. You can’t avoid reality forever, one day it catches up to you.
Indeed. Same with option selling systems. High win rate, but explosive downside if a trade goes against you. In fact, doubling down on a losing trade precisely mimics the increasing gamma and delta of option selling which makes it so deadly. The typical risk metrics don’t capture this at all which is what makes it such a trap for the unwary who scale significantly only to have half their account wiped on a system that only previously suffered a 20% max draw down.
Zip4x showed much higher risk right from the beginning, not after many years. Just zip’s 3rd month return was -20.4% and 7th month was -37.8%. He has over 99% win rate, which means he refused to close losing positions even if the data shows the reverse position was better.
Conserve has a lower win rate at 90% and has a stop loss for every position (though stop is quite wide). Conserve is willing to close at a loss if the position looks unfavourable. Also Conserve sometimes has positions open with inverse correlations like long usd / jpy and short eur / jpy, which helps to contain the overall loss. There is no guarantee, but it’s quite different from zip.
Note that I haven’t looked at the system in question in detail, I’m only making general comments that are JMO. Best of luck to all system devs and their subs but I avoid systems with high win rates. A 90% win rate is a red flag to me–it is unsustainable and hiding tail risk. Having a stop loss will get you out of a losing trade, but it doesn’t contain risk as a stop doesn’t guarantee the sell price. Trades can blow through stops and execute at values way way under the stop. If you are over leveraged (hoping a stop will save you) you can still blow out your account the same as having no stop in many cases.
I wouldn’t count too much on his stoploss. I’ve seen him pull it away in some cases (making sure it doesn’t get hit…?). But you can always place an additional stoploss (one that doesn’t get pulled…). But since C2’s orders are not real OCA group, this will increase the danger that you have an open unprotected position.
Plus, he holds positions over the weekend. No, you shouldn’t do that with high leverage and when your average trade is say 30 pips. One large gap in Sunday evening open and weeks or months are wiped out.
How can a new user avoid falling into this trap? Would I need to study and analyze a trade leader’s past trades?
I mostly cringe that i see a “high-fee” suscription systems, especially once tied to futures base strategies, high flying vix base dejur stratgie (with 2016 backtest only record), or crazy option writing srategies with no TOS… You have to realize, most of the subscribers here are with small size accounts… I would never commit a “serious” high 2 figure or 6 figues capital to any of the single systems here … So, that leaves me with smaller size capital to try things out 5k-30k … So if i am to commit 20k to a system that charges 200$ a months, my annual cost is over 12% of my capital deployed and that is a fee structure that is worse then highly scussfull hedge fund.
The reasone “conservprofit” is so succesfull, is that is lets me trade with a small size capital 5-10k with a reasonable fee, wich comes out of (3-6% annual cost of capital deployed, in my case)…
I understand the effor that tradeleaders put into running their systems and all the hard work that goes into it. I totally do, you would get compencated if you are succesfull… But u have to realize what your target customers are at the end of the day… So to sum it up, a system that is targeting 5-10k of capital, must have a reasonable cost to attract customers…
I hope my insight as a “customer” helps…
Hedge fund charge 20% on your profit plus 1-3% annual fee. Now you say hedge fund have better fee structure?
Most strategies on C2 charge much less than $200/month.
If you choose strategies that charge $200/month, those strategies would be making over 100% per year, or it get few subscribers. In fact, when you look at a strategy’s performance, the sub fee are deducted from its performance.
So a strategy making 100% per year, it is actually making 112% per year( adding your 12% sub fee cost.)
You are saying the 12% fee you pay is too high for a 112% winning strategy? Using hedge fund fee structure, you would pay 24% per year.
… again…“ss_ww” it all depends on capital commited to the system… Most customers do not commit that kinda of money to justify high fees… I am just giving you my honest “customer” feedback… And belive me i have subbed to about 10 different systemd over last 8 months in C2… “conservprofit” was the only system that made some money for me and not just to the tradeleader…
You get a wrong impression that all hedge funds make money.
In fact, the average hedge fund performance is worse than the strategy’s performance you can choose here in C2. And they charge much more.
I guess your problem is that you chose wrong strategies.
Studying the trade leaders past trades is pretty much the best way yes. It´s always favorable to have a decent knowledge about what works and what doesn´t when it comes to trading in general, even when you´re just a follower.
Another good protection for any “trap” is to split your money amongst several systems. But in order to not overleverage you have to have quite some expandable money, I´d say at least 50k.
A positive track record of say 9 or 12 months is also a good sign that the system works at least temporarily or perhaps even for years and decades. But you have to be aware that slippage can lead to drastically different results for subscribers and trade leaders. So it´s very recommendable to look at the trading style and markets of a trade leader.
So all in all you either must have a ton of money and make diversification your top priority or you have to make the due dilligence and invest in the best and safest system(s) around. If you can choose I would recommend both in combination.
If you don’t know which strategy is good, choose a strategy that has more than 10 subscribers for more than 6 months.