Can you name the following two forex systems:
System 1:
(Hint: A Martingale like system, presently in a large drawdown)
Duration 31mo
CAGR 70.5%
Max dd 48.1%
Sharpe 1.084
Sub fee $95
System 2:
Duration 28mo
CAGR 70.2
Max dd 18.6
Sharpe 1.825
Sub fee $69
Once you have found the two systems can you please give me your opinion why System 2, which for the most part of its life has outperformed System 1 (all you have to do is overlay the chart of System 1 over the chart of System 2) and from a risk adjusted return standpoint is vastly superior to System 1, has only one auto trading subscriber whereas System 1 which, like all Martingale systems, can easily crash seems to have more subscribers than any other system on C2.
Your feedback would be greatly appreciated.
Correction:
System 2 since not too long ago has now 2 autotrading subscribers.
Karl,
I’ll pass on the egg hunt, but here are my thoughts…
My guess would be some developers market their own system outside of C2. Maybe they have friends and family trading their system. There are some systems that have performed horribly of late and still have 20 or 30+ autotraders.
So even though you may think one strategy is better than another, the amount of subscribers is simply how these developers are marketing their system.
Enjoy the weekend.
Adrian
I do not buy this explanation. As far as I am concerned, the developer can market his system all he wants, but if I question or doubt his ablility then there is no way I would be autotrading it. I am sure most people will agree with me.
Barry,
I don’t have an answer other than it’s people they probably know personally and that trust the developer regardless of how they trade.
Maybe they have an investment company and this is simply another service they offer their clients… I don’t know.
But more power to them if they are able to generate more subscribers.
Adrian
Karl -
You are assuming that people, when given 2 alternatives, will make a rational choice. When it comes to money, especially speculating, people tend to make all kinds of odd decisions. That is why the markets are not totally efficient.
The other reason is you’d have to compare the system at every point in time that someone subscribed, not just at the end point. It could be that System 1 “looked” better a few months ago, and attracted more people at that time. For example, just being a popular system might have drawn people in, under the mistaken assumption that there is safety in numbers.
Kevin
Kevin,
Good to hear from you, I was not even sure if you are still around.
Your two points make a lot of sense - in a way system developers and subscribers should be happy that people act irrationally and therefor create ineffiicencies in the market which can be exploited.
I wish you would have kept up evaluating systems on your profile page from a long time ago. It certaianly would have helped "rational" subscribers to choose the right ones or at least avoid the dangerous ones.
Karl
Thanks Karl. I stopped doing that because 1) I would get trolled, by jokester developers like xxx, and 2) most people never listen anyhow.
Picking systems on C2 seems to be something people have to do incorrectly on their own for a while before they get it right.
So, I am still here, although 95% of my time is trading my own accounts.
Feel free to drop me an e-mail sometime, and we can catch up.
Kevin
Hi Karl,
I just saw this. I’ll venture the following:
1. System 2 has a very choppy equity curve; System 1 has a nice smooth one in comparison, despite the obvious landmines. People want all gains and no losses, all “green” and no “red.” They don’t want to join a system that has potential to give back 11% profit one month, and they don’t bother to dig deeper to look at risk/return. Instead they opt for the system that they believe does NOT have that potential, based on the picture. IOW, your comment about a better risk adjusted return is largely not understood by a lot of the sub base.
Also, system 2 had very good performance within the first 4 months that has not been replicated since, but those first months are still influencing statistics. This can be seen as a negative, in the same way that early poor performance will cause stats to be similarly disregarded (see System 1).
2. System 1, which realized that drawdown and saw a corresponding drop in (apparently surprised) subscribers, has enough “green” months in a row that – despite a past drawdown of 31% that took AN ENTIRE YEAR to regain – subs are easily deceived into believing that the risk has somehow been mitigated, apparently through some magic knowledge acquired by the system owner that will simply prevent those drawdowns from ever occurring again (see the painfully sincere review from the person who stated s/he’s allergic to drawdowns).
- Which, I might add, is terribly ironic, because when this particular system owner himself sagely counsels subscribers to exercise their own risk management via stops, not over leverage, etc, he is in effect actually telling his subs that he can’t be bothered to exercise proper risk management on their behalf!
Finding the right balance of returns/longevity/risk is always the challenge - even some of the best, longest running systems on C2 have suddenly “broken.” It’s generally not suprising that people look for the smoothest equity curve they can find in spite of underlying statistics.
3. Lastly, as Adrian mentions, there is something to be said for marketing/giving yourself a presence.
As far as commentary/analysts, the system for that here is totally broken because of the current culture. Too many good commentators (like Kevin) are shut down, refuted, or given bad “ratings” for their trouble. (“Unhelpful” is too often synonymous for “I Disagree/Don’t like what you said” – useless.) Too many system-owners-in-disguise (Inga…) provide a running stream of harshly negative commentary that’s not entirely useful or not without bias. Or, conversely, thoughtful/insightful commentary will simply be dismissed because it comes from a system owner, who surely can’t be trusted. Etc. Etc. Etc. There is absolutely nothing on C2 to motivate anyone to publicly expose their commentary, let alone to try to establish themselves as a well-known, trusted, and helpful expert. Even by merely participating in forums like this, someone is likely to only get rewarded for their trouble with a publicly displayed “ignored” statistic. A culture that encourages negativity is only going to breed negativity. Sad, but true.
Christina
Well said Christina, there is nothing I could add or improve upon,
Karl
