I am new to C2 and just subscribed to the "S&P Swing" Options system. Please explain this to me. The provider issued a signal to close their position on 8/18 @$6… Somehow this got converted into a market order and sold in my account for $4.9. The first question is how the heck can a limit order be changed into a market order? Then it gets stranger… Autosync thought that the position still existed in my account after my broker sold it. C2 issued a buy signal at $6.5 (not sure why a buy signal would be issued, I would think it would be another sell) and then C2 sold what it bought for a loss at $5.7. Thus, it wiped out my profit for this trade in half!!! This is ridiculous. What is going on here? I was really excited about trading with C2 but this first experience makes no sense to me.[LINKSYSTEM_62209324]
Hi Joshua,
My guess is that the signal was for an option contract with a relatively large bid-ask spread with the limit price within, or very close to, the spread at the time of the signal?
I have also suffered from this strange occurrence before, which is why I now issue limit orders very rarely. See this post:
http://collective2.com/forum?autotrade-order-duplication
Dean.
I also had the same problem, I can’t beleive C2 can have this sort of mistake. I lost all the profit which S&P Swing has made in last trade. I have contacted my broker Optionxpress, they just told that it is problem from C2. I hope C2 will sort this problem , otherwise will be very scared to rely.
Raj[LINKSYSTEM_62209324]
Don’t worry, C2 staff is busy growing a sister for this website (youtuallfunds or something).
If this bug survived for 8 years, it will exist for another few years, my 2 cents, as a software developer. I dare C2 to prove me wrong!
Just make sure to contact the system developer and explain him the issue, and ask him nicely to manually send any future orders like this though mail, so you can execute them manually.
Hi, Guys:
A couple of questions are being asked, and a couple things happened here.
1) First, there are certain cases where, due to broker API limitations, certain limit orders must be held on C2 servers and sent as market orders when the bid/ask crosses the limit price. This was the case here.
2) The symbol being traded was an option, and has a very thin trading volume. Some lucky person got filled at the $6 limit price, but not everyone did (and more to the point - not you!). So in cases where the market doesn’t trade through so that all traders get the limit price, C2 converts the “unlucky” people at the market price. This keeps everyone in sync with the system. This obviously happens more often with systems that trade illiquid options than it does with systems that trade liquid stocks, futures, or forex. But of course it can happen with liquid futures too – that is, you can sometimes see “just-touched” limit prices, where only some people are filled at a limit price, but the market doesn’t have sufficient liquidity to fill everyone.
3) When you were filled in your real-life trading account at a less favorable price than the system’s limit price, C2 did something interesting that is worth noting: it automatically went back and adjusted the price shown on the system page to reflect the actual fills received by real life traders. Thus, the system page track record shows the actual fills you received in your real brokerage accounts – not the “unrealistic” $6.00 fill price, which no one at C2 actually received. In other words, we reduced the system performance so that it showed what real-life traders got filled it.
The real error here happened after the fill took place. C2 was late in recognizing that a fill actually occurred in a real brokerage account. So AutoSync closed your position (since, according to C2 at that time, the position shouldn’t have existed). Then a few minutes later C2 recognized the fill had indeed occurred, and re-opened the trade. This shouldn’t have happened, and I’m investigating the cause in the five-minute delay at C2 in recognizing the fill actually occurred. I’m sorry for this.
Matthew
I have a bit more information about why C2 didn’t recognize your brokerage account fill. (And thus closed your position and re-opened it a bit later.)
Recently, we’ve had some problems with certain broker partners reporting erroneous fills to Collective2. So, in response, we added a “sanity filter” to all broker fill reports. Specifically: if we receive notification from a broker that someone filled a signal at a price that is extremely different than what we would expect, we ignore the broker’s fill report. This is designed to prevent C2 users from being converted to market orders erroneously.
In this case, your broker reported the fill, but our sanity filter thought the fill was so bad, it was practically insane, and thus we ignored it. The problem is that we didn’t realize that an option order, for an illiquid option, might have a very bad fill indeed. ($6.00 limit price… filled at $5.20 in real life.)
I have modified our sanity filter to be more trusting of option order fill reports. This should prevent this from happening to option trades in the future.
Thanks for the report, and sorry for the trouble.
MK
All I can say is thank goodness this trade was still profitable and that I was only trading the minimum of “3” contracts given that I’m new and want to see how these things play out. The net/net for me is that what should have been a $473 profit (which C2 reports in the system’s results) only turned out to be a $150 profit in my live account. I got +$390 on the initial close of the position but when C2 acted up, it lost me -$239 for a net of $150. Again, thankfully it was still a positive trade and I was only scaling at 100% but this could have been really ugly.
I am the developer for S&P Swing. I am also relatively new to C2. By that consequence, I have decided to take this progress very slowly by not trying to complicate my system too soon, i.e., autotrade. To use an analogy, I have not yet reached cruising altitude, therefore, my airplane should not yet be put on auto-pilot.
As tempting as it is to pursue autotrade, I have decided to use only manual trading features, issuing the signals via the normal message system as you suggested. Autotrade execution is a decision for each individual. I do not see it as my place to make a recommendation either way for anyone else. I do not plan on use of auto-trade for my personal account at the present time.
I was, of course, aware of the possibility of liquidity/open interest issues on this particular trade before executing it. I view a number (only a modest number, again, for stability) of underlying securities before deciding to issue a signal. In this case, more liquid securities did not provide me with the higher confidence I sought in the one chosen. More specifically, there were some very prominent fundamental factors, a report release that lent high credibility to my decision.
I will correct this situation by looking for a wider variety of additional proxies for use in this commodity segment, and any segment with OI issues, in the future.
My experience with limit orders, as opposed to market orders, is highly favorable.
Also in this particular case, as always, I do not simply follow the C2 estimate for the contract price. I go directly to my broker to view the actual, real-time contract prices and spreads to make a comparison with what I’m provided by C2. I think I owe that to subscribers, real-time prices, when available, rather than to take what might have been provided a few minutes before. My normal process is to
refresh my order ticket at least once, to grab the latest prices, and, even adjust my desired price once more, before I actually execute.
It is well known that the primary risk of market orders is the possibility of receiving a low-ball bid. It happened to me only once, at a cost that I don’t recall, and I don’t intend on being ‘played’ in that fashion again, just for the sake of a speedy fill.
I carefully choose my limit order prices, by allowing what is a realistic price to the market maker, often lower than the last or current price. My intent is to put a firm
’bottom’ on what I will accept, while allowing the market maker to decide how much to pay above my limit price, and, of course, up to the current price. I would not place a limit order for an unreasonable price. Characteristically, if my limit price is not met, I expect the order to be ignored, not executed. As it happened, by the end of the day, the contract price ended at 6.40 bid. Simply holding the order to the end of the day would have permitted an easy exit at the 6 price.
I do not understand the logic of forcing an exit from a trade when a limit price cannot be accommodated. I have never experienced this type of execution under any circumstances.
At the time of my exit signal, I had received an execution in my personal account at the ‘current price’. There had been no unusual adjustment to the spreads at that time, even though I had experienced a spread within hours after my purchased that was subsequently reconciled with the big move in the underlying security overnight, as expected.
If one prefers market orders, then, interpreting my signal as a limit order should be adjusted for a personal preference. I will only use market orders for very severe ‘get me out now’ circumstances, not for normal circumstances, where I will have seen, or am currently viewing the current bid/ask prices, and, subsequently factored for short-term movement or trend direction of the contract.
[LINKSYSTEM_62209324]
And it will get ugly one day!
C2 lacks big time in the quality assurance sector.
1) the testing systems are only for developers and are invisible to subscribers. It should be the case that a developer could build a testing system, and (optionally) let subscribers use it to simulate and test paper trades.
2) system developers have to PAY to have a testing system, so it is understandable why most developers are not aware of the issues, because they need to pay extra just to evaluate the platform.
3) I have seen over and over small issues like this!
4) C2 does not maintain a public list of "known issues". I worked for many years in software quality assurance, and believe me, EVERY software has its list of known issues which will probably never get fixed because it is not economically feasible. And if C2 can make money for 8 years with a host of internal known issues, they will, like any other company. C2 should disclose them and their workarounds, YOU can lose a fortune!
5) Ultimately, C2 will make money just because system developers will pay the monthly fee, and C2 will resist with current quality for a long time, but will you, the subscriber, resist?
Take time to read the forums. I have listed many other opinions. Both system developers and subscribers have to be very careful while using this site. It runs $400 millions weekly, and the possibility for large screw-ups are endless!
Reggie -
The nature of how C2 works is that you are effectively issuing automated trading advice across multiple accounts, and multiple brokers. If you trade illiquid instruments, or - more generally - instruments whose liquidity is less than the volume of trades placed by your subscribers, then you’ll be faced with this issue: you’ll often find yourself in a circumstance where some of your traders are filled, and others aren’t. C2 insists that all subscribers be filled and stay in sync with your system. That’s our solution to the problem of non-market-clearing limits.
If you think about it, you’ll see that the same problem, but disguised, would happen if you managed a single large hedge fund. You’d issue an order to enter or exit at a limit price, and then you’d encounter a case where you couldn’t buy or sell the full quantity you wanted to buy or sell. So you’d have a choice to make: Trade the rest at the market? Wait for the limit price to be hit? Well, maybe you would wait – but of course there’s always a chance the price would move further away from your limit, not closer. And that stub portion of unfilled (or adversely filled) quantity would be averaged across all customer accounts.
C2’s algorithm is this: When the limit price is hit – anywhere in the world – make sure that all traders get filled, even at market if necessary. This keeps everyone in sync with the system, which is really what people are paying for, ultimately. Then C2 will adjust your performance stats to reflect the VWAP of the actual fills received across all real life accounts.
It’s not a perfect solution, but it’s a reasonable one considering the trade-offs, and it’s the algorithm we’ve settled on after many long years of trial and error. What it means is that, as you gain more subscribers, if you trade illiquid instruments, your actual performance (and the performance as portrayed on your C2 track record) will not be as good as the limit prices you desire to hit. If you stick to more liquid instruments, or have fewer subscribers, the effects will be less noticeable.
Matthew
I agree with all of this. For option trading to be profitable (and to keep market makers from ripping us off with wide bid/ask spreads), it is critical for limit orders to stay as limit orders. I understand why Collective 2 thinks it has to change limit orders to market orders, but this is one of the reasons I never use autotrading. Another reason is that if things go wrong with autotrading, C2 may correct the system statistics but all the subscriber gets is the bad fill and a "sorry."
As a subsciber to S&P Swing, I manually traded this signal when I got the ITM message, put in a limit order for $6.00, and got it immediately. So "real world" I did get a very good fill. If Reggie changes from issuing limit orders to only issuing market orders, this will hurt subscribers who trade manually and will make no difference to autotraders, they still get their orders forced to a market order now anyway.
This issue is discussed frequently with Topaz and its developer wisely insists on sticking with limit orders since they are critical to his strategy. Yes, there are often complaints from autotraders but at least he has plenty of experience explaining why C2 does what it does.
Reggie, if you do feel forced to change to market orders, hopefully there is a way to indicate in the comments the target limit price.
Good feedback… Is there anyway on C2 to see which brokers got which fill prices for trades? There is a great feature on zulutrade which lets you see the slippage amount for each broker that the autotrades go through. It would be interesting to see how much MB Trading (my broker) was part of the problem given that the autotrade signal goes instantly to the broker once its issued.
Matthew,
I know you feel like I harass you, but really, this “feature” should be described in the Autotrading EULA! We should not have to read about these features on the forum! I almost used it a few weeks ago!
Please list other “features” like this, so people are aware.
If there is a place where “features” like this are listed, please let us know, so we can learn about them.
Also according to this forum post the EULA is just wrong, this phrase is just not true! “Collective2 has not evaluated the quality, fitness, or appropriateness of the trading system…”. But C2 does evaluate the trade, and it does know the trade can’t be executed, and it does alter the trade entered by system owner from Limit to Market Order!
Many thanks and apologies for “harassing” you once again!
Here is the AutoTrade EULA we are supposed to sign:
This is an agreement between Collective2 LLC (“Collective2”) and you (“User”).
You are about to begin using Collective2’s Web site and infrastructure to send trade information to a piece of software created by another party (“Software”).
The developer of Software is unaffiliated with Collective2. Collective2 has not evaluated the quality, fitness, or appropriateness of Software.
You agree to hold Collective2, and its owners and managers, harmless for all faults of software, and for all losses caused by use of Software, or by Software failure.
The trade information you are about to automate is based on a trading system created by a third party unaffiliated with Collective2. Collective2 has not evaluated the quality, fitness, or appropriateness of the trading system or systems you are about to use, or the creators of these systems.
You agree to hold Collective2, and its owners and managers, harmless for all losses caused by these systems.
Finally, Collective2 makes no guarantee about the reliability or availability of its own technology, software, and infrastructure. Our service may become unavailable at any time, for any reason, which may cause you to lose money or may decrease profitability. Our software may fail or may be improperly designed.
Regardless of the cause of such failures, unreliability, or unavailability, you agree to hold Collective2, and its owners and managers, harmless for all losses you may incur, or for profits you fail to achieve.
You must agree to this before continuing. If you do not agree, click CANCEL below this Agreement and do not continue.
Hats off to you Edison, I think you have made some very good suggestions.
Ernest W.
There are 14 posts listed in this thread and I can only see 9. I don’t have anyone on “ignore.” I saw one by Edison Nica a couple of days ago that is now gone, right now the last one listed at the top of the page is from Ernest Wong but I never got to see it.
Why were these posts deleted?
