Originally I titled this post: Is C2 dying?, but I changed my mind.
Well, I hope not, but sure enough, there aren’t that many exciting systems here.
From time to time I go through the top 60 and I also check the newcomers, but there just aren’t any good systems that I would subscribe to. Most equity charts are horrendous, some newcomers are good for 2-3 weeks then die, some older highflyers are also taking huge losses.
Also if you check out the webtraffic at Alexa, C2’s traffic went down from 10,000th 2 months ago to 32,000th.
I think the website itself is almost perfect now programming-wise. Everything is there that is needed for the subscriber, except good, consistently profitable and followable systems.
Under Grandma’s list I have found 4 decent systems but they don’t trade my kind of instrument. I wonder, how could we bring in talent??
I would have to agree about the lack of systems. Too many people get excited about the high flyers, but i think this is not because the systems are good, it is because probability states that SOME systems have to have a decent short term equity curve at any moment. But most of the "high flyers" usually revert to the mean rather quickly.
I have just about exhausted whether there are any in the instruments I trade.
"I have just about exhausted whether there are any in the instruments I trade."
Have you considered switching priorities or goals? Mine is sustainable profits… above and beyond instrument type.
For systems that are doing remarkably bad, you could always turn into a contrarian and trade against the system…
Of course, you could combine the signals from various systems (all trading the same base instrument) and trade in aggregate.
There are many things you can do when the going gets tough… plain old [boring] covered calls come to mind, too.
>For systems that are doing remarkably bad, you could always turn into a contrarian and trade against the system…
That is not such a bad idea, except:
1. There are few consistently bad systems.
2. If they are the owner stops giving out signals.
So as you see, the concept doesn’t work in the long run…
What is a good system? If you order the systems by return, and take the first 10, there are several systems that are profitable for a long time: Hawk-fx (forex), Pinnacle (options), Penny stocks movers (stocks), extreme-os (stocks), future-pro (futures). Further on the list there are ATDow, Starfinder, Tango, Sliced Bread, TA Swing trader - to name just a few that I know.
What you need to appreciate most of these systems is a strong stomach and/ or patience. Generally speaking, the less patience you have, the stronger your stomach should be.
There is simple reason for that. Many of the most profitable systems use high leverage and average down - and then you need a strong stomach. More conservative systems use lower leverage and some kind of stops - and then you need to be patient (and if they are stopped out on a series of successive trades, you may still need a strong stomach).
When I say "strong stomach" I actually mean two different things: a strong stomach or a strong belief that the system will recover.
When we moaning no-so-exciting systems in C2, have we seen any real good system elsewhere?
Some of us might have seen good looking ad-flyers, website-postings showing nice equity curves. How many of them are truthfully presented through by un-partial third party? Those curves could be deceivingly plotted to their advantage. (such as plot the curve base on closed positions not to reflect the real draw-down of long-holding positions.) If they were put through C2 display, they might be just as ugly.
People are always looking for un-realistic wonders. Consider those professional managed Mutual Funds, how many are CONSISTENTLY making 40% annual return with low draw-down? Everyone knows larger return always come with higher risk. We have many highflyers here in C2 averaging much higher than 50% annual return. But we have to be reasonable for their rollercoaster equity curves.
I believe there are some would-be-decent systems are pressured by our un-realistic expectations. Their good initial performances raise peoples expectations, higher pressure in turn retard their performances. When reasonable draw-down occurs, they take extra risks they wouldnt usually do. The early good starts transform into down hill curves. The more they try to compensate the worse it gets. And we are here criticizing fewer good systems without knowing we are part of the causes.
> People are always looking for un-realistic wonders. Consider those professional managed Mutual Funds, how many are CONSISTENTLY making 40% annual return with low draw-down?
There is a fair group of CTA’s that are doing well and have done well
for years.
"There is a fair group of CTA’s that are doing well and have done well for years. "
How “well” have they done for years? Average 50%? 100%?
How were their max daily draw-downs in between annual results?
Can they perform as well in limited base as $100K?
Are they available to small-time investers like us?
Are the costs of their service similar to we paid here at C2?
I believe you, but what is a CTA? I tried to google and the first 6 pages produced:
Canadian Transportation Agency
Citroen Traction Avant
Chartered Tax Adviser
Call To Action
Computed Tomography (CT) - Angiography
Community Transport Association
California Trucking Association
Christian Tattoo Association
Colorado Translators Association
Christian Teacher’s Aid
Canadian Trucking Alliance
Canadian Taxicab association
Coast Transit Authority
Core Technology Alliance
Cinema Theatre Association
California Transit Association
Center for Technology Assessment
Colorado Telecommunications Association
Corrections Technology Association
Clinical Training Agency
But seriously, if it is what I think that it is, then you would probably need at least $50K for it? Then I can’t do it.
I think there are 3 problems:
1. The hurdle to take for system vendors to post their system is low (< $100), and they might just be overly enthusiastic without having done some really serious testing.
2. System vendors cannot signal the confidence they have in their system in any objective way.
3. There is a disalignment of interests between vendors and subscribers in case of sudden collapse. Vendors’ maximum loss after a collapse of a system is limited to losing their subscriber base and future revenue. This is likely to be smaller than the combined maximum loss of their subscribers (possible thousands, if not millions of dollars), especially those who joined right before the collapse.
Exactly because of these reasons, we see many systems that do well for a couple of months and then suddenly collapse. I also think these events make people think twice about signing up for ANY system, since historical performance apparently gives no guarantee against a sudden collapse. As a result, vendors experience low subscription rates, and become less interested to invest in better systems. A classic ‘lemons’ problem.
But various solutions exist:
1. give vendors an option to choose between alternative payment models regarding their payment to C2 (note: I don’t mean the payment of subscribers to the vendor here). That is, from a model with a very high initial fee (e.g. $10,000), but a very low fee per trade (i.e. 1%), to a model with a very low initial fee (as current), but a high fee per trade, and then a bunch of models in between. If C2 would then list the model that the vendor has chosen, this would give a signal to potential subscribers how much confidence the vendor has in its own system.
2. Instead of an initial fee charged to vendors, charge a monthly fee that is negatively correlated with profits. E.g. the larger the losses, the higher the fee a vendor pays C2. Highly profitable system would pay no monthly fee, and would compensate C2 entirely through the 30% cap on subscriptions.
3. Allow vendors to deposit a certain amount of capital in an IB account autotraded, monitored and reported through C2, such that the vendor can signal how much of its own capital is at stake (again, signaling his confidence).
4. Allow (or require) vendors to list the expected properties of their system upfront in a standard format, e.g. expected profit, max. drawdown, Sharpe Ratio, W/L ratio etc. and make it searchable. This gives subscribers an idea if the vendor knows what he is talking about, or is just lucky. Vendors face an interesting trade-off: They want to be competitive in order to get subscribers (thus set a high expected profit, low drawdown etc), but cannot cheat (because subscribers can easily check expected performance to real performance).
Just some ideas…
>How “well” have they done for years? Average 50%? 100%?
10%-100%+ Some have been very profitable for 20+ years.
BTW, there are NO C2 track records for “years”.
> How were their max daily draw-downs in between annual results?
Much better and better documented than anything more than
anything on C2.
> Can they perform as well in limited base as $100K?
Everyone starts somewhere. Some of those guys turned $5K into
millions in REAL money. Not paper trades ala Mat G et al.
> Are they available to small-time investers like us?
Not after they’ve made 20% for 20 years.
> Are the costs of their service similar to we paid here at C2?
1%-3% management fees. 20-30% of net profits. Percentage wise
C2 tends to be more expensive and you pay win lose or draw more
often than not on C2.
I hope that answers your questions… of course you could have seen
for yourself. There is a little tool called Google, try it sometime.
Ha! These “solutions” would be suicide for Matthew and C2. He would lose his vendor income PDQ.
But various solutions exist:
1. give vendors an option to choose between alternative payment models regarding their payment to C2 (note: I don’t mean the payment of subscribers to the vendor here). That is, from a model with a very high initial fee (e.g. $10,000), but a very low fee per trade (i.e. 1%), to a model with a very low initial fee (as current), but a high fee per trade, and then a bunch of models in between. If C2 would then list the model that the vendor has chosen, this would give a signal to potential subscribers how much confidence the vendor has in its own system.
2. Instead of an initial fee charged to vendors, charge a monthly fee that is negatively correlated with profits. E.g. the larger the losses, the higher the fee a vendor pays C2. Highly profitable system would pay no monthly fee, and would compensate C2 entirely through the 30% cap on subscriptions.
3. Allow vendors to deposit a certain amount of capital in an IB account autotraded, monitored and reported through C2, such that the vendor can signal how much of its own capital is at stake (again, signaling his confidence).
4. Allow (or require) vendors to list the expected properties of their system upfront in a standard format, e.g. expected profit, max. drawdown, Sharpe Ratio, W/L ratio etc. and make it searchable. This gives subscribers an idea if the vendor knows what he is talking about, or is just lucky. Vendors face an interesting trade-off: They want to be competitive in order to get subscribers (thus set a high expected profit, low drawdown etc), but cannot cheat (because subscribers can easily check expected performance to real performance).
Just some ideas…
> I believe you, but what is a CTA? I tried to google and the first 6 pages produced:
Sorry… I thought I was posting to an investment/trading oriented group.
CTA is Commodity Trading Advisor. I posted links here before, but
if you need some help with googling please let me know.
Agree! Do not make the mistake of making sharing systems more difficult! I think C2 works well.
Panu
These incentive schemes could be easily set up such that total revenue would be unaffected–it could actually increase. It all depends on how you set the fixed part in relation to the variable part. It’s the same principle as you see in calling plans; except that in the C2 case it’s of great value for subscribers to know which “plan” the vendor has chosen. If I know you signed up for a calling plan with unlimited calling time (free) with a high fixed fee, I know you must be a very frequent caller. Similarly, if I know you offer a system and paid a huge upfront fee, with very low variable fees, I know you must be expecting a lot of subscribers, and must be pretty confident of your trading abilities. C2’s revenue would depend on exactly how large the fixed and variable fees are in the alternative plans, which would be a decision entirely by C2.
As I understand, the whole idea of C2 is that by showing a performance history of system vendors, subscribers can make an informed guess which system has the highest likelihood of maximizing future profits, and subscribe to it.
This works great as long as systems behave in a consistent way, i.e. they either show consistent losses, consistent profits, or consistent randomness. The whole thing will die when systems appear consistently profitable for a considerable period of time and then suddenly collapse, think “Eagle One”, “Pannonia”, “Pedro”, “Black Dog” etc. If this happens often enough, customers will lose their confidence in the very basic premise of C2 (as described above). When you read through system reviews, this is causing the biggest frustration: “Just after I signed up, the system went into a huge drawdown”.
Thus observing past performance is a useful tool, and beautifully implemented here at C2. But not a perfect tool. Not only because the system might suddenly collapse, but also because as soon as the track record is really exceptional and long enough to have some statistical merit, chances are the vendor will be able to sell his system or services to commercial parties with a much larger capital base and leave C2.
Therefore other tools might be useful in addition, such as giving vendors who are convinced of their performance an opportunity to signal (in an objective and verifiable way!) they are professionals and have a lot of confidence in their system. I personally would be willing to pay a considerable premium for a system subscription, if I knew:
- the vendor’s own capital was at stake
- the vendor bought into the endeavour himself by depositing a larger upfront payment
- the vendor knows his own system exceptionnaly well by making an explicit statement about its expected behavior upfront
On what basis would a system vendor, like myself, be able to judge which payment model to employ?
There is no information available from MK concerning how many ‘real’ subscribers there are on this site. It appears that C2 is only capable of attracting ‘hopeful’ system vendors who end up subscribing to others systems, making this a rather limited pool.
Take a look at the forum pages and see how many comments are posted by ‘non-system vendors’. I would have thought that real subscribers trading their own real money would be equally or more willing to give input to the forum pages, yet they seem almost non-existent.
Without knowing the potential subscriber base, how could any vendor figure out whether it was worth paying a higher initial fee in return for higher subscription cut?
that is rather easy, as long as you are allowed to switch plans periodically. If you’re an existing vendor with subscriber base, you’d just calculate the optimal plan. If you’re a new vendor, you would compare the characteristics of your system (based on your experiences when you developed and tested the system) to those of existing systems and choose a plan close to theirs. From then on, you would periodically calculate the optimal plan based on your subscriber base and the rate at which it changes.
Ah, Thanks.
I doubt that monkeying with the pricing models of C2 will address the underlying difficulty that started this thread.
Why would the ability of vendors to publish profitable systems suddenly change because the incentives were made more favorable? Every vendor tries to outperform. Most believe they can but few have any capability to do this.
I suspect it would attract more or less people but not change the underlying difficulty of effectively prognosticating the market
I agree with you Ross.
Higher stakes cause even higher pressure affecting their normal performance.
Many stystems were doing well during their initial free period then went bad after collecting fee. The feeling of responsibility due to collecting fee causes the presure.
