Hi,
Can someone explain why my strategy Minimum Suggested Capital has changed ? I started with $25,000 and only recently it’s showing $30,000. Thanks.
My Strategy BSPmini had a starting capital of $25,000 and the suggested minimum capital required was also $25,000. I have never traded more than 1 contract of ES at a time, so why is this minimum capital gone to $30,000. I can understand it dropping to lower value based on only 1 contract being traded but can’t understand it increasing. If I was an investor looking at this it would put me off thinking it requires $30,000 to trade, where as it could be traded with as little as $10,000.
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@Biks this should be the least of your concerns as a developer.
Most subs or potential subs trading futures know what the margin requirements are for various futures contracts and, therefore, know how much capital is required to trade any single strategy.
Instead, what scares subs away is developers with inconsistent and poor performance, doubling down on losing trades, and not adhering to their own rules (“I never trade more that 2 contracts” and then proceeding to open five contracts or more).
Subs may be a little smarter than you think they are. You would be better off focusing on what could make your strategy a great strategy.
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CoreyR,
I am not overly concerned, but would like to know how these figures are derived. If they don’t make any sense to me then I ask the question, that’s how one learns. I did not say subs are not smart people, I like to think I am smart as well, but when I look at systems that require big minimum suggested capital I tend to shy away. I am well aware what I would like to see in a system, a consistent returns, with a minimum DD, so have developed 2 systems ( both TOS ) BSPmini and BSPcrude-oil. They both in the early stage yet but hopefully be around for a long time.
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I don’t understand the “therefore” here.
I do know the margin requirements for any contract (at least I know how to look it up), but how would I know because of this (“therefore”) “how much capital is required to trade any single strategy.”?
For this I need to know the number of simultaneously open trades and the distribution of the DD of any trade, right?
This data is not available from C2. C2 publishes the max DD (and, depending on strategy this number is incorrect, but this is a different discussion) and not only it doesn’t publish the # of simultaneously open contracts, its “trade size” for individual trades is incorrect (as was discussed numerous times.)
I wouldn’t shy away from big minimum capital to trade. The developer/trade leader is probably sizing appropriately because you have to consider the value at risk and its relationship to the risk of ruin.
The higher the amount of starting capital relative to your total risk on each trade reduces your chance of heavy drawdown and totally blowing out the account. The percent of portfolio at risk that can significantly increase your chance of ruin is actually smaller than a lot of people believe. Slight increases in percent of portfolio used in each trade magnify into volatile equity graphs.
isn’t that suggested minimum capital completely wrong? I can not imagine why one needs 280k to trade this system. 50k should be more than fine in my opinion, probably even half of it
The ‘Suggested’ Amount tracks with the current balance.
Good point, there are probably tons of potential subscribers who decide not to join a strategy because that “Minimum suggested capital” is too big for them, even though they could easily trade that system with $5K or less, instead of the $25k or more that C2 usually recommends.
In the trading industry the usual suggested capital is twice the maximum drawdown of the system, in dollars and cents.
You can read this link for more information: https://support.collective2.com/hc/en-us/articles/115008510008-AutoTrade-Setting-Scaling-How-big-or-small-should-I-make-my-scaling-
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