Anyone have first hand experience?
Judging from the leverage spikes and where they occurred it probably relates to the style of trading. Seems to have been one where you DCA deep into positions (martingale if you will) and it blew up. That is just what I can tell from the chart.
I subbed to this system 2-3 years ago. It was always v risky. The manager would often keep open losing positions for a long time in fast moving stocks like TQQQ and even add to the losing position.
Plus the the system also sells out of the money options on many different stocks. These trades make a profit most of the time but once in a while you get a big move that makes a huge loss.
For reasons like this I think it would be very nice if C2 added some sort of leverage limit. In other words if I start autotrading a strategy I would like to be able to set the autotrade up and KNOW that the leader can’t exceed a certain leverage factor. This is what always scares me from subscribing to other strategies. Even though this strategy was running for three years and never exceeded roughly 7 leverage, there is no way to know the leader won’t suddenly use 10, 20, 30, or 45 times leverage. 7x times leverage would already be plenty in my opinion.
Because of this I am likely to only ever set up autotrading to follow stock trades and only in IRA accounts so that the leverage cannot exceed what I am expecting. My broker would stop trades that would go over the allowable leverage.
I have been a sub for almost three years . The trader is actually really really good ( look at his multiyear record ). That is except this last trade ( that is going on for last 3-4 months ). He shorted TESLA and as tesla kept moving away from him , he did not close the position. It seems like he wants to take revenge from TESLA. I wrote to him around a month back and that time inspite of heavy loss in TESLA, he was around 24% for the year. I tried to get him to close that position and get back to being the amazing trader that he has been for so many years. Alas, he did not and now the system is down 55% for the year.
He is still selling puts to reduce the impact of this trade ( he is selling around 6 times more PUTS option than what he is short) - the issue with that approach is that any given day TSLA can go down $150 and all these far out of money puts will be working against the system. So bottom line is that this trader seems to need some kind of intervention - some one needs to shake him and get him out of his daze. This kind of trading is not really his style. He is taking tremendous amount of risk.
He used to have atleast 100 auto traders, right now i think there is only one trader thats autotrading him. I personally stopped around 3 months back ( i did not short tesla, and stayed away from all the tesla related trades )
Looks like volatility began skyrocketing in late August with the Tesla stuff. Not following any prior levels of vol for this strategy. Poor guy went completely off the wall. @HamzaSyed seems to be correct.
The multi year record, except for 2016 is also pretty bad. In 2017 the return was 19% with 2 consecutive months with negative 28% returns! In 2018 the system made a 10.8% return with a one month that had negative 36.7%! 2019 was decent.
The system loses more in 1 month than it makes in year. The current account equity is below what it was in the beginning of 2017. If you started auto-trading in 2017 you would be negative after 3 years with the system.
“I have been a sub for almost three years . The trader is actually really really good ( look at his multiyear record ).”
Actually, the trader is really, really bad. No portfolio risk management, no ability to be wrong on the direction and adjust the position. Sooner or later his C2 account will go below zero.
I heard Michael Burry is short Tesla. I picture Christian Bale drumming to some death metal right now.
$700 TSLA will move the account below zero without any position adjustments. If TSLA is worth $700 tomorrow? Doesn’t matter. What matters if the trader has a plan with TSLA at $700.
Markets can remain irrational longer than a trader can remain solvent!
Idk. about a total collapse but you don’t need to subscribe to any system to know that TSLA will be under 500 at some point in my opinion.
Please let me know how to make money on TSLA under $500 at some point.
I didn’t want to disclose everything but check back in about 5 months.
Even sitting at ~80% DD He is still managing a ~100k profit per YEAR which is 5 times the starting capital. While there are many genius able to achieve such performance in a paper account, there are only few that managed to make such $ profit in a TOS account here at C2.
It is only one way to achieve this performance - taking an extended risk and being right. At some point, you going to be wrong. And how you manage it tells you who you are.
I’m not predicting the outcome of this situation. I’m saying that the trader doesn’t have any risk management skills. To make money, he needs to be constantly right. When he is wrong, you have an 80% drawdown. He is a degenerate gambler (read his profile).
One more comment. Yes, the annual performance is still outstanding. On another hand, the risk of his account go to zero in the Monte Carlo simulation increased significantly. Everything else is a subscriber decision and the consequences of it.
In 2016 where the system made all its returns it kept adding to losing positions and the market kept coming back from dips. The adding to losing positions which would increase the risk, then greatly increased the profit as the market would always recover pretty fast. But if the market had gone down more those positions would have wiped out the system.
There is such a thing called results bias where some actions / steps are judged just on the results obtained while ignoring everything else. Let’s say a person is offered a game of Russian roulette where if he wins his stake is doubled and if he loses he blows his brains out. The person sees that there is a 5 in 6 chance of winning and bets all his available funds. He wins and doubles his money. Now people see the result of him doubling his money and say he was smart to take the offer of the Russian roulette game!!
@MaxTor, brilliant response. The danger with this system has been lurking since the beginning with the clear warning signals along the way. “Good results” do not mean a trader is a good trader but perhaps a rather lucky gambler.
Though the trader of this strategy is TOS certified, I see that he has only executed 65.1% of the trade signals in his own account. That would cause me some concern. I don’t want to say anything negative, but it seems to me there is a mismatch in what he does in his own account vs. subscriber accounts.