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The Most Expensive Strategy on the C2 Leader Board (Avi Butz’s Strategies) has underperformed the SP500 since autotrading began

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#1

“Avi Butz’s Strategies” is the most expensive strategy on the C2 Leader Board, charging $595 a month for a subscription. Recent autotrades show 10-12 trades, which gives a rough idea of the number of subscribers.

It came to my attention because it has both of the markers for major problems or failure here: a win % of 96.3%, well over the safer 79% cutoff, and a win$/loss$ ratio of .16, well below the safer cutoff of 1.2.

“Avi Butz’s Strategies” currently has the second highest C2 score among all strategies here. It shows fantastic returns before subscribers joined and returns under 1% since recording its first autotrade.

From March 2020 when it started through the afternoon on Sept 15 when it did its first autotrade, Avi Butz’s Strategies gained 187%. From that time until the early afternoon on Dec 21, it has underperformed the SP500, returning only 0.86% total over those 3 months. The value of the strategy was $145,271 at 2:47pm on Sept 15, and it is $146,518 as I write this on Dec. 21.

It is not unusual here for a strategy to do well here before gaining autotraders and then stall out (I am a developer who has experienced this myself). Yet a sub fee of $595 a month is a lot to pay for a net return of less than 0.3% a month.

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#2

Also, all of his big gains came with overleveraging…

#3

This one is mostly marketing.

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#4

Honestly, I haven’t seen here the long term strategy for which I can agree to pay more than 200$.

From my observations, traders who wanted 300-500 bucks (a) traded over-leveraged and went down quickly (b) played variation of the martingale strategy with large returns and almost 90% drawdowns or © generated outstanding returns before subs and typical returns after.

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#5

Where on earth did you get this idea that trading systems with a high winning percentage and a small win/loss ratio are doomed to fail?!?

Seriously.

#6

I did a study after a week in which the market went down 10% and 4 of the top 5 strategies at C2 went bust or had major problems:

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#7

Please allow me to rephrase your statement slightly, here we go:

“I did a study after a week in which the market went down 10% and 4 of the top 5 strategies at C2 went bust or had major problems…BECAUSE THEY USED POOR OR NO MONEY MANAGEMENT.”

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#8

Here are some other comments since then on strategies that looked likely to have problems based on these two criteria: high win % and low ratio of dollars won per win to dollars lost per loss. You can generally scroll up in each of these threads to see the current chart of results for each of these strategies that failed one (or usually both) of these criteria.

#9

Again, these strategies failed because the trade leaders did not control the risk, not because their systems have a high winning percentage and a small win/loss ratio.

Big difference.

In fact you are almost implying that systems with low winning percentage and high win/loss ratio are automatically winning systems.

#10

By insisting on “money management” as the problem–if you are correct–then you are just shifting the analysis to “Why do systems with very high win% and very low AvWin$$/AvLoss$$ tend to have such poor money management?”

This issue has been discussed many times before on this list and other commenters have said that strategies with these criteria tend to have managers who are loath to take a loss and move on; many are even Martingale systems.

Remember, these are just indicators of likely collapse or major drawdowns, not causes in themselves. Other things being equal, a high win% is a GOOD thing, but other things are not equal. Strategies with a very high win% tend to collapse or have major problems–not all of them perhaps, but most of them.

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#11

Very good question indeed!

The answer is very simple : high winning percentage systems tend to attract “traders” with a gambling mentality.

It’s like asking me : “Why do people who go to that local bar have such a higher rate of liver problems than the rest of the population?”

Answer: Because bars tend to attract a lot of alcoholics, period. But in and of themselves, bars do not create liver problems.

#12

Thank you for the analysis. However I think a more accurate timeframe to compare it to SPX would be early September at a peak of that rally before the sell off and what it is now. SPX is up 3% and AVI is up 13%. The timing of the auto trader was too late, but that isn’t AVI’s fault.

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#14

Each investor is responsible for their own money even if they are subscribing to someone else’s trade alerts. If they have $50K+ to put in the market it is their responsibility to choose an investment strategy that they accept the risk reward profile. Just because they don’t know how to trade well enough doesn’t remove responsibility from them. AVI’s strategy is not something I am interested in, but I’m not going to spend much energy on throwing shade on it.

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#16

Probably another system that started after the Feb. drop that subs will tire of paying $7000 a year if returns get too small.

#17

That of course assumes that his strategy actually works with subscribers. In the long run, virtually every strategy underperforms the SP500 for non-trivial amounts of time, so that’s to be expected.

I genuinely hope it does go back to making piles of money for people. It’s not good for the C2 community when so many high-flying systems fail.

There is another thing worth noting; Avi Butz’s Strategies has not lost money yet and may not do so. Since C2 deducts sub fees, he has at least slightly outpaced his high sub fee. If it merely stalls out, that would be a much better outcome than collapsing.

#18

I don’t trade futures but Avi has done very well and has been open about what happened to him when he went live with his first autotrader(s). It explains a similar thing that has happened with many systems, I believe usually futures systems, when they get subscribers. People seem to think it is all part of a plan to take money from the early subscribers but it’s less nefarious than that. Suddenly, a whole bunch of regulations kick in, C2 has to limit the number of contracts traded.

If you look at his trade record, when Avi was just trading for himself he was trading a huge amount of contracts, when he went live he ran into the restrictions and posted here right away about it. As I recall, he was trading around 50 contracts before and suddenly was limited, due to the number of subscribers he had, to trading one or two. So while his early performance was like a rocket taking off, he still manages to turn a profit. I was impressed that he was able to adapt so well.

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#19

I found the thread where Avi talked about what happened to him when he got his first subscriber. BIG BIG system problem!

#20

VG2,

Thanks very much for that link to Avi’s other thread. It supports what you are saying.

Avi certainly comes off (impressively) as committed and straightforward. From his complaints, his problems seem to stem from scaling up problems. I once had analogous problems scaling up one of my strategies.

That’s good news going forward. We’ll have to wait and see if he can deliver alpha for his subscribers.

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#21

This thread is reason number one to avoid this manager… Correlation S&P500

#22

Also, don’t overlook the psychological factor. Trading a hypothetical account with no one watching is far different than trading with 10 or 20 clients looking over your shoulder. The transition from amateur to professional trader is not without problems.

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