Subscribers need protection from bad systems

Matthew,

There are too many systems here with high ratings that would make many traders ill if they traded them. Should this not be a high priority, to protect subscribers from bad systems?



Systems with high drawdowns and very large loses on one trade would be a good place to start. No system with either should ever get above 500.



Of course subscribers should be responsible for picking good systems, but many do not no what to look for, and high ratings and big gains will confuse or mislead.



Some of what I see happening here is unconscionable.



I personally think all trades should be one of whatever is being traded. Subscribers can figure out the multibles and should do their own money management, it would certainly be much better than what they are given here by some. There are many people who know little or nothing about investing and can easily be fed to the wolves.

There are too many systems here with high ratings that would make many traders ill if they traded them. Should this not be a high priority, to protect subscribers from bad systems?



Ratings are not for the systems, but for the trader.



>Systems with high drawdowns and very large loses on one trade would be a good place to start. No system with either should ever get above 500.



Ratings are not for the systems, but for the trader.



>Some of what I see happening here is unconscionable.



You can always close your eyes.



>personally think all trades should be one of whatever is being traded. Subscribers can figure out the multibles and should do their own money management, it would certainly be much better than what they are given here by some. There are many people who know little or nothing about investing and can easily be fed to the wolves.



Are you jealous because you have a pitiful rating?

Quote: "Ratings are not for the systems, but for the trader."



What a stupid comment. How does a trader get meassured? By how good a person he is? By where he went to school? If his bank account is bigger than another person?



If you look at the ratings page, you will see the rating is based of the PERFORMANCE of a trader. And performance is directly linked to his/her system(s). So, good systems will give a trader a good rating and bad systems will give a trader a bad rating.



Quote: "Are you jealous because you have a pitiful rating?"



The fact that Frank have a good, or bad system is completely besides the point about validity of the ratings he brought up. If you want to follow your reasoning, than none of Tiger Wood’s instructors should be allowed to make comments on how he can improve his game as none of them play better than him.



If you have nothing constructive to offer on a certain topic, please refrain from posting and making personal attacks on the poster. Here this would be good if you follow your own advice about “You can always close your eyes.” and stay away from topics you have nothing to offer about.



Chris

All points are valid.



Cannot close eyes forever.



My rating is exactly as it should be.







Dude,



You are forgetting that a trader can have multiple systems.



What are you trying to prove here. That you are not dumb? Everyone knows how dumb you are when it comes to trading. Some people are born that way. Nothing wrong with that. So no point in trying to change that by posting garbage and pretending that you have mastered trading. Atleast Frank had the integrity to admit it. But you can always overcome your slothful ignorance, willfull deafness and enshrined falseheood by hardwork…



Many of us welcomed that you are going to leave C2, but yet you did not. What is your purpose here. Why are you still here?

So what if a trader have more than one system? Then his rating is based on the combination of the PERFORMANCE of the systems.



According to you ratings are not based on systems, which would include the performance of systems. What would it be based on then if not on how system(s) peform?



You attacked Frank personally for bringing up a topic and made comments such as that the ratings are not based on systems, but on traders.



As I mentioned before, please refrain from personal attacks and stay on topic. You accuse me from changing the topic? Look at your last post. Your first sentence can be borderline classified as being on topic. The rest is just a personal attack.



Look again at my first post. I pointed out the flaw in your reasoning about that the rating is based on traders and not systems and politely asked you to refrain from personal attacks on posters if you don’t want, or can’t offer anything on the topic. But all you could come back with, was yet another personal attack, which by the way is completely meaningless to me. I don’t even know you, you don’t know me, so why would I care what you think of me?



And you say “Many of us…”. So now you speak for many on here? As far as I know, there are a couple of thousand registered members here and you claim to speak for many of them? Reeeeally? Based on what do you think you speak for many “of us”? Maybe someone need to come down to earth a little bit?



When did I say I was going to leave C2? I assume you can back that up? Please post the date, time and forum of when I said I am going to leave to prove your statement.



Chris

So what if a trader have more than one system? Then his rating is based on the combination of the PERFORMANCE of the systems.



Finally, you got it. Some people take more time to get to the truth, some people take less time. Nothing wrong with that, because among other reasons, people differ in intelligence and, therefore, in the kind of work and scale of creativity open to them…



As to the rest of the stuff, you wrote, it is arbitrary, so deserves no response. But, I’m glad that you got the point.

In your earlier post you said, the rating is based on traders, not systems. Now you agree that the rating is based on the performance of systems. Having a little trouble making your mind, I see…



And the other stuff is not arbitrary. You made statements and I asked you to back them up, which you obviously can’t, so you decided “deserves no response”. If you make statements, make sure you can back it up, otherwise they are just empty, meanignless words.



Let ME give YOU a clue… you will find, you have much more meaningful debates if you can stick to facts and statements you can prove and stay away from personal attacks once you realize you can’t offer anything.

Kavin S,



You should be banned. Unbelievable that you would be posting/calling someone dumb or stupid, from what I see, for two days now.

Matthew, please ban this idiot. Here is what I have in my pm box. He wasn’t brave enough to post in the forum?





From: Kavin Sundar



Sent at: 1/02/06 (19:35)



Message text:





Sorry, I should have called you the moron.

I’d like to say that I also think all trades should be one of whatever is traded, or at least a fixed number from the start. If a system wants to trade 10 lots of something to start that’s ok but then 10 lots every time from then on.



Mind you - that’s only practical when the system trades only one instrument. Otherwise you need to use some kind of fixed fractional.



From my own experiences of trading NOTHING is more important than money management. It can keep you in the for the long term.

war is ugly

I’m only a newbie, and I agree with the thread starter. From my perspective it would be more convenient if all trades assume a fixed $100k account, i.e. that the system is not allowed to trade with earlier profits. I think this for several reasons.



First: If the system is stable (no large drag downs) and profitable, then one would expect a linear trend if it trades from a fixed account but an exponential trend if it trades from an accumulating account. An exponential trend implies that the slope of the curve is increasing too. As a consequence, the Annualized % of the system will artificially increase as the system lives longer. This inflates the Annualized %, giving older system an unfair advantage. (Of course it is a good thing if the system remains profitable for a long time, but that is a different dimension and should not be mixed up with the Annualized %).



Second: I assume (but remember that I’ve no experience) that money management is easier when the account size is fixed. As I understand from the many warnings, the C2 fills are often much more profitable than real fills. This means that the theoretical accumulated account of the system will increase much faster than the real accumulated account of the user (I understand that a $100K account grows more rapidly than a $10K account, but what I mean is that the percentage of profit is often higher in theory than in reality). This would force the user to adjust his Trading Permissions more often than necessary.



Third: There is a risk to re-using the profits in new trades. The drag downs will increase exponentially too. This is perhaps not wise for every trader. For myself, I intend to withdraw some of the profits (hopefully there are any!) at regular intervals.



However, in this discussion it may be necessary to distinguish between the signals sent to C2 and the signals sent to the trader. My first point applies to the signal for C2 as it is used in the statistics for the system; my second point applies to the signal that is sent to the trader. The one can be cumulative while the other is fixed.



I understand from this forum that the system vendor has the liberty to choose the size of each trade. So it is possible that some system vendors assume a fixed account size (even though C2 allows them to use the accumulated account), and that others do not. It is important that all system vendors make the same choice in this, otherwise the comparability of the systems will be corrupted.



The same problem applies to the computation of drag down percentages. One can compute the drag down with respect to the initial account ($100K) or with respect to the accumulated account (say, $200K). At the same time the system vendor appears to have the liberty to trade from the initial account or from the accumulated account. If the drag down is computed with respect to the accumulated account whereas the system trades from the initial account, then the drag down percentages will be artificially deflated as the system grows older. This would give the candidate users a wrong impression of what can happen with their money once they start with the system. For example, a drag down of $20K would be shown as a 10% loss, while the system assumed a $100K here and with respect to this $100K it is a 20% loss.



So for both the Annualized % and the Maximum Drag Down % it is important that all systems trade with a fixed account size throughout their life, and that this size is used in the computation of the statistics.

To clarify my comments on the Annualized profit % a little further: It is computed by the formula Annualized % = (Cumu $) (#days in a year) / (#days the system is active). I verified this formula by substituting the quoted numbers for several systems. I assume that “Cumu $” is the total amount that the system has earned.



Thus, the profits of the system are linearly extrapolated in this formula. But if the system uses its earlier profits by making bigger trades, then the profits will not increase linearly but the curve will be accelerated (curved).



So this formula does not agree with the habit of increasing the trade size when the account size grows. Either one should change the formula, or one should force the system to assume a fixed account size.



Of course I do not mean that individual traders should not increase their trade size when their account size grows.

"To clarify my comments on the Annualized profit % a little further: It is computed by the formula Annualized % = (Cumu $) (#days in a year) / (#days the system is active). I verified this formula by substituting the quoted numbers for several systems. I assume that “Cumu $” is the total amount that the system has earned.



Thus, the profits of the system are linearly extrapolated in this formula. But if the system uses its earlier profits by making bigger trades, then the profits will not increase linearly but the curve will be accelerated (curved).



So this formula does not agree with the habit of increasing the trade size when the account size grows. Either one should change the formula, or one should force the system to assume a fixed account size."



Jules I agree with many of your comments but not this one. Annualized % is computed correctly - the formula you listed is how it is computed (actually I think you missed something from the formula above, that looks like annualzed $ not %, but I know what you meant). It is what it is - you can’t redefine it.



System vendors may choose to use compound profits and thus not follow a linear growth model but that does not invalidate the annualized % figure it just means that that figure cannot be relied on to predict annual performance (which I’m sure is not the intent).



In my mind annualizing % return just allows someone causually browsing systems to compare/sort the returns of two different systems which did have different starting points. Without it comparing at a glance would be more difficult (e.g. system A gives %30 return in 2 months versus system B gives 50% return in 4 months)



So if you want to use a different formula in place of (or in addition to) annualized % then I guess that would be ok but I would be very skeptical if MK started posted some sort of estimated annual return based on extrapolated compounding (will make the already optimistic systems look even more optimistic)



One thing I would like to see is the ability to work with the system graphs more, blow it up to a large size, switch from linear to log mode and be able to zoom in/scroll through different period of times in detail.



The reason is that I’ve noticed that some system that have been around a while and have managed to really scale up their assets have caused earlier drawdowns that may have been very significant at the time (say a $30k drawdown on a $100k account) to become almost invisible blips on the full-life graph once the system has reached say $500k in assets because of the automatic scaling factors and compression of data points (for older systems).



"Of course I do not mean that individual traders should not increase their trade size when their account size grows. "



Actually I somewhat disagree about on this too, the only way for invididuals to keep their overall % returns constant is to increase their trade size as their account size grows. Of course the trade size should be based on their overall risk tolerance (taking into account all of their assets, not just their trading account assets).



Thanks for the great comments and meaningful discussion.

Pete, you’re right, I missed something in the formula: the right side should be divided by the initial account size of $100K. Then it gives the same numbers as C2.



I agree that the Annualized % is probably used to browse systems on their perfomance. My point is that you cannot use it in this way if one system lives longer than the other and one or both of them is using compound assets: Suppose that you and I have exactly the same system, but yours start in January 2005 and mine in July 2005. Suppose that we both use compound assets. Then, in December 2005 your system will have a much larger Annualized & than mine (assuming that the system is profitable all the time). So one would believe that your system is better than mine, which is not true. So the Annualized % is misleading if it is used in this way and the system uses compound assets.



I agree with you in that I would not like to change the formula for Annualized %. I think it would be better to force the systems to trade with their initial account size only. But perhaps there are other reasons why C2 may insist to let the available account size increase. In that case I think that it would be better to adjust the formula (or to add another index). Because the most important thing is that the index reflects how profitable the system is independent of its age. This can be achieved in both ways: changing the index (and give it another name if you want) or leaving the account size fixed.



I agree with your comment on the figures. This is a similar problem, indeed. This triggered my thinking about it. But I think that adjusting the figures is not enough: Changing the size of the figure helps only if you are aware of this problem. A naive user would probably still judge the system from the relative properties of the figure. (As you are probably aware of, when you enlarge the figure then the dragdowns become larger, but the slope of the curve will be larger too.)



I think that you do in fact agree with my last comment. Note that my sentence has two times “not” in it (bad writing, I admit). Thus I believe that it is wise to use some or all profits in new trades.



Thank you, too.

Thanks Jules. I understand your point now about two systems with different lifespans - as soon as compounding begins you cannot fairly compare the two easily. It is an interesting problem, I like your idea of always limiting systems to $100k in some ways however allowing a system that is losing money to continue to trade the full amt just seems wrong.



Sorry about misinterpreting your last statement - it does seem we are in agreement about that as well.

Yes, the situation is different if the system systematically has more losses than profits and the account drops below $100K. I was just thinking about this too. One could argue that the losses should be subtracted, as this is done for a real trader too. However,



1. If the system looses systematically, then the Annualized % is negative (even if you assume a fixed $100K available) and nobody would buy it anyway. So in this situation it doesn’t matter very much what the precise % is.



2. If the system is profitable on the long run, then the situation that the cumulated account drops below the initial account will probably not happen, and if it happens it will probably be in the beginning. That is a matter of bad luck for the young system. Decreasing the available account will then have an excessive impact on the Annualized %, even if the system starts growing after these early losses. So the Annualized % will again not be a fair measure.



3. I believe that most real traders do not put all their money on one system when they’ve never traded with it. So even if the system has some early losses, they will be able to continue for some time with a fixed amount of trading money permitted to the system. How long they can afford this, depends on their total capital and their trust in the system.



In my proposal C2 would be like an infinitely patient and wealthy trader, who allows a losing system to start over and over again. I understand that that is not a realistic simulation of a real trader, but nevertheless it would yield more stable, reliable, fair and comparable statistics about the profitability of the systems. And that is the purpose of C2 as I understand it. Simulation of a trader is only a mean to this end. (Full and realistic simulation of a traders account is anyhow impossible, as this would require knowlegde about the trader’s handling of trading permissions and his withdrawals, and for all reasons that are mentioned in the other topics.)

It is not the role of C2 to protect anyone against bad systems, or to promote good systems. Even a bad system can help someone see what mistakes other people make and how not to make these mistakes themselves.



It’s my experience that people should pick systems that they are comfortable with. If the system is rated as a good system but have large drawdowns, many times subscribers may still lose money because the may not be able to tolerate large drawdowns and get out before the system recommends. If the system is too conservative, some subscribers may stay in longer than recommended and expose themselves to larger risks.



So, C2 should do exactly what they do and just publish the trades. Good system, bad system
let the customer decide.

I agree with Dexter 100%

Let the subscribers decide what system matches their own trade objectives and personality.

Some traders dont mind swinging for the fences and accepting large drawdowns, some want more stable smaller trades with higher winning percentages, and everyone has a preference RE instrument (futures VS stocks VS forex etc), its not C2’s job to decide what is valuable to each subscriber, its C2’s job to accurately report live walk-forward results. Period.