Would some subscribers to strategies that were rescaled share their experience? I am considering rescaling one my my strategies down to about 10% of what it is right now. Will that throw off subscribers follow percentages? If a subscriber is following a $250,000 strategy with $50,000, when I scale down by 10% will their account sell off to follow with $5,000 or will their scaling percentage adjust to keep it at $50,000. From a subscribers perspective is leader scaling down actually of benefit to you?
I think its best to use a strategy size that is reasonable for the size it trades based on the expected drawdown.
@AlgoSystems I assume when you say reasonable you mean as small as possible within reason? I mean many strategies have a very wide range of amounts of money they can be effectively traded with. Is that what you mean?
Hey Charles, my rescaling experiences have been very unpleasant both for me and for my subscribers. After doing two of them (one when I switched to Broker Transmit, and one when IB changed their margin requirements), I hope to not have to do another for quite some time! When I did the last rescale, it locked up my computer and then locked up the help desk computer, and had to be done 4 times to finally get the scaling correct…hopefully those issues have now been solved.
From the subscriber perspective, you definitely don’t want their accounts going through all of that, especially if there end up being issues, so here’s what I did:
• I made the announcement about a week before, that the rescaling was coming
• On Thursday I closed out all positions and sent out another announcement instructing them how they should change their scaling percentages if they wanted to keep the same allocation
• After the rescale was complete, I sent out another announcement letting them know that I would start opening back up positions on Monday and that their scaling changes needed to be done by then
• And then I gave them a fee discount for their troubles
Good luck,
David
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Thank you David. That is a very helpful review. I did a scale down on a strategy today without much warning, but that particular strategy had no AutoTraders because it is very young. Fortunately everything went smoothly, but I think with AutoTraders it is imperative to have plenty of warnings and info on how to adjust their scaling. When I do a scale with AutoTraders I will certainly follow those same bullet points you laid out. Thanks again!
Yes Charles small as possible but giving room for a period of drawdowns. For example, 1 contract ES futures can be traded quite reasonably with 15k and up to 25k. Using a 200k account for a 1 contract ES futures system would be overkill.
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David, your steps for rescaling should be etched somewhere in a guideline for developers. Duly noted and saved. Thanks!
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David’s suggestions are right. Note that you should close out all positions and go to cash first. Then rescale. Then your subs need to scale their accounts appropriately.
