Matthew,
If you don’t mind new ideas for C2 improvement there is one. I think C2 has unique possibilities to provide really verified signals. We have C2 and TB. TB software knows when real orders are placed to the market it gives unique opportunity to C2 shows verified signals.
Real results:
Lets assume a system has subscribers that uses TB. In the case ANY fill should be initiated by real active subscriber (not by C2) when subscriber’s position is filled in real word. After that C2 will publish the trade in trade log with special sign that the trade was real and with reality index (if 10 from 10 subscribers had the fill reality index is 100%) also C2 will use average price from subscribers fills.
Hypothetical results:
If there aren’t any subscribers with C2/TB or no one takes the trade. C2 will publish the fill/result as it is now. I’d like to remind that any system has at least one subscriber who can use TB and trade the system in reality. The subscriber is the system vendor.
And last part is to modify “Trading System Results”. We already have “hypothetical statistics”, why to not add “real statistics” with real average prices and volume. If the two results are close enough the system is real and it works not only in C2.
Sorry if it sounds complicated, but I think no one system provider shows system results based on feedback from the system subscribers.
Just an idea.
Eu
I really like that idea. It’s quite complex to execute, so I need to think about it a bit before coding. But I appreciate it. It’s very brilliant.
Matthew
Very good idea!!
Very good idea, and this approach would be especially effective in revealing trades which could not be executed in the real world due to insufficient volume in a stock or option. Quite a few systems seem to recommend very large purchases or sales of a stock (in terms of shares, not necessarily dollars) which could not possibly handle the volume in a single trade, or even in a single day’s trading. As a result, spectacular results (wins or losses) are often shown which could never be realized in an actual account, and such trades should contribute to a lower realism index for that system.
Hypothetical results can be completely unrealistic due to the fact that the liquidity of stock in question may not allow to enter huge positions that result from compounding. This is particularly true in the case of penny stocks.
For example trades (50K shares at approx $0.30) on a particular stock may occur when total daily trading volume is just about 50K shares. One can not place such huge orders (almost equal to daily trading volume) without influencing stock price.
To realistically trade penny stocks one needs to use the software that allows to limit the transaction size to a certain percentage of daily trading volume so we can safely assume that we don’t influence the market by placing our orders.
Software built-in at C2 should limit the trade size based on daily trading volume, so, once requested position size is too large, it will be shrunk down by the hypothetical fill engine.
Running the trading system with transaction size limit set to 10% of daily trading volume will result in more realistic profit, and when the limit is lowered to 5% then profits shrink to normal stock market average levels over several periods.
This will account for more realistic Compounded Annual Return (CAR).
Hi Mathew, I am happy to hear your plan! IT WOULD BE A BIG STEP FOR C2 TO LEAVE THE PLAYGROUND AND BECOME ADULT! Greetings from one of the first, who tried with real money.
Henry
Pal,
This is true, but the portfolio balance of the system provider in no ways reflects the size of the subscribers’ portfolios. i.e. if a vendor is well established, and has been successful, his/her balance may be $250,000+. However, a new subscriber may have a beginning balance of $25,000, or 1/10 the size of the vendor’s balance. If the C2 software rejected/limited the trades of the vendors due to liquidity, based on their large balance, the subscribers would be unfairly affected.
Liquidity is a complex issue, and needs to be well thought-out. I’m not sure what it’s place should be here at C2.
Brian Schumacher
It is actually very simple.
When striving for realistic results (trade size not larger than 10% of daily volume), an auto-generated comment needs to be included with such trades that the trade size has been limited by C2 to 10% of daily volume and the subscriber is advised to adjust the volume of his trade accordingy.
This indeed would be an AMAZING plan, and I totally agree this idea is brilliant!!! This would catupult C2 to the forefront of the independent verification of trading systems industry. I don’t know of anyone who does anything remotely like a Reality Index, and I think this would be the biggest improvement to C2 and its stated mission since its founding.
Bravo!!!
