@InteractiveAssets…I may not be Dr. Fauci but social distancing from the forums sounds like a great idea!
You might as well, the forum neither helps you or loses you subscribers. I wouldn’t worry too much about it though.
Just to clarify, in the post you referenced a number of forum members pointed out a number of abandoned strategies that appeared to be yours and how martingaling systems always eventually fail. Since then, as you stated, you’ve become less aggressive and have stopped martingaling. Your strategy now looks much more sustainable than it did back then.
I congratulate you on the ability to switch trading styles and still be profitable. That’s a feat that most traders could not pull off.
As always, I wish nothing but the best for your subscribers.
DETAILED BACKTEST RESULTS
I hope you are all well and about to have a great Easter weekend. Today, I wanted to take a little time to give a more detailed look at my backtests. You must realize that these are just estimates of hypothetical performance and not guaranteed to be correct. My main reason for doing this is to show you that my performance will not always be as good as it is at this moment. There are major risks to investing the way I do. I likely have not done my backtests with perfect accuracy. There may be some major problems I am missing. I do feel very confident that my strategy at some point in the future will have a drawdown much greater than has today and likely larger than any of the backtests show because the past is not a guarantee of the future. Bottom line invest at your own risk! I am investing my own money at my own risk.
It is difficult to know if a system will perform in the future like backtests showed in the past. There is no way to guarantee the future. However, it is possible to test the quality of the backtesting methods to a degree by trading with real money for a period and then applying the exact same backtesting methods to that period. By comparing the results, it can help show if the backtesting methods seem to even reflect reality.
I started trading live with a significant portion of money on June 4th, 2019 through April 1st, 2020. Last weekend I also performed backtests for that period to compare the backtests to the actual results. The results were very similar and make me believe that for the most part my backtesting methods do provide a good general idea of how my strategy would have performed in different periods in the past.
There are of course many limitation to my backtesting the further back in time I go because not all the data for those periods are availablse and some of the assets I trade didn’t even exist back then. But I have done my best to work around those. The results assume I did not speculate on Bitcoin until GBTC was publicly traded.
Below is a summary comparing the hypothetical C2 results vs my backtest results:
Longer Term Backtests
In my mind the effectiveness of my backtesting is confirmed though as always there are still big risks and uncertainties. Now more than ever I believe my backtesting methods seem to be able to mimic history. My test seem to show that:
- Some years it shows results worse than the S&P 500.
- Some years it shows negative or flat results
- Down years in the market seem to be good for my system.
- The system does best in trending markets.
- Really good years and really bad years for the strategy can occur in any order.
I am using the following graphs to give myself an idea of the good, the bad, and the ugly I need to be able to stomach when trading my strategy. I believe consistency is key for any subscriber to have a chance of mimicking my strategy well.
Have a good Easter and enjoy the graphs below!
Full Time Frame
Personally, I don’t have the knowledge or experience to evaluate your backtest parameters, method, or validity… but… it does appear you’ve made a serious effort to fully disclose your strategy strengths and weaknesses, and if I’m correct in that assumption, I wish you the very best of luck on C2. I think honesty and integrity pays long term dividends.
I also like your year-by-year results, as they tell a more meaningful story than a single long term chart. It lets me visualize each year vs the S&P results.
Have a good Easter!
Perhaps the most common questions I get are “can I have a free trial” or “can I have a discount for 1 year?” So I want to address both of those items really quick. First please don’t take this personal but the short answer for both questions is unfortunately “No.” I hope my reasoning below helps you understand why.
Can I have a 1 year discount or other long term discount?
The ease of getting set up at C2 is a huge blessing. However, there are certain limitations that come with that, such as not being able to give personalized investment advice legally or refund fees based on performance. Sorry those are the rules.
Because of this I don’t ever want to know how much or how little you intend to copy my strategy with. Since my fee is a flat fee the pricing for various scenarios could be ridiculously expensive or ridiculously cheap. I like to think of subscription fees and AutoTrade fees as one annual fee even though they are not technically. Currently C2 has $15,000 listed as my suggested minimum capital. Therefore, to me the worst case scenario for an annual fee is someone following with the minimum and paying 14% the first year.
That is huge compared to an index fund, and in years when I lose money it sure won’t feel like it was worth it and could go up for the individual if the account goes down. However, on good years like this one where my performance (SO FAR) has been 105% the 14% fee is relatively small.
So the annual fee can vary but that is out of my control. However, investing just $30,000 drops the annual fee to about 7%. Investing in my strategy is very risky. It certainly wouldn’t be suitable for people that don’t have plenty of high risk capital to throw around, making my fee rather small to anyone investing larger amounts. If there was a way for me to keep the fee at 2% for anyone investing small amounts I would but there is no legal way for me to do that.
Finally and most obviously, I want C2 to be well worth my time and money too.
Can I have a free trial?
I have not found that free trials do a great job of converting people to subscribers. Furthermore, there is not much you will learn from a 1 month free trial from me that you cannot find in this extensive thread or in the description of the portfolio. Many months I don’t even have a trade. However, one thing you would learn from a free trial is that every trading day my stops are updated. So most days the only trade info that changes on my strategies is the location of my stops. Alerts for those can be turned on or off in your C2 settings.
Unless I am mistaken, the fees are already included in your C2 return of investment, so that shouldn’t be a problem for your subscribers, money-wise (assuming you continue to deliver that kind of positive ROI), yes?
I agree with your assessment. I used to give an automatic half off to anyone who asked or who simmed. It’s a good promotion for new strategies to attract followers. But once a strategy is established there is no need. I’ve completely stopped giving discounts as well. Funny thing is, almost every potential subscriber who asked for a discount ended up subscribing at full price even after I said no.
I strongly believe that if people are serious about making money they will gladly pay the required subscriber fee, no matter what the price is. You can charge $1 000 a month (some C2 trade leaders do) and you will still find takers, if they see that your system can make them money in the long run.
Higher subscription fees also tend to attract “high rollers”, people with deep pockets who want a least twice the average annual return of the S&P 500.
Deliver and they will come, that’s all there is to it.
Keep up the good work.
Patience is a Virtue is celebrating 12 full months of publishing on Collective2. The last few months it has underperformed the market, but that is to be expected at times. Matter of fact it did worst than the market for about 6 months last year, but when in doubt I zoom out. If this month is hard I zoom out and look at the last year. If this next year is hard I will zoom out and look at my previous year and backtests.
The last couple months have not been great for me, but I have not changed my system it has simply been one of those time periods where my system doesn’t do as well. Obviously I am always looking for ways to improve it and am always checking for reasons or evidence that my system no longer works. So far I have not come close to any reason to abandon my strategy. It is simply a natural period were it hasn’t done as well. As I have said time and time again many months and years my system will under-perform the market, but according to my backtests I just need to keep calm and carry on.
I am very happy to currently have $1.6 million following my strategy (including my own money) and I hope to have much more soon. I encourage you to check out my strategy description and my backtests to see if my strategy is a good fit for you.
Today marks one year for Patience is a Virtue!
It is crazy to think that when I first posted in this thread my strategy looked like this:
But now it looks like this:
Check out the strategy! From what I found it is one of only two strategies to appear on both the IRA Friendly and Trades-Own-System Leader Boards.
Happy Anniversary to your trading system then!
Very nice returns! And still alive after one year And besides the returns, I like the other statistics as well. Good trading!
That is fantastic and you did most of it during a very volatile crash/recovery(?). Wishing you continued success!
I hope you all are doing well. There will be some changes to Patience is a Virtue coming to adjust for the recent announcement - linked below. In the long run I think this will not be a big deal, but will require me to find some replacement funds for ZIV, TVIX, and UGLD. I have several possible methods to address this change, and will update subscribers and others as I select a way to handle this. https://www.prnewswire.com/news-releases/credit-suisse-ag-announces-its-intent-to-delist-and-suspend-further-issuances-of-its-velocityshares-etns-301080971.html
Thank you kind subscriber who sent me the link!
I’ve been using UVXY SVXY NUGT.
Feel free to copy.
Due to the fact that TVIX, ULGD, and ZIV will no longer be traded on exchanges in the near future, I have made some changes to the ETF selection. I certainly could have waited to do this, but decided to take the conservative approach and get out of these before there was any erratic price action or drift from the true values.
For the time being they will be replaced by UVXY, GLD, and SPY. These new ETFs are not exact equals. However, I have tested all of them already in backtesting well before I published my strategy and know they will do just fine. I may look for a different alternative to GLD and SPY, but for now I am going with what I know.
They were not my first choice obviously, but the silver lining is that overall there is less leverage use with them. For now I have not changed the percent allocations, but have just done a plain swap. For example, even though GLD is 1/3 the leverage of UGLD I have exchanged UGLD for an equal dollar value of GLD - roughly. I will be doing further backtesting over the next month or so to dial in exactly how the allocations should change in the long term for everything. Once I do this I will publish updated backtest results in the forum.
I started to replace UGLD with UGL. However, I forgot that many people including myself who follow with IRA accounts at Interactive Brokers will have trouble following. UGL is not permitted at Interactive Brokers inside IRA accounts. Similarly, I have considered using SVXY in place of ZIV, but SVXY has restrictions at IB for use in IRA’s.
For now I will just be keeping calm and carrying on.
Yeah it’s good you didn’t do this. Two completely different animals.
They certainly are. I have run simulations with both. I am able to do better with SVXY in simulation vs ZIV, but don’t use it because of its structure. If they were to bring back a XIV type option at the original -1 factor I would use that in place of ZIV. The indicators would certainly change etc., but in simulations I would do best if I had access to a recreation of XIV. Yes I know it sounds crazy. That is why it would only ever be a part of the portfolio just like ZIV was only a part of it.
Broadcast to Subscribers on 6/27/2020
I am very grateful for you and hope all is well! I want to cover two things. The first is that I will not be able to monitor my system on July 1st or 2nd. As you should know by now, my system runs on its own and all should be just fine without me. However, I have trained my wonderful wife as a secondary safety net. If anything gets outside of predetermined limits I have set, she will close out those positions.
I am leaving my money tied to the system while I am out of commission. However, you will have to decide if you feel comfortable doing the same or not. I simply wanted to make sure you were informed. Between now and when I am back in the drivers seat, I will be restricting new subscribers. That way no new people can join without getting this warning.
The second item I want to cover is much more exciting. I have recently made some huge progress on backtests for one aspect of the strategy that would build upon one of part current aspect of the strategy. However, to properly implement this aspect into the system I would need to purchase long put options.
I am not making any final decisions at this time, but it looks promising that in the near future I will be adding some long options trades to the strategy. If you don’t have permissions to trade long put options you won’t be able to copy those trades. Therefore, you may want to reach out to your broker to see if that is a permission that you can or should get.
Some of you may not want to trade options for a variety of reasons, and I respect that. However, if I do implement the options it is because they are the best tool I can find, and I will be tying my assets to the strategy I believe to be the best. If you have any problems with the strategy trading long put options please let me know. If enough people don’t want options added and are willing to pay for a version of the strategy without options (the current version), I can likely publish two strategies to accommodate.
As you know I don’t do naked shorting because of how risky it is. I already take on enough risk for my taste. However, my most recent backtests have indicated that I may see some serious improvements to the overall long-term success of the strategy by implementing a short replacement strategy on several ETFs. As I like to remind you, even with this potential improvement I still expect the long term average return to be far below the current 100% annualized. So don’t say I didn’t warn you!