Looking at the leaderboard it seems to me that the algorithm is designed to favour C2 Star strategies. From C2’s perspective this makes sense since they pay C2 Star strategy managers and must generate revenue to make a profit. However, in my opinion it’s missleading investors and discrimating those managers with solid non-C2-Star strategies.
3 Likes
Gentlemen:
I understand the C2 Score and ranking methodology is a bit mysterious, and that may partly explain why some of the statements being made in this conversation so far are incorrect.
The C2 Score is designed to find strategies that manage (and hopefully reduce) risk, and strategies that do not gamble by allowing losses to run.
It’s the result of a lot of statistical analysis by a team of people whom I’m working with, and who are a lot smarter than me.
The C2 Score is not perfect, and is subject to continual tweaks and changes. But it’s much better than simply ranking strategies by “annual return.”
When I read comments like the ones above, pontificating about how C2 prioritizes C2Star strategies because those strategies “pay” us, it makes me mental. First of all, if you know anything about C2Star, you will recognize that it’s a program where C2 pays the strategy managers – the opposite of what you say. (Yes, there’s an entry fee, but once you’re certified, C2 guarantees that strategies receive a minimum monthly income; and certified strategies receive 70% of fees instead of 50%. On a direct financial basis, the program costs C2 money.)
The reason C2Star strategies seem to be prioritized by the C2 Scoring algorithm is because, by definition, C2Star-certified strategies must meet strict risk and drawdown criteria, or else they get kicked out of the program. These risk and drawdown metrics are extremely important metrics within the C2 Scoring methodology. (For what it’s worth, the C2 Score formula does not even “know” whether a strategy is in the C2Star program, or not. The formula does not, for example, add extra bonus points to strategies who are in C2Star.) And of course I should point out that C2Star strategies are not the only strategies that are ranked highly by our C2 Score algorithm. You can find many others.
Let’s step back for a moment, and re-iterate first principles. I want to be clear. My first and only interest is for investors who use C2 to do well.[1] This is not merely kindness on my part; it’s also good business. It costs a lot of money for C2 to sign up one new investor-customer. If that customer does poorly and loses money after one month, or two, and then leaves C2, that’s bad for the customer, and bad for C2. (And bad for the other Strategy Managers who rely on our platform to bring investors.)
I’m unmoved by Strategy Managers who don’t like the C2 Score because they feel they should have a higher ranking. My goal is to help investors who use C2. If you are a Strategy Manager, and you want a higher score, then trade with less risk. Decrease your leverage. Reduce your adverse excursions (i.e. don’t let losses run, hoping they will turn around and change into winners.) Don’t double down on losing trades (i.e. don’t “Martingale.”)
I’ve provided Strategy Managers with a C2 Score Workbench designed to help them better understand the statistics and metrics that make up the C2 Score for their individual strategies, and to help them try to understand the sensitivities of the various metrics.
But if you’re not interested in playing with the C2 Score Workbench, or you don’t have the time to
poke around the statistics, let me get to the essence. If you are a Strategy Manager who wants to increase his or her rank on C2, follow a few simple rules. Keep your leverage controlled. Reduce you maximum adverses excursions. Don’t Martingale.
Of course, I should also instruct you to increase your “alpha,” which is also an important factor in the score, but that is a little harder to directly control. Your strategy either has alpha or doesn’t. (Telling someone to increase alpha is a bit like telling someone to “just be more handsome” – an instruction with which I would love to comply, if only I could.)
I’ve been hesitant to wade into this conversation, because I fear it will release the lurkers and the haters, who seem always ready to courageously pounce (anonymously) into our forums, and to assume the worst about C2, and to voice these assumptions.
But I do want to at least try to correct these incorrect perceptions. In summary, the C2 Score algorithm is an imperfect method, but one designed to try to help investors using C2.
^1 Footnote: When I say things like “the C2 Score is designed to help investors who use C2” or “I want investors who use C2 to do well” or the goal of the C2 Scoring methodology is to “reduce risk,” please understand that these are merely goals, and may not be achieved. Remember that all trading is risky, and that C2 cannot guarantee good results – C2 Score or not. You can still lose money. You should only trade with money you can afford to lose.
2 Likes
Could you please tell me what a handsome alpha score might be?
2 Likes
Cheekbones that slope smoothly up and to the right.
1 Like
In my opinion, C2 will not be able to build a good ranking. The best option is that C2 includes a list of the most important indicators and allows each investor to make their own investment decisions.
2 Likes
