Volcano Systems 2

A previous thread discussed volcano systems. These are systems that have a really good equity curve. They often become popular, and then for some reason, they give it all back. Perhaps in a week or a month or two. Anyway, two new systems to add to the list:

Positive Forex


If you notice any others, please add them to this list.


Just also adding, your thoughts on WHY these systems crater would be interesting. Bad money management, perhaps the market changed, death of the vendor :slight_smile:

I’m more than happy to comment on InvincibleX, as a former subscriber…

At first glance, this system seems very enticing. A cursory review of the trades leads one to believe that trade size (for the account size) is conservative, profits are consistent, losing trades are few and far between, and draw down is reasonable. Granted, there are some (currently visible) trades with a bit of draw-down, but the vendor always seems to know what he’s doing.

Upon careful review however, appearances quickly yield to the ugly truth behind the system and the vendor’s way of thinking. We find occasional trades (most recent not yet visible) with suicidal draw-down - typically twice a year. A quick chat with the vendor reveals a stubborn philosophy espousing the notion that “the deeper the draw-down, the bigger our eventual profit potential.” A look at current open trades (visible to subscribers only) reveals an Aug 8th trade that has been left open through progressive draw-downs, to the tune of $60,650 (65%) and growing! Sadly enough, this trade was profitable just a few weeks ago… but the vendor opted to forgo locking in profits with a trailing stop or equivalent. Instead, this once profitable trade is now dragging the system’s equity curve to the point where he’s almost touching the $100K starting mark again.

What pitfalls and lessons can be learned from this system?

- Avoid vendors that refuse to enfoce uniform or sensible stops.

- Avoid vendors that believe draw-down is a good thing.

- Avoid vendors that refuse to protect profits.

- Let history guide you, not recent performance.

In closing, I want to be revisit the draw-down issue. What does an extremely deep draw-down on a previously profitable trade tell me, when coupled with a vendor attitude of “the deeper the draw-down, the bigger our eventual profits?” It tells me he’s a terrible market timer, who refuses to “be wrong” by getting out (taking a small loss) and waiting for a more opportune time to re-enter. It also tells me he’s unwilling to look at possible ways to be on the other side of that draw-down or at least neutral until the market shows signs of coming back in his direction. Most of all, it tells me he’s willing to gamble with your money.

Like stock and index charts - and stock charts contrasted with indexes - that typically correlate well with price and volume action…I think it is a matter of simply knowing what you are looking at. I mean come on, scant few system vendors will EVER stand the test of time.

10, 5 or even 3 years will eventually shake out almost every “system”. What works for a while in “beating the market” with a high yield, will inevitably be tested with its corresponding risk. That’s just the way it goes.

I can’t say too much for “scalping” systems, because I have limited experience (nor do I want more), but some of these may prove me wrong.

I came to C2 a little more than 3 months ago and around that time assembled the quick list you see at My Analyst page. Some have been added since, but almost all were in June - before recent market “tests”.

Now aside from Positive Forex (which blew up in an inane way and may - if it’d continued to be managed appropriately - might still equal success) and I think a couple others - many, many, many ot these continue to forge on.

I’m not big with the use of stats, but I know equity curves, risk/reward scenarios and what the market can throw at you. As you can see my selections (mostly) continue to succeed and to make profitable accounts for subscribers.

I didn’t even visit this page recently until now to see for myself…but you have to know what you are looking at.

Go figure!

I would like to take the time and comment on what I see to be the pros and cons for every selected system. Perhaps soon I will take the time to analyze the rest.

Here’s a thought. Consider everyone here a newbie and if using your own money, diversify between systems and have your max DD for each - or expect to get burned.

Gilbert aka Paysense

Add Jydra Chew to the list. As always, it started out looking really good. I had it in my analyst page, but it cratered also…

90%+ wins on a futures system that is not writing options?

There’s nothing more I would look at. I would wait until a drawdown hit and watch how the vendor handled it. As we see now. Actually what happened wasn’t that bad given this mentality. It will get worsee if this vendor keeps trading with the same system.

Also interestingly from my notes he seems to have changed his trading style (holding on to losers) once he got some C2 subscribers. I can not confirm this, but it seems to be true.

Impossible to maintain, which even the vendor said… From your other posts you also know this fact. Yes it will be a volcano.

InvincibleX - $83,600 draw down so far, with equity curve dipping below the original $100,000 mark. On the previous copper trade (which is the older dip in the equity curve you see), he blamed C2 (in reality, he just wasn’t familiar with C2’s contract symbols… pit vs electronic). This time, he has no excuse… but of course won’t admit he should have stopped out of the trade a long time ago. Alas… this is all a great learning experience for me (as far as vendor mistakes to avoid), and I hope to be rid of all these problems when I finally offer my own futures trading system in early January.

" and I hope to be rid of all these problems when I finally offer my own futures trading system in early January"

Interesting. Well, If you can promise me that I’ll be able to Live Longer and Prosper further with your new futures system, I will be the first one to sign up. Do you think I’m kidding you?