If you are a system vendor here on C2, I want to let you know about a new feature that will soon affect you.
Soon, Collective2 will begin a program in which a system vendor will be able to choose to publicly display whether or not he actually AutoTrades his own system using real money at a C2-compatible broker. (Vendors may choose not to participate in this program. By default, if you take no action, you will not participate and we will not display any information about your AutoTrade activity.)
The purpose of the program
We think it is important for system vendors to have “skin in the game” when offering systems to the public. Of course, there are many reasons a vendor may not want to trade his own system with real money (for example, his system might be a test system that is under development; or the vendor may be very confident in the system, but lack capital).
However, system vendors who are confident in their own systems, and who choose to AutoTrade them, ought to win more subscribers than those who decline to trade their own system. I think it is only fair and proper therefore to allow system vendors to choose to make this information available to the C2 public.
Over the next few weeks, we will be rolling out this feature in key places across C2. For example, C2 users will be able to filter systems on The Grid, to show only systems whose owners actually trade them, and they will also see this information on the “System Details” page.
We’re letting you know about this program in advance, so that system vendors who want to participate, but who do not yet have a brokerage account, will have time to open one.
Details about how it works
This program will only work with C2-compatible brokers. If you trade your system with real money outside of C2 AutoTrading, this information will not appear on the site, nor can we verify it for C2 users.
To participate, a system vendor can select any form of C2 AutoTrading. All generations of AutoTrade technology will be compatible. (However, some advanced features, such as optionally displaying a detailed trade list of your own system activity in your account, should you choose to make it available, will be offered only if you use a Gen3 broker.)
Questions and Answers
Q: Okay. I’m interested. How do I set up AutoTrading?
On the top of your system’s details page (where it shows your equity chart and trade record) youll see a big button: AUTOTRADE. Click and follow the instructions. If you do not yet have an account at a C2-Compatible broker, you will need to open a new account at a broker.
Q: Which broker should I choose?
Sorry, Collective2 Corporation is not allowed to make any recommendations about which broker you choose.
From a technical point of view, you should choose a broker that allows you to trade the instruments that your system trades.
So, if you want to select a Gen3 broker:
For stocks and options systems, that means OptionsXpress.
For futures, that means OpenECry or OptionsXpress.
For forex, that means FXCM or Gain Capital.
If you are willing to leave your computer on all day and run a “helper” application such as TradeBullet or Trader68, then you can trade your system at a Gen1 AutoTrade broker such as Interactive Brokers or MB Trading. In addition, there are several other brokers compatible with Gen1.
Q: I don’t think system vendors should be forced to trade their own systems with their own money.
A: That is a perfectly rational point of view. For this reason, you are not required to participate in this program in any way. If you take no action, you will not participate.
Q: I want to participate. I have set up AutoTrading at a C2-compatible broker, and I am trading my own system in a real account with real money. How do I choose to make this information visible?
A: You need to specifically tell us that it is okay to reveal that you AutoTrade your own system.
To do so, click the EDIT link (available either from your own list of systems on the C2 home page, or from the orange drop-down ADMIN menu on your own system’s details page).
Scroll down to the bottom of the page and check the box that says: "Reveal to people if you AutoTrade your own systems?"
You will have two choices. You can either simply report a yes/no answer whether or not you trade your own system using real money. Or you can choose to check a second box, which also reports the trade quantities at which you trade your own system.
You can find screenshots here:
http://www.collective2.com/how_revealautotrade
Q: What kind of information will be reported? Will people be able to see my private account information? Will they see how many dollars are in my account?
A: No. No other information is revealed. Even if you check the second box, which allows us to show the quantities you trade for your own system, we will not reveal any information about your account that is not related to your system.
For example, we will not reveal how much money is in your account only how much money you are risking on your own particular system. All trades unrelated to your own system will not be revealed.
Q: I think this is a devious way to generate AutoTrade fees for your partner brokers or for C2.
A: Many AutoTrading solutions are free from AutoTrade fees and, in many cases, C2 (and its affiliates) do not share in any commissions. You can elect to use free Gen1 AutoTrading, for example, in which C2 receives no compensation.
Q: What do you think the long-term effect of this program will be? Will it improve C2?
A: I don’t know. But it seems like a reasonably good idea, so we’ll try it.
As always, I welcome your feedback and thoughts about the new program. Please let me know if you have any questions that I haven’t answered here.
- Matthew
The only problem I have with this program is that a vendor who does trade his own program may be limited by C2’s autotrading software in trading it the way he already does. I trade stocks and futures, but trade a subset of the signals I show on C2. As I understand it, C2’s autotrading does not allow you to specify instruments you wish to trade and those you wish to bypass.
I told Matthew over a year ago that I believe the biggest problem with autotrading is the limited ability of the user to specify the risk limitations he was signing up for. I think it’s still a problem and I would never autotrade anothers system, or recommend someone autotrade mine without a VERY detailed setup to limit risk (number of contracts, symbols, adding on, etc).
Isn’t this what your customer would be charged, too? Shouldn’t your system be able to make enough to overcome fees and slippage?
I trade all of my signals with real money. SMA and Conservative Growth are both traded with Rydex Mutual Funds. Your auto trading will not accommodate Rydex Mutual Funds.
Mathew these improvements may very well enhance Collective2 and make it a better place to find and sell a trading signal. However in the last 2 days I have sent you 2 very important emails. When you choose to ignore your successful vendors it just takes away from what a great web site Collective2 could be.
I would ask you to continue to improve Collective2 however at a pace that would give you time to service what you have.
Rick Haines
Rick: The "last two days" were on the weekend. I do try to respond as fast as I can, but give me a chance. I usually try to respond within a couple of hours on business days.
If there a SIGNIFICANT number of MAJOR brokers here, this might have value. But there are only a tony percentage of the brokers here. In fact, am the one that talked Rick at OEC to join. I made at least 4-5 phone calls to convince them to do this a couple of years ago.
What about international brokers? If someone from Italy want to do this, which Italian broker can he use? Spanish? HongKong? Australia? China? Russia? It makes these people look more shady.
What if someone has a long-established broker they like? they need to change brokers just to have a C2 system?
And when major brokers like InteractiveBrokers do not work with C2, then I think this program has MAJOR flaws…
This sounds more of a way to make C2 collect more autotrading revenue, than anything else.
You can indeed use Interactive Brokers for C2 AutoTrading. (It is Gen1 AutoTrading, which requires the use of a program like TradeBullet or Trader68.)
And of course we are working to have other brokers join the C2 AutoTrading program. We expect to be able to make some announcements about new brokers soon.
Finally, thanks for your help when you encouraged OpenECry to join our program.
Since Gen1 is outside your control, how do you verify Gen1 autotrades ?
Also, for international vendors, where getting an American broker is hard, why not give a clearly-market designation that says "International vendor - self trading not applicable" ??
The C2 AutoTrade Protocol requires fill executions to be reported back to our servers.
It is not impossible to open an account at an American broker, for residents of many countries (the EU, for example). (Example: see www.optionsxpress.eu or www.optionsxpress.ca).
And I’m not really anxious to carve out weird exemptions – exemptions which would require additional verification by C2. How would we know whether a vendor really resides outside the U.S.? And more important, why should anyone care if he does? How is that information helpful to subscribers?
If a vendor trades his own system using C2 AutoTrade technology, then we’ll report it, if the vendor wants us to. If the vendor doesn’t want us to, or is unable, then so be it. This not meant as a punishment. It is simply an additional layer of transparency that should benefit subscribers looking to choose a system – and vendors that eat their own dog food. As a subscriber, I would want to know whether a vendor trades his own system via AutoTrading. But it’s certainly not the only factor that goes into my decision about whether to choose a system.
"As a subscriber, I would want to know whether a vendor trades his own system via AutoTrading."
Two points. First, I would like to know if a vendor trades his own stuff, but whether he does it via AutoTrade would make no difference. A vendor that AutoTrades his own stuff can control risk to his own risk tolerance level. As a subscriber, I can’t. Clean up the risk control on C2 AutoTrading before you roll out a procedure that penalizes vendors that don’t choose to AutoTrade here, for whatever reason.
Second, C2 was started so that potential strategy sellers could show a track record beyond their own hypotheticals. In that respect, it is a great success (for those who can trade). Why add another burden of proof on the vendor. Instead, I think C2 should make some effort to educate potential subscribers on how to select strategies to trade based on the stats C2 provides. The subscribers moan “does any C2 strategy really make money.” The answer is “You didn’t choose wisely”. Here’s what you need to look at.
Hi Matthew,
I think this is a great idea! However, I would also propose to make visible in the grid and in other places on the C2 which systems do not rely on auto trading (like Kauai). I have spend substantial effort building a system that is as robust as possible, and does not need to rely on auto trading. Other vendors have build systems that are end-of day and do not require auto trading technology either. It would be nice to make this distinction between intraday and end-of-day systems clearer in the grid, and help those subscribers looking for a system that does not rely on autotrading technology to easily identify these systems using the grid.
ST
Keith:
Your main complaint seems to be that a C2 AutoTrader can’t specify which specific futures contracts recommended by a trading system should actually be traded in his live account. (I want to make sure that you are aware that an AutoTrader definitely can specify a minimum and maximum number of contracts traded.)
But as a system vendor, why does your system recommend trades for futures contracts which you yourself are not comfortable following? Why not offer a system that you are willing to trade entirely as recommended? I do not mean this question as rude or aggressive; rather, I simply seek to understand your concerns.
One important benefit of C2 AutoTrading is that it lets C2 easily verify that trades are really taking place in your live account. While it’s true that a system may be slow enough that a subscriber does not “need” AutoTrading in order to follow your system’s trade signals with fidelity, AutoTrading allows us to report very easily whether those trades actually take place.
Matthew,
You recommend that a vendor fund his C2 account with a minimum amount necessary to trade his strategy. I do things differently. I offer a strategy that can trade a $100,000 account, but for smaller accounts, I recommend portfolios for various account sizes. Those portfolios are subsets of the largest portfolio. An auto-trader would need to be able to specify just the contracts in that portfolio. This is what I believe C2 can’t do. Why should I limit my subs to $100,000 accounts or larger, when I can set up a way for subs to trade with accounts from small to large.
But beyond that, a vendor might “SAY” that he always has a stop on a trade, but he really doesn’t always do it. I think the AutoTrader should be able to enable a stop if the vendor doesn’t. A vendor might “SAY” that his max stop is 4 points, so a sub limits his size to 1 contract, but then the vendor puts in a 20 point stop which means the sub is taking the risk of 5 contracts. Risk control items like this are the reasons I wouldn’t trade another vendors strategy. I think C2 should make risk control for the AutoTrader the highest priority on C2, especially since there’s so many intraday systems that are not tradeable without it.
I’m sure there’s many like me who won’t AutoTrade because of C2 risk limitations. It’s in C2’s economic interests to make AutoTrading as risk bullet-proof as possible for the subs.
I think this is a great idea, Matthew.
I understand why the vendor’s account information is not being made public. But will they be allowed to scale their own trades down to, say, 1 share per trade? Such a small risk would not really impress me.
This actually seems to reveal another problem. A vendor could in theory offset all auto trades in another account (not linked to C2 auto trading). In that case it would appear on C2 as if a vendor is trading his own system, while in fact he might have no exposure at all.
I agreed up and to the point when I realized that this would cost system vendors even more money to post a system here. Not only are we paying $98 every six months, now we’ll be incurring 30% of our monthly membership fee on top of that. This is a thinly disguised technique to raise fees from us vendors. I’m feeling nickeled and dimed.
As I explained elsewhere in this thread, some available AutoTrading solutions involve no extra fees. Or you can choose not to trade your own system at all.
Also, there’s always the chance that if you trade your own system, and follow your own advice, you’ll earn profits from your trading recommendations.
