Matthew,
I was looking at Fortuna and in the C2 stats, it shows there is a 0.5% chance of a 50% account loss.
How could this C2 stat be correct when a subsriber account in Fortuna would have lost more than 60% in Feb. and Fortuna has a max draw of over 73%
Is this an issue with other systems at C2?
The “chance of account loss” statistics are generated using Monte Carlo simulations.
It might seem counter-intuitive to read that there is less than a 1% chance of losing half your account when just such a loss is staring you in the face in the actual equity chart for the system. But this implies that the actual outcome that happened in real life was statistically unlikely. (As recent events in the U.S. financial system demonstrate, events that are supposed to be statistically unlikely do indeed happen, probably more frequently than the computer models indicate that they should.)
Of course Monte Carlo simulations are just that – simulations. They’re not perfect predictive tools. But neither are they useless. For example, if you look at the “Probability of loss” stats for the system, you’ll see that the current probability of a 30% loss in your account is over 75%! Real life performance proved much worse than this, but - even so - a 75% chance of a losing one third of your account should be considered a warning sign worth investigating.
Matthew,
The other thing that caught my eye was the marked dropoff in % of account loss at the 50% level.
For example,
Chance of 10% account loss 95.1%
Chance of 20% account loss 81.0%
Chance of 30% account loss 76.7%
Chance of 50% account loss 0.5%
I agree with you regarding the 30% account loss figure. It seems strange that the account loss number remains somewhat consistant until the 50% level is reached. Then the % drops in an in an inconsistant manner.
Thank you for looking into this and for your detailed explanation.
