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Martingel or Average Down looks sometimes great at the beginning until it becomes a catastrophe… It will always become a catastrophe without a stop loss…
The poor subscribers did not know that this strategy include invisible atomic bomb and they lose more than 50% in 2 days!
The only reason for that come from the Martingel/Average Down “Money Management”…
How do we know that? Look at the CRUDE OIL graph…
Nothing special… Continue going up…
Unbelievable what a bad MM can do…
This catastrophe will hurt in everybody here because the subscribers of this strategy will think more then twice, if at all, to join again to a strategy here…
We already spoke about this destructive tool in the forum ( Warren Buffet is right as always or Let's share good ideas for MM and RM) and I think that C2 should get a declaration from the developer if he is doing Martingel/Average Down and show this info to the potential subscribers so they will know in advence what they are going to buy…
I think that to do a Martingel/Average Down in the market without a clear stop ( and not after you loss almost everything…) is something you should Not Do!. Never. Period.
My 2 cents: Check with the developer if he use Martingel/Average Down… If he does, you know what you should do…
It would be nice if Collective2 had some sort of statistic or tool to easily show you how much leverage was used to make returns. Huge leverage to make small returns is a massive danger. But even without such a tool it was clear that guy was adding more and more onto trades. Anyone that subscribed should’ve known what they were getting into.
When the market changes gears and starts to fall there will be a lot more systems blowing up.
And by the way, this is another high %win system. Avoid high %win systems!
I think it would be more accurate to say: Avoid systems with high win ratio but low avg. profit to avg. loss ratio. Unfortunately C2 does not show the latter one right next to the win ratio (even though I have repeatedly asked Matthew to do that), high win ratio by itself is meaningless. If both ratios were shown next to each other one could immediately spot Martingale or Martingale like systems. I am surprised so few people recognize the old trading rule: Let your winners run and cut your losses short.
WOW. Only two weeks after the last blow up. USE STOPS. These investors work hard for their money. Stop being so reckless.
EXCUSES:
“my stop is on a server and will kick in as needed”. BS
"my stop is a mental stop" more BS
"I am an expert market timer". You can guess that one
"I’ll give you the stop the day after we get in". Huh? Why?
“I hedge”. Fancy BS
If you ever hear any of these above, be aware. I’m not saying a trader can’t hedge but I’m willing to bet the majority of traders here don’t know the first thing about a proper hedge. A trader should always know when he’s wrong. Here’s a hedge. Find the strongest sector. Short the ETF and go long the strongest stocks in that sector. The strongest stocks are always going to outperform that sector. Is that the kind of “hedging” you see?
There is a point where the trader knows the trade is bad. Can’t he simply add a stop? This goes back to psychological problems. When a trader is in a trade, he’s emotional and doesn’t look at the facts. Stop trying to impress investors and use a stop.
I wrote about this with the last blow up. Go down and look at all trades INCLUDING winners. Next to it in the drawdown column, any trade ever a 5% loss should be no to subscribe to. 10% is an absolute no. Why? Because the trader is only concerned with showing winners to his investors. AT ANY COST. Now don’t you think the investors that just lost $15,000 wish they took my advice? And how about the ones that scale higher? Even worse. If you weren’t impacted by the last two, consider yourself lucky. Do yourself a favor and take my advice. I said it before. It’ll save you a ton.
Anyone that took my advice would not have been subject to this. This guy had a 7.78% DD on 1/05/2018. He also had a 23.92% DD on 1/01/2018.
Investors:
If a trader shows a 10% loss on one single trade, he is trading completely the wrong way. This trader showed a 24% DD. OF HIS ENTIRE CAPITAL. On one trade. Who trades like that? It doesn’t work.
I guess I have something to write about this weekend. Trading is a mindset. Trading is probabilities and risk management. This isn’t your local casino or lottery. Investors: stop trying to turn $5,000 into $1 million in 6 months. It’s not reality. It’s false hope.
Sorry but stops aren’t the issue. Stops don’t work in many cases (e.g. when the move happens while the market is halted or closed, or when the market gaps or moves very fast) and can’t be relied on to avoid catastrophe. If a system is scaling up on losers it can still wipe you out even if there is a stop. The issue here is scaling up on losers–martingale.
In the short time I have been on C2, I’ve seen many discussions about risk but very little about the amount of leverage that is contributing to that risk. I don’t think it is C2’s responsibility to police the risk of every strategy but there are some different measures they could post that I think would help provide a more consistent measure of risk and used when comparing risk levels between strategies.
I would love to see returns expressed not only on the basis of whatever the developer sets up but also on the NOTIONAL amount of the underlying derivative that is being are traded. Some of the high fliers are achieving astronomical returns through the use of extremely high levels of leverage. I’d love to see returns posted not only on the “amount invested” but also based on the NOTIONAL amounts. Not only would this give a more consistent yardstick for comparison but also state the degree to which leverage is playing a part.
Some would say that knowing NOTIONAL amounts is irrelevant since a “good trader will always use stops”. Let me say that yes, stops are useful and should be used. But I believe they are also overrated as the be-all-and-end-all for risk protection. I guess I’ve been around too long, but I’ve seen too many instances when stops were ineffective. I have had days in the past during certain market events when stops were useless. Remember – a stop only ensures that a market order will be issued, not the price it will occur. There is also the issue of being stopped out. Many traders here use “tight stops”. Again, I’ve had too many instances of being stopped out only to see the market turn around for an ultimate gain. The lesson learned for me is to 1) use put options in addition to stops, and 2) if stopped out, immediately buy a short dated ATM call option. It costs a little bit, but at least you have defined your maximum loss and you’re not left behind if the market returns to plus territory.
100% completely agree on this metric being helpful. Seeing the DD% of each trade and results are one thing. To see the win as a % of capital in a separate column same as we do in the DD as a % of capital will make it easier to find good systems. I’m with @KarlA on this metric. This will also highlight how much leverage the trader is really using.
I think the problem is knowing WHEN to close a position whether its a mental stop or physical stop. In this systems case, The trader/system seemed to either break his rules or never had rules on when to exit a position when things go south.
Most systems in C2 are not traded with real money so there is no stake when a major loss occurs.
The best thing to do is trade with a lower scale and also put in a physical stop yourself. However, I feel that if I have to do that extra work its not work paying the subscription fee.
Here’s the problem with “mental” stops. Emotions are heightened when a trade is going against you. There’s been studies about how this impacts your brain to think. Do you really want to have a “mental” stop in place when you aren’t thinking clearly? A trader can make every excuse to talk himself into staying in that trade. Or he might catch the deer in headlights syndrome and freeze and do nothing while his account evaporates. Not the right mindset. If indeed he had a “mental” stop, why can’t he simply attach it to the order? Wouldn’t that have the same outcome? He really doesn’t want to get stopped out if it’s mental. That’s why.
What makes you guys think that developer even cares that his system blew up?
He was not trading it himself.
For him\her it was just paper money.
He will register a new account and create another system.
There are a lot of developers here that only want to collect fees, they don’t care about longevity of the system.
And a lot of naive investors hoping to get rich quick. They see high win rate, and that gives them peace of mind thinking that system is working. They see +100% in one month, and hoping that they can get on a ride to double their money in one month.
Sigh
I wish C2 would do a better job to warn investors. But that would be against their business model, after all, they want to get their cut from subscription fee.
One must consider all futures trading systems to be high risk regardless of track record and especially those that use martingale logic without stops. The best way to proceed with these systems is to allocate only a small percentage of your portfolio to the systems.
We are talking about Martingel/Average Down which ALWAYS blow the account…ALWAYS!
Why always?
Because if it will not blow the account then the meaning is that you found the Holy Grail…
You do not need any strategy if this idea is working, right? Just keep buying more and more during the way down…
The only way, I think, is to use this management with a very strict Stop Loss…
But, too tight Stop Loss almost for sure will hurt the performance so the conclusion is just not doing Martingel/Average Down. Very simple.
There are many ways to manage the position and the risk. This management is absolutely not good so why use it?
Robert…I never said that this system had good money management. I just meant there CAN BE some good systems out there that use money management properly. I totally agree with what you said but what I meant is that with high leverage the result will come faster. (The account will blow up)
