So you can have a 100% drawdown on C2 and then just keep going?
The last trade of March 1st shows 17 autotraders actually risking money (one trading 10-lot). It’s reassuring for me to know that there may be investors left after I have lost 100% of their invested money with me. It’s like reinvesting with Madoff after he made off with your money? How dumb can a homo sapiens get?
How dumb can a homo erectus get? quite a log apparently. Greed is a powerfull force
Just looking at “A strategy for YM” which still has a lot of subscribers, and has traded very bad since the crash in February.
There are also months with 530 % loss.
Aw I remember Alpha and Omega. This guy was a genius. Came on the boards ranting and raving about how smart he was.
Over 15 people subscribed to this mess. Sad.
He made out though, probably cost him less than $200 to get it up and running and he raked in at least $1500. Well done, sir.
I like and hate the Wild West nature of Collective2. I think it hinders the growth of C2. Only so many people have the risk appetite or skills to navigate it. If I was in charge of C2 I would probably make a second website with completely different branding where the strategies are a bit more currated. Something where you could send your friend with less investing knowledge without worrying they will get wiped out.
Or just completely prohibit people from investing in strategies that are less than 3 months old.
I mean really, no one should be doing this. It won’t solve everything but it might deter guys like Alpha and Omega from coming here, since they might not last 3 months and get that quick buck.
That is not bad idea.
One thing that could also help would be making really visible difference
between TOS and non TOS strategy. Like higher fees for non TOS; better profit
split for TOS; more advertising for real money strategy. I do agree that TOS is not guarantee; but it is better than no TOS.
Fundseeder is a way more professional traders n using real money. You can compare what is going in here. However, only limited people can use that service.
Charles, if such a venture existed, would you invest personal funds in this?
I can’t fathom investing with someone after only publishing for 3 months. However, sometimes these really dangerous strategies last for years. I would still be hesitant to direct a less knowledgeable friend to collective2 because of the possibility that they go for a strategy like some of the ones we have seen that blow up after a year.
Perhaps the new C2 broker will be a bit more like other brokers that give you different levels of trading permissions, stocks, then long options, short options, futures etc. If so that could be a solution too. Though I guess other brokers are already doing that but it doesn’t seem to stop subscribers.
There is obviously no way to protect everyone in a business where risk is such a crucial component. I just picture C2 as it is now as the trial grounds for good developers and great for people that are really into trading, but if C2 really wants to grow they need open up a toned down version that can be marketed to the average consumer.
Potentially! However, I am a small fish. Such a venture may not be interested haha.
It seems to me like there is a very simple solution. Include a “Stress Test” percentage at the top of each strategy page. IB has a stress test that shows what would happen to your portfolio if there was a 10%, 20% or 30% market drop. Pretty easy to calculate for about 90% of strategies (commodities & forex may be more difficult).
The way I calculate it for Simplicity Trading on Feb 1, a 10% “market” drop would have resulted in a 89% portfolio drop. Throw a big red -89% on the top of the screen, and if someone still wants to invest, then great - but anyone not comfortable with that level of risk would stay away.
One may even want to include a “Maximum Historical Risk” or “Average Historical Risk” number, which would show that for a strategy like Quant Models Volatility – back on March 31, 2017, a 10% market decline would have likely resulted in a 1620% loss for the strategy! Sure, many strategy owners will argue that their model or their stops would get them out of the positions before we had that 10% drop – maybe, maybe not – but it’s a good measure of the risk/leverage used to obtain the historic returns.
Seems like a simple but very effective way to let strategy subscribers know what they’re getting into – how much risk was taken to get the historic returns, and how much is the strategy currently using.
I like that concept. I think some kind of indicator like what you just mentioned is a must to show how much leverage is being used. Throwing a Sharpe and some other ratios on strategies that have a very short and peaceful history doesn’t tell the subscriber much. Subscribers need some kind of signal showing “Maximum Historical Risk” and “Average Historical Risk”
Of course, I doubt any one indicator can say it all. So regardless subscribers still need to use common sense. Say you have a strategy that only held SPY vs. a strategy that only held 1 small company. Wouldn’t both have the same stress test results? In this simple case it would be pretty easy to see the risk, but some other strategies may make it more difficult.
or c2 can just NOT allow margin on NON-TOS. or 1 max future contract if u have less than 100k brokerage balance.
allowing a 50k strategy to long 18 $YM future contract is just dumb. not fair to subscribers to lose up to 500% of their account balance when the leader is losing $29 c2 fee. they are trading paper money, of course they are going to martingale and double or triple down.
I would love to see that. It would be great to have all strategies on a level playing field and not have margin usage be the hidden cause for massive returns.
Since nothing can prevent trade leader from doing crazy things, I was thinking about setting up the stop loss which will close all positions if strategy hits K * MaxDD, where K is from 1.0 to any big number, roughly defined by strategy age.
How do you think, will such approach affect strategy behavior during regular market regimes?
In fact; there is an option called Auto-Constraints. And trade leader can set
"Sum of all open positions may take no more than % of strategy capital"
And once strategy has subs, leader can’t change it until they all agree.
It is still in beta. But no one is preventing trade leader to do this.
As a subscriber of your strategy, I would prefer if you would not joke around
on losing all your subscribers hard earned money. So far you have been an excellent trader.
Please keep it professional and continue on doing your best trading.