SAFEGUARD the Capital - Critical Features Missing in C2

C2
1

Strategy (system) configuration panel offers very basic level functionality. There is no fail-safe measures to prevent capital losses from malfunction or human or system error.

Without certain functionality enhancements, it’s extremely risky for investor to use any strategy. Other day, I was doing analysis one of the strategy (system), and there was 6 consecutive losing trades ranging from 4000 to 6500 in single day. There has to be some sort of measures to protect an investor from this kind of situation. Or to protect capital in case of Flash-crash or any kind of system or human error.

Of course, there is no way to protect every single scenario, but by providing certain features, C2 could empower investors for preventable fatal losses of this kind.

50,000+ drawdown per trade is very normal thing for a given Forex Strategy (because of the nature of strategy), and worse drawdown was close to $500,000. My concern is what happens if someone or system malfunction cause it’s any position to close. Investor will lose money forever for simple human mistake or fat-figure etc.

Also how to prevent a drunk Trader to make mistake, most traders here doesn’t have TOS certification. They can go rouge and destroy investor’s wealth without any consequence to their account.

Any serious investor would love to have following preventive measures.

Here is my suggestions to handle this.

1. Strategy (System) Level Safeguard:

Max concurrent Open Positions [ ]

                                         (Let investor to select number s/he is comfortable with)

Because most strategies are not honest about (initial) capital requirement. There is no absolute way for an investor to control, how much capital strategy will use.

Max Capital Loss [ ]

Let user to pick the amount, let see $5000 or something whatever amount is good for an investor, or s/he is willing to lose for given system, then system should be lockdown for manual action….
Keep track of all losing trades, add them up

Current losses [ ] match against the max allowed and if losses are more than investor allowed then shutdown the strategy and let investor to manually intervene and RESET current losses. Also add LIEF-TIME LOSS, AVERAGE LOSS per trade (since the Investor subscribed the strategy) So Investor can make informed decision.

Current functionality “Stop Loss” only prevent one trade at time, if Strategy (system) keep making losing trades (might be because of system/Data feed issue or any reason), human or computer, it could wipe out investor account.

Once system hit that max Capital Loss amount, Pause (Lockdown) Strategy, Park all signals and inform users. Also provide options, in case system is losing

		[ ]  Close all open positions
		[ ] Close all losing positions
		[ ] Leave all positions open

Lockdown strategy, if lost consecutive trades [ ]

Investor should be able to pick any number 2 or 3 whatever s/he is comfortable with. Once system loses that many consecutive trades shutdown the strategy for manual resume and let user know by text, call or email. whatever investor wants in each of these cases.

Park Closing Order if Position is losing more Than [ ]

user should be able pick some number
This is the most import functionality, if system draw-down was $500,000. I don’t want any human error or craziness close the trade, if investor was ok with draw-down, he might be able to wait bit longer and close the trade manually. Just park the closing trade and send TEXT to user/email/call whatever.

Or send text to an investor with draw-draw amount and closing order information and ask for confirmation, if s/he wants to close the trade Press 1 for Yes, 2 for No. But there should be no further action till investor wants to close the trade.

Pyramid Trading []

	O on losing trades 
	O on winning trades

Max Capital allocation

Some strategies are for multiple asset classes, and they don’t’ trade in any predefined patterns
This could be complex to implement but it’s do-able. We can discuss if you are interested.

2. Portfolio Level safeguard / Lockdown:

Each account should have functionality to make multiple portfolio, with any number of strategies (systems). Portfolio level settings should supersede Strategy (System) level settings.
In case some system fails or SPX500 experience Flash-Crash I want to make sure, all Strategies within given portfolio should goes to pause, and don’t close the open positions (because of stop lost trigger). So this could be achieve by these measures.

Lockdown all strategies (systems) within given portfolio if

[ ] SPX500 is down [] % or Points [ ] <<< Investor can pick any number
Or
This portfolio is down [??] % or $[ 35000 ] <<<< investor can pick any number

Each account should be able make multiple portfolios, like some Forex Strategies need extensive draw-down to make huge profits, and some investors love to use that strategy, so they can put that Strategy in Forex Portfolio where SPX going down doesn’t matter and leave Portofino setting empty.

There are many more ways, to make C2 provide greater protection to investor’s capital. Remember Capital is lifeline of C2, unless C2 is provides comprehensive safeguards, I am not sure any investor with substantial capital will ever consider C2 a safe place.

I have been working as C-Level executive for very long time, including CIO role, so I can understand, development cost of these enhancements. I know how management always feels when user wants more functionality.
There are two ways to approach this. Add more functionality like 1 enhancement per month or quarter; second, I am sure C2 could charge more for premium features by making Investor Plus or whatever name C2 would like to use for more comprehensive features.

I am willing to pay double or even 2 times more per month to have these features, and because I could be at ease that I have ultimate power to override any strategy I am using.

Not all investors can monitor every single trade or system 24/7. Investor could be traveling, in hospital etc. I think these features will give every investor a greater control and peace of mind.

There are many more enhancement, which could be done. I am willing to discuss with you, please let me know if you are interested.

I would love to hear from other investors. Thank you.

1 Like
2

As a signal provider myself, I completely agree. I provide signal, but I am expecting to follow any other great system as well for diversification purpose and for the fun of having money not sitting in a bank. However, I would need to have my capital protcted against any careless traders or human being mistakes as well. I am with you,
However, I have seen many times those protections can still turn againt you by closing trades to quick or by having the wrong set up that do not match the traders styles.

1 Like
3

There is no way to prevent every single mistake, but right now, I feel it’s every investor is very vulnerable. That’s why I an not suggesting, closing the position. I am saying lock-down the strategy and send text, automated call or email alert and let user to intervene. what the worse could happen, some user will miss one or two profitable trades.

Also not every investor have to use these features, if they don’t like. I have seen system which was doing so well and all of sudden (out of blue) they lost 4 or 5 big trades in a row. Why not let investor to decide.

I will be more peaceful, if I know I have ultimate power to close the trade, if it’s X amount down. If system lost 2 trades with x amount in a row. etc.

4

I don’t want to be a rude investor, but almost all these enchantments are like a second parallel set of car controls granted to the passenger with no driver license and with no driving experience. Give illusive feel of safety but add a mess for driving in reality.


[quote=“MunawarAbadullah, post:1, topic:8547”]
Max concurrent Open Positions [ ] [/quote]System opened 15 positions, investor was comfortable with first 5 which gave losses, other 10 brought profits, but not for the investor


[quote=“MunawarAbadullah, post:1, topic:8547”]
Max Capital Loss [ ][/quote] this one makes sense


[quote=“MunawarAbadullah, post:1, topic:8547”]
Lockdown strategy, if lost consecutive trades [ ][/quote] trend following systems usually have large number of consecutive losses before they get into trend and get profit which is larger than all that losses. Investor can cut these profits by his hands since he will not get into trend.


[quote=“MunawarAbadullah, post:1, topic:8547”]
Park Closing Order if Position is losing more Than [ ][/quote] is it like “lets wait when the price will come to our levels back”? I think drawdown will be even larger in this case.


[quote=“MunawarAbadullah, post:1, topic:8547”]
Pyramid Trading [][/quote] any restrictions on pyramiding will ruin results of the system created using pyramiding and bring losses to the investor. Just don’t jump into such systems if you don’t like them.


[quote=“MunawarAbadullah, post:1, topic:8547”]
Max Capital allocation[/quote] Can be the same situation like in “Max concurrent Open Positions [ ]”.

[quote=“MunawarAbadullah, post:1, topic:8547”]
Lockdown all strategies (systems) within given portfolio if

[ ] SPX500 is down [] % or Points [ ] <<< Investor can pick any numberOr This portfolio is down [??] % or $[ 35000 ] <<<< investor can pick any number[/quote]


In order to use such enhancements correctly and with benefits investor should have knowledge of trading system creation. Almost all limitations proposed can’t be applied without the knowledge of the particular system rules and market behavior. I am not against implementation of these limitations, but I believe that they will bring more problems and losses to investors.

2 Likes
5

Thank AndreyBlinkov for your feedback.

System opened 15 positions, investor was comfortable with first 5 which gave losses, other 10 brought profits, but not for the investor

“Cocurrent” means how many positions could be open at same time. This will help to control max capital utilization by one strategy.

E.g.; Let see Strategy 1, Deals with Forex.

Most of the time, this strategy has 2 Open positions at any given time. But 4 times in a Year Trader opens 4 or 6 concurrent positions.

There is one open position in EUR/USD and it’s down $50,000. Trader feels there is opportunity in EUR/GBD he opens position in EUR/GBD and it’s down $85,000, both of positions are still open and he finds another opportunity in EUR/JPY and He opens position there and it’s down $100,000, Now this strategy has drawdown of $235,000.

However, trader finds opportunity in AUD/JPY and he opens position in it’s also down $70,000. Now this strategy could be down up to $305,000.

(and yes, that strategy (system) do exist on C2)

If an investor has limited capital he wants to use this strategy, he has to reduce scale it 10% to accommodate 4 or 6 max so that he doesn’t get margin call. If Max Cocurrent feature is there, he could use 20% scaling and be more profit-able most of the time. He will be part of EUR/USD and EUR/GBD but his account, won’t open EUR/JPY and AUD/JPY position.

People could be brave enough to drive a car without “BREAKS” but I hope they are not on same ROAD I am :slight_smile:

I can explain each feature, but because you find them almost all of them useless, That’s why I suggested only people willing to buy “CAR” with more Technology and pay for that Technology, Auto-Breaks in BMW and Benz is additional feature, owner has to pay extra for that. Most user consider it’s useless, but Safety board thinks, it is a good feature to have, so by 2022, all cars will come with Auto-Breaks in US. Now I heard some people are saying what happened to old saying, “Keep your eyes open and hands on wheel” …

6

Pyramid Trading
any restrictions on pyramiding will ruin results of the system created using pyramiding and bring losses to the investor. Just don’t jump into such systems if you don’t like them.

That’s why I am suggesting, it should be Strategy Level, so If I know Forex strategy is build on Pyramid, I can allow it, however, I don’t want an Gold Future Strategy to keep adding when it’s down 40 points.

C2 have inherit issue of reporting, some traders are exploiting it, to show Win to lose ratio.

Let’s see a Gold Strategy normally opens 2 position, but there was such a Gold rush, and that strategy had 5 winning trades in a row, he went over his head and opened a position at 1280 with 3 contracts and Gold dropped to 1220 and now trader knows he is in trouble and one way of showing he is still wining the trades to people who are looking at strategy page before subscription. He adds 3 more contracts at 1220, how his Average is 1250. He closes the trade on bonce back at 1255. To public it seems a wining trade, unless someone look very deep in data, however because of limited reporting at C2, most people won’t find the secret sauce of this winning trade.

It’s a winning trade to outsider, but if someone has small account, s/he will be out of this position long before, because of margin call or insufficient fund, and let see even through I have funds in account, I don’t want Gold Strategy to use them when it’s in trouble to bail-out, because I might have those funds for other strategies.

Someone can claim there is max contract option Right now, that means, I am limiting my capital efficiency. Because a winning trade impacts account differently than a losing trade. I want to be part of every winning trade but I want to limit the exposure to losing trades, because losing trades reduce available capital.

Most of these features for skillful investor will provide capabilities to maximize capital efficiency without having to deal with drawdown.

Of course not every investor understands or wants to maximize capital efficiency or wants to protect Capital. I am sure an investor with 10K vs 10M have very different objectives. That’s why I am suggesting, create “PLUS” dashboard, charge to those who are willing to pay for it, and understands, how these features works.

7

Max Capital allocation
Can be the same situation like in “Max concurrent Open Positions ”.

No, Let’s see investor wants Strategy should be able to open max 3 positions at a time but never use more than $100K,

Now if strategy opens first position with 10K, strategy still have 2 more position, Strategy opens second position with 90K, now strategy used 100K but still have one position remaining, but if there is feature to limit 100K, Strategy won’t be able to open 3rd position even through there is still room for position but strategy max-out on capital use, but if first and second position was 10 or 20K each, strategy could open another position, 3rd one.

8

[quote=“MunawarAbadullah, post:5, topic:8547”]
“Cocurrent” means how many positions could be open at same time. This will help to control max capital utilization by one strategy.

E.g.; Let see Strategy 1, Deals with Forex.

Most of the time, this strategy has 2 Open positions at any given time. But 4 times in a Year Trader opens 4 or 6 concurrent positions.
[/quote] If the strategy has such style (2 regular trades and then 4 trades once a year), then why should investor neglect them? From your example, say in case of four trades, the signal provider get profits, but EUR/USD and EUR/GBD bring losses only. Where is the profit from such rules?

I am subscribed for the system which can open up to 15 positions at the market opening. If I will start selection of positions, then my trading as investor will be just coin tossing.

In my example with the car I didn’t neglect BRAKES at all, I gave BRAKES to driver only. Auto-brakes feature was studied and tested long time before it comes to production. And it still only helps to driver a little bit, it doesn’t change his driving style. Most of your features break system rules, and add new rules to the trading system, which can be dangerous for investor himself.

9

And you might end up with loss from two open positions, but not get profit from third position.

10

What I would add to improve scaling on pyramiding is max number of contracts per entry in addition to max position contracts.

BTW scaling feature with certain improvements will resolve almost all capital efficiency problems without interfering with the strategy rules. Have small capital - keep trading 1 contract or 10%, have big capital - follow strategy rules. C2 has huge amount of data to identify strategy trading style, potential risks and so on. Again you will not be totally safe, but this is trading.

1 Like
11

I guess you missing the point. It’s the matter of profit or loss, it’s matter of if account have enough funds to even open unexpected trade.

If I scale 100% to one system which uses 100K per day bases, and all of sudden that system open up new position which will push capital to 200K. Now if someone has only 100K in his account, he is fine, because position will not open because account has no funds for it. But a person, who has more 200K in his account new order will go through, even though he was expect another system to use that funds. Now when other system will try to use those fund, there will be no funds available. so Max Concurrent position will allow investor to cap how many position that strategy can open.

All of the features, I have suggested can’t not be used for every kind of system, someone who never used Forex system, might not need certain features.

Even Exchanges now have circuit breakers to control madness. Investor got have some control over what system is doing, especially if system is doing unexpected.

12

Anyone believes “Status quo” is enough doesn’t understand “Defined Risk”. No one can control risk 100%, but there are mechanism to control risk at manage-able level.

Even Exchanges started deploying break mechanism in case of madness. Any system (fully automated could suffer from computer glitch) or trader could go mad, in any of completely unexpected situation, investor needs some protection.

If I set Max Loss Amount to $25,000. Might be worse could be 27K or 30K market slipped further while closing trade executing, but a mad trader can’t keep executing trades, because after max loss it will be lock-down mode. At least I have peace of mind, the worse could be loss of $25K up or down few thousand.

I joined this site 3 years ago, and I didn’t use it for this reason, there were not enough protection for investor, but I didn’t want to point out because I thought with time, C2 will improve, but sadly after years, it’s still lacking some safety measures.

Steve Jobs said, "A lot of times, people don’t know what they want until you show it to them.”

Majority of people in this world have no conceptual capacity, they can’t see Elephant in the room.

C2 is successful venture now, I think it’s time for C2 to enhance these areas, they got to have road-map for improved reporting like comparable sites are doing, more simulation etc.

Site, where trader’s identity is unknown, their credentials are unverified, their trading activity is questionable at the time of market stress, not having fail-safe mechanism could be disastrous. Just because it didn’t happen, doesn’t mean it won’t happen.

I layout just core missing elements, not how to implement them or how to organize them so they won’t backfire. It needs proper time and architecture, which could be discussed, if someone is interested.

I won’t waste people’s time, if they don’t feel the need. Good Luck everyone. Happy Investing.

13

@MunawarAbadullah

I understand you concerns and totally agree with

But features you offering can seriously interfere with system trading rules and bring losses where simple following of the system rules brings profits. Even make this features paid you will not be able to guarantee that investor will use the features wisely.

14

Very Interesting topic.

Investors must look deep in the data if they don’t wanna part from their money.

As far as I can see, most systems that have 80% or more win rate have averaged down into losing positions infinitely until the position returns to average. This will work many times but when it fails, it will most definitely take away most of the gains.

This method of trading has failed miserably for individual traders like us. We do not have infinite capital.

The gist of all these risk measures come down to one thing: Pyramiding into bad trades. This is how your money gets locked up.

Perhaps, there can be a switch which subscribers can turn on to prevent any position from adding to it when it is x% or x$ in the red. Or there can be a limit on how many times you can add to the losing position. This alone will prevent subscribers from going bankrupt.

For example, as a system vendor, If I bought abc stock at 10 and it went to 9.5 and i wanted to buy more at 9.5 but subscriber has risk controls in place which prevents this add on, then that subscriber will not take on that added risk. Its very simple.

But if other subscribers do wanna take that risk, then the trade record will show that transaction on C2. However, if no subscribers accounts were filled for that second transaction, then trade record will adjust itself to show the actual data from auto trading.

Now, vendors may say this is not fair because s/he may have made money by pyramiding. Thats just too bad because if you were right about your entry, you would not have to pyramid.

19

Hi Munawar , thank you to bring this issue in this topic. Are we talking the same Manager? WUGOT? NEW SUBSCRIBERS must see the manager’s secret how he manages his trade become winning trade. Especially all sudden drop to $12k and end up with profit $4k. This is Gold market, it can swing very quickly, even if you use 100 percents, how about the slippage? Even from C2, they can’t guarantee anything you will get the same price with the manager’s price. In addition, the manager blame to the new subscribers, you should join with him early, so you only lost from your previous gain and you need a big capital. How fantastic this WUGOT’s statement. Enjoy your ride new subscribers.