"Ugly girlfriends" list by Matthew Klein


If C2 is an independent auditor who is unbiased, why are you promoting the systems on the list?

Thank you in advance for your answer.

Being “unbiased” doesn’t mean acting deaf and dumb.

You can be unbiased and still nudge users in a helpful direction. “Unbiased” means you tell it like it is and you are beholden to no one.

I occasionally write emails and send them to C2 users. These emails serve a few purposes. One is that they (hopefully!) provide useful information. Another is that they might let customers know about systems they previously overlooked. A third purpose of these emails is to – shocking surprise! – promote the C2 site and remind users about how cool C2 is. I don’t think the email which I recently sent, and which you are referring to, in any way betrays the notion of C2 being an independent evaluator of trading systems.

(But I’m happy that you read the email and took the time to post your thoughts. So, thanks.)

Considering your status of an authority on C2, your "nudge" towards certain systems could be construed as unfair by certain ethical standards.

Also some of your "ugly girlfriends" are not less risky than other systems on C2, yet your "nudge" could lead some potential subscirbers to believe otherwise.

Thanks for your answer.

Collective2 has also been criticised for precisely the opposite reason: that there is no “standards filter” in order to weed out the bad systems and protect people from losing money. I thought the article was very good and provided some very common-sense points. Although I concede that for some people generating a list may be going too far as Matthew is supposed to be unbiased, he did stress that no system can be guaranteed not to blow up.

Usually it’s people like Myth Buster who make these points over and over again, but even so the Hot and Most Popular lists are always full of the next get-rich-quick system based on hot air (frequent “My system is great” post & chatter) and/or flawed science-gobbledygook that even the vendor is kidding themselves with. Invariably they fail sooner or later (usually sooner) but not after sucking in plenty of subscribers who part with good money when the warning signs are there for all to see.

Also, Matthew may actually be doing his revenue stream a short term disservice by writing articles like that, so more power to him for putting reputation in front of a quick buck.

I bet that C2 makes more money from these short lived rocket systems and their subscribers (both system vendor fees and a sizeable subscription percentage go to C2) than from the type that the article recommends. The former are plentiful and gather a lot of attention and followers, the latter are smaller in number and sit in the background for a long time paling into insignificance compared to the latest hot shot.

Some may think I am biased because one of my systems appeared in the list, but the thoughts above were going through my head as I read the article even before I saw the list, and that’s a fact - I could try to prove it now but it takes a deep understanding of physics to follow so you’ll have to take my expensive “This is what I think” course instead :wink:


I think it is important to occasionally remind investors of realistic expectations. In that respect, before the Ugly Girlfriend list, I put a post on my blog (http://www.etf2x.com) pointing out the average annual return for hedge funds which happens to be 12.25% according to the Hennessee Group.

It unfortunately appears that many C2 subscribers are drawn to systems that are currently hot and may therefore believe that unsustainable annualized returns are realistic. As noted in Matthew’s article, you generally don’t achieve incredible returns without taking a risk. The risk, of course, is a serious draw down from which the system may or may not recover.

There was a comment on the site recently criticizing the “Gainers This Week” list. I have to agree that a list of systems that are hot this week adds nothing to the site.

Thanks, Dean. I still prefer to hear an answer from Matthew.

Completely agree Fred. C2 is far better than Zulutrade in this respect in that it at least allows you to filter systems by Sharpe ratio so you can easily find systems that are consistently profitable. With Zulutrade, the key metric is win % which can be completely manipulated by never closing a losing trade to acheive a 100% win rate and we all know what such a system will do to your margin !

I think Matt’s article goes a some way to educate subscribers in the use of these tools but perhaps a ‘beauty parade’ based on Sharpe and low drawdown rather than gainers this week might be better with more prominent articles and how to select the best systems would benefit subscribers.

Also a site wide strapline promoting realistic annual gains e.g. 50% and comparing this to other investments e.g. bank accounts, index tracker funds etc.

I could not have agreed more, Dean. Congrats on being on the list, by the way.

Anyone could decide to go and be with a “beautiful girlfriend” occasionally… But make sure you’re somewhat wasted and it’s nothing more than a one night fling (Or in the case of trading systems - know when to get in and when to get the hell out).

Just this moment, after reading this thread, I went on to inspect the details of one of the trading systems which stars right now on the list of “most viewed in last hour”. After a boring-looking ho-hum trading curve of few weeks time, the trader had a huge winner (around $97K on a $100K system), and the risk is designated as Extreme. Yes, he suddenly way over-sized his position, and let it go adversely by 24.2% - an amount that a fraction of which I wouldn’t even dare dream about taking - before it became a winner.

This “most popular” list proves the moth, at least at the moment, have not taken heed, and are still being drawn to the flame.