Matt, as it currently exists, this new H&H indicator presents the following information to C2 users and visitors when the “?” is selected.
"The “Hold and Hope” ratio…is designed to show which systems hold onto losing trades longer than they should, in order to boost their winning-trade statistics, at the expense of drawdown and margin-call risk.
…a simple way to think about it, a system with value of .20 means that for an average $200 win, the system was down at some point $1,000 on every trade."
For many systems, both of these statements are untrue and misleading, and they need to be removed or significantly altered. They do not apply to systems which, as a signficant part of overall portfolio managment, maintain multiple positions in various instruments at the same time.
More specifically, the statement that a value of .20 shows that a system “was down some point $1,000”, is competely untrue and out of line when the system is maintaining multiple positions and trading a variety of instruments. One trade does not necessarily impact overall system performance at any given point in time, unless the system is trading only a single instrument. Otherwise, this indicator is useless and misleading.
Please immediately remove this ‘indicator’ and make necessary revisions to the indicator itself, or to the explanation of its proper application in understanding a trader’s approach.
If you feel that some sort of guideline is important in helping subscribers avoid systems that are dangerous to their financial health, that is a worthy cause. But this H&H indicator is way off the mark in that regard, and serves only to create doubt in some systems where this doubt is not deserved.
The description is fine as it is.
I agree. Also, because the DD data is spurious and inaccurate, this H&H indicator is also spurious and inaccurate and therefore misleading. It should be scraped along with the spurious and inaccurate Drawdwn and Risk column statistics until the errors are fixed permanently by MK (who does not seem to fix these errors which exists from the day this column was introduced, even after repeated requests through the fix link in the trade.)
ps: Irrationalism leads the intellectuals to discard the possibility of independence (of the reality orientation) in favor or the public good, which leads them to such actions. Thereafter, however scandalously they drop context, rewrite history, or contradict themselves, they feel no shame; so long as they are for the public good, they feel noble. Their epistemology, in short, permits them to manipulate the data as they choose - to reach any conclusions they like in regard to any matter of fact; and their ethics programs them to reach only altruistic conclusions.
I disagree… while I think the H&H ratio “can” be useful for subscribers and for vendors wanting to improve their systems, I believe the description does “editorialize” too much and paints too broad a sweeping generalization in it’s current description…
Here is my 2 cents worth (if that) as to how the description could be improved from my own personal standpoint…
"The Hold and Hope indicator was invented by C2 member, Ross Canfield. It is designed to help identify systems which experience large drawdowns compared to average profits. While not necessarily the case, a low H & H indicator score may be the result of a system vendor holding on to trades despite the drawdowns while hoping they return to profitability to avoid taking losses. While a vendor may be able to withstand these drawdowns in a C2 system, potential subscribers may be unable to do so.
Like all indicators, the H & H indicator is not perfect and the risk involved with certain systems may not be represented accurately by its H & H score whether its high or low. The H & H indicator should be used in conjunction with other available system statistics as part of a subscribers due diligence on any C2 system.
Here is how Ross explains the Hold and Hope ratio:
…“
Now, of course, even my version of the description is slanted toward a belief that “in general” the indicator does what it intends for many, if not most systems” and leaves the onus on us vendors to clearly explain to potential subscribers why our ratio is what it is… For me that’s fair enough… I know many of you disagree.
It’s interesting that you know so much about the driving force behind MK’s actions or inactions when it comes to fixing issues on this site, under the guise of a philosophical generalization. Were you, per chance, married to MK at some point and the victim of a bitter divorce?
I think I have seen Ross explicitly lay out exactly how this H&H indicator is calculated in other posts. It didn’t seem to be a terribly complicated calculation, and it seemed fairly intuitive to understand.
Why not include an explicit formula showing how the H&H indicator/measure is actually calculated in the text used to describe its interpretation/use?
This would help all involved to clarify just what H&H is. It would help anyone interested in disputing its relevance to better construct their argument(s). And it would help any more technically minded traders and/or system developers to know how the H&H indicator compares to more traditional statistical measures commonly used to judge trading systems by the industry at large.
I also vote for removal of the indicator.
1. It is derogatory in nature.
2. It is derived from 1 individuals idea of what a good trading standard should be. This in itself is highly biased as it suggests to all potential subscribers what is a good system by attempting to dictate the rules which comprise ‘good trading’. Given that there are a variety of successful ways to trade, succesful methods and combinations of methods, it is not applicable. Nor is it applicable when trading various time frames as the degree of risk acceptable will vary among daytrading scalpers to those who trade and hold for weeks. The indicator attempts to define ‘risk’ to everyone based on a single personal bias which may or may not agree with everyone’s acceptable level of risk.
3. The notion of drawdown risk implied by the indicator is flawed. It is a raw measure of drawdown on a per trade basis only and doesn’t take into consideration risk at all. In fact, it has no relation to total units per trade or any relation to account size in terms of percentage. It also does not take into consideration hedging techniques and or multitrade methods which depend on diversity and scaling entries to reduce risk. In actuality, it penalizes a number of these methods by giving a succesful system a low number. Thus, not only does it arbitrarily define risk in a biased manner, the parameters of risk are not even measured accurately.
4. The indicator is easily misrepresentative of a system because of the flaws in (3). It is not broadly applicable and while it may flag some systems, it will inaccurately label some systems as good when they aren’t and others as bad when they are good systems. The indicator is controversial in its function at best as evideny by recent discussion.
The indicator should be removed. At the very least, it should be renamed, redescribed, and modifed to more accurately reflect true risk based on a per unit (or per contract basis) and per account basis.
David Lindq & (of course) Palsun Anand & SuperInvestor.WS
What’s is your concern? The H&H is simplified version of interpretation of MAE/MFE. What is your problem guys with that? From my point of view it’s mass understandable version of correlations between the two major guys.
Eu
P.S. I don’t care about the new “indicator”, but it’s understandable and straightforward.
—
P.S.S
2SixSigma Trading
I also vote for removal of the indicator.
If we’ll vote I’m for keeping the H&H. It’s simple and stupid enough to be understandable by anybody. lol More simply there cannot be enough warnings. There might be only less.
> It should be scraped …
MK: notice all these calls are from vendors with low HH stats.
Not a single subscriber objects to the HH.
You missed my point completely, as usual…
You missed my point completely, as usual…
Usually I’m trying to understand people. But so far you proved that you don’t even worse the try.
Wanna say something about MAE/MFE? Or you want just complain about your genius that the market doesn’t understand (Surprise, surprise).
Eu
First of all subscribers, with perhaps 2 notable exceptions (HI2U Jules and Lew), simply don’t post. I am of course intentionally overlooking the obvious “alternate egos” of various vendors.
Also, there has been one vendor with top-level H&H statistics that has asked for it’s removal, so that statement of the original poster is not accurate. To be fair, that particular vendor generally only posts in “Ross” threads, and is always against “Ross”.
The name needs to change, period. Identify the math (in the name), and describe how it’s calculated.
Also, as stated and documented by “Cheetah”, the DD figures need to not be buggy as all hell if we’re keeping this metric.
Actually Eu… I don’t really have any concern regarding the indicator itself… I do have a problem with the editorializing included with its descrpiton that lays out a blanket generalization of nefarious or underhanded intent for all systems with low H & H ratios.
I think the editorializing should be scrapped, not the indicator.
I for one admit that my system’s ratio (which is on the low side of “tradeable”) indicates that the system can and does have a higher risk of large drawdowns than systems that may have higher rankings or that use stop losses. I don’t have a problem with my ranking… I believe the rest of the statistics of my system and its description address the risk issues upfront and the results speak for themselves. I don’t mind the H&H ratio being included in the mix.
What I do object to is the clear suggestion that any system with a low H&H ratio must have earned it by attempting to manipulate their trades to avoid losses or increase their winning percentages. This just isn’t true for all systems and that should be noted in the system description.
"Not a single subscriber objects to the HH."
I don’t see many cheering for it either… In fact most of the posts here are either against it, or don’t care either way. I don’t see many glowing remarks about it. Besides Ross of course who thinks anything he say is the best thing since sliced bread.
Besides, why would the vendors with high values complain? They are not affecting by it, even if the indicator is flawed. Do you think they will come out and say that their system really suck and that HH is giving it a high value incorrectly? If I accidentally stumbled backstage during a Victoria Secret fashion show, do you think I am going to tell people that I do not belong here and really should leave?
What would have been interesting is if C2’s forums can have a polling function like so many others. Then we could have had people vote and see what they really think about it. Not many people like to speak out against Ross as he will just dismiss what they say as adding no value and not based in reality and will praise the ones who agree with them. Not many people like public confrontations as much as him.
> Also, there has been one vendor with top-level H&H statistics that has asked for it’s removal, so that statement of the original poster is not accurate. To be fair, that particular vendor generally only posts in “Ross” threads, and is always against “Ross”.
And he has several systems with low HH’s.
> The name needs to change, period.
OK.
> the DD figures need to not be buggy as all hell…
I agree here too.
>if we’re keeping this metric.
Aren’t all metrics reliant on correct data?
Dustin Dubia
Also, there has been one vendor with top-level H&H statistics that has asked for it’s removal, so that statement of the original poster is not accurate.
Your honor, I’d like to ask to include my voice to records of the court. There is at least one vendor with low H&H stats who supports the defendant.
SuperInvestor .WS
I do have a problem with the editorializing included with its descrpiton that lays out a blanket generalization of nefarious or underhanded intent for all systems with low H & H ratios.
Actually, I don’t care even about the issue. The stats is unknown/unproven, but it’s simple for public. Let the guys eat it lol
What I do object to is the clear suggestion that any system with a low H&H ratio must have earned it by attempting to manipulate their trades to avoid losses or increase their winning percentages. This just isn’t true for all systems and that should be noted in the system description.
It’s more interesting, but if you don’t manipulate a system it might be easy recognized by normal stats. If you manipulate it it’s recognizable as well. Some unknown number won’t play any role when people start thinking about putting their money, but the red flag might help to few idiots (hmm… cross out the word) few intelligent investors to save their money.
Eu
>Wanna say something about MAE/MFE?
I will try again. MFE/MAE figures are only as as good as the data that goes in and the data that comes out after performing calculations, in other words, GIGO - Garbage In, Garbage Out. As long as there are data and calculation errors, these figures are erroneous and should be scrapped.
Certain data can be manually fixed, like the entry and exit prices if they are wrong. But it is not physically possible to manually fix open DD figures as there are numerous systems with numerous data errors and these data errors crop up all the time. It is also not possible to automatically fix these data errors. Calculation errors can be fixed automatically by modifying the algorithm that calculates these DD’s, but not data errors. Either way, it cannot be fixed, either manually nor automatically. Valid enough reason to eliminate it altogether.
>>What I do object to is the clear suggestion that any system with a low H&H ratio must have earned it by attempting to manipulate their trades to avoid losses or increase their winning percentages. This just isn’t true for all systems and that should be noted in the system description.<<
Agreed.
(sigh)
Dear Palsun Anand,
(sigh) It’s only better for the indicator if C2 provides dirty data on worst side. It has a name “worst case scenario” and it’s part of MAE/MFE, but only with name “worst fill scenario”.
(sigh) There isn’t ideal world, you know 
Eu
P.S. Somehow I’m not surprised that you say nothing about MAE/MFE correlations. (sigh)
>It’s only better for the indicator if C2 provides dirty data on worst side.
You must be kidding. I did not have the time to take a look at all the data errors, but some of the data with calculation errors is so wrong, like the 275K drawdowns (greater than 1500 pips on some trades instead of 150 pips or so), I decided it is not worth the effort as it doesn’t make sense to me anymore…
