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I believe that risk management is fundamental in any type of strategy. Standard deviation and Beta are two measures of volatility. I think it’s good to take into account that:
I had a couple of suggestions for improvements but not sure where to put them.
When looking at other strategies to subscribe to I often see their equity curves and virtually always the starting capital their curve begins with is very different from what amount I want to invest. I think it would be helpful if there was an easy way for users to type in their own starting capital and have the curve redrawn. So if a strategy started with $100,000 but I wanted to see if only investing $10,000 would have done well or if it would have been eaten up by commissions, AutoTrade, and subscription fees I can easily do this. The minimum starting capital obviously helps for this but I think something the user could adjust would be more beneficial.
For the leaderboard I see many young and often risky strategies bump to the top. Part of me thinks that if C2 wants to promote more longevity the default tab for leaderboards should be the IRA or TOS option and people have to click to go to the popularity tab which seems to get more of the unsustainable strategies on it.
As always I know improvements require work and not everyone is going to agree on them. Just my opinion.
Why on earth would TOS not be a factor?
Certainly actual live results must be weighted much heavier than those with no skin in the game.
I mean does it really make sense to judge a system with Zero TOS the same as one with 50% TOS the same as 100% TOS?
thats because TOS strategy is prob like 1% of all the strategy at c2. which also mean c2 doesnt want to turn away from 99% of their clientele. they want to be “fair” to all their developer clients.
Maybe c2 can reverse the raw account value and the dashboard just a thought…thanks
Osutai you seem to know a lot…what do you think about that…thanks.
These changes certainly seem good. I looked at your “sneak preview” link. I’d like to provide some feedback.
This seems concerning. To lose 21% of the account on a single trades does seem excessive. If you had a $100,000 account, would you allow one trade to drop your account to $79,000? That in my eyes is very risky and fits the description of excessive. That shows that the trader either doesn’t manage risk well at all or simply doesn’t want to show a loss until it’s absolutely necessary at which point it’s probably beyond the point of OK.
At the time this particular strategy had a 21% drop on one trade, the capital was nearly $70,000 and this trade lost nearly $13,000. Further looking at the strategy stats, it has a win rate or nearly 70% with an average win of slightly less than $1400 and an average loss of slightly more than $1900. That means the expectancy of every trade is (1400 x 0.7) - (1900 x 0.3) = $410. This system expects to make only $410 every time it takes a trade. But it seems fine losing $13,000.
It would take 32 winning trades just to make back that one loss. That’s not counting future losses.
I’m not picking on this strategy and I won’t name it. I randomly opened one with a high DD amount and that’s what I immediately noticed. I’m sure if I opened others I’d notice things that stand out as red flags.
A strategy that has an expectation of making only $410 but is willing to lose $13,000 absolutely shouldn’t be on this new list.
You are absolutely correct on popularity. You actually shouldn’t give it any weighting. Just because people look at a strategy, doesn’t mean it’s a good strategy. Popularity doesn’t equate to good. So I commend you on lowering the weighting on that front. I’d actually recommend completely removing popularity as a variable.
Prop shops have a way to measure consistency in traders. To make sure no trades are out of norm. For example, assume a trader averages 1% DD on trades give or take. Then all of a sudden that trader has a trade that averaged 15% DD. That’s completely out of the norm for this trader. There are other ways to measure if a strategy is consistent. But the point is to add weight to consistency somehow.
The 6 month is somewhat off. You might have a strategy that only takes 1 trade a month. You might have a different strategy that takes 10 trades a day. To compare both those strategies isn’t comparing apples to apples. The strategy that takes 1 trade every month has only 6 trades. I personally think instead of an arbitrary time like 6 months, you can add weight to the number of trades. If one strategy gets to 50 trades or 100 trades for example, you give it more weight. In the example above, the strategy that takes 10 trades a day averages around 200 trades a month or 1200 trades over a 6 month span. You would be comparing a strategy that has 1200 trades where a clear patter has emerged to a strategy that has only 6 trades in the same timeline.
I’d love to hear your feedback on each of these points above please.
Keep up the good work and thank for for continuing to work toward improvement. I’m sure everyone appreciates that.
@DayTradingIncome1, there are tons of strategies that have drawdowns of over 40%. I totally agree that this is unacceptable to manage client funds this way since the chance of ruin is high like this but there seems to be a lot of martingale type strategies that rely on doubling down on losses.
Others are swing trading systems that use extremely wide stops OR over leveraging that could also one day lead to ruin.
That seems to be the nature of the beasts of most of the systems that are created in C2.
Hi @AlgoSystems
There certainly is a lot of strategies that take excessive risk. I think the point I was trying to make is they shouldn’t be on this new and improved list endorsed by C2. I was providing points that in my opinion would allow strategies to make an exclusive list like this. If a strategy wants to lose $13,000 on one trade which is 21% of capital, that’s up to them. My point is a strategy like that should never make the cut. Especially with an expectancy of only $410 where it would take 32 winning trades just to cover 1 loss. That’s without factoring in further losing trades. If people give weight to a list like this to make investment decisions, the list should offer the best of the best. I’m sure I can find 10 strategies better than the random one I opened and looked at that deserve to make the cut over a risky strategy like that. Most investors don’t know exactly what to look for or properly grade a strategy. Some strictly would rely on a list like this. As you can imagine, that would be misleading in a way if they chose a risky strategy like that.
I’m not saying strategies should do this or do that to manage risk. They can do whatever they want. I’m only saying they shouldn’t make this list with risky trades like that. Think about it. Why would this strategy ever think it was OK to lose 21% on one trade? You wouldn’t lose $13,000 if you had a $70,000 account right? Cut the trade and look for a new one right? All the traders energy is going into this massive loser. There are strategies that keep the risk under control and keep it consistent. I think most investors would prefer to see consistent profits instead of a wildly volatile strategy. They don’t want to see their $100,000 account go down to $79,000 the next day. They’d rather see small $1000 to $3000 losses on that account with a steady up slope in equity. Imagine they saw a loss of 21%. They’re sitting there wondering if they should stick with the strategy. Will it make it back? Should I take the loss and move on? It’s not a good place to be in as an investor. If the reason they got in the strategy was solely because they didn’t know what exactly to look for and relied on a list, that’s not good. Unless of course the list provided the best of the best. Then yeah the list is properly evaluating strategies.
I’m just proving my opinion and feedback on what I perceive to be important when deciding on a few strategies from the many that are on here. And hopefully my feedback is considered and the list is improved even more than the new improvements that are coming. As I said earlier, prop firms evaluate traders not on how much they’re making but more on consistency. They want to see that a trader is consistent across the board. I think we can all work and provide feedback to narrow down the list to some really good strategies on here.
Where do you see that I’m a fan of R multiples? I’m a fan of good strategies that manage risk well. I don’t believe I asked for R multiples to be included in the new list.
First I want to thank you for the very informative and thoughtful comments you have made on the forum so far.
Regarding your above statement I agree with your logic and I want to add another reason why it is short sighted right now to favor systems which are at least 6 month old. Since the beginning of October the market environment has changed dramatically and some of the older systems which have performed very well before in that ever rising market are now stumbling badly whereas some of the very new system are navigating exceptionally well in this difficult new environment.
Makes sense. A step in the right direction.
I would like to see more prominence made to “Strategy Activity Details” or at least a metric relating to it. I’ve been looking at it and you can see the difference between a provider with a decent track record and little strat activity versus those that have a very busy history cycling through many strategy iterations. I am using it as a sniff test…
