Sam,
Interesting, I saw that (the Alexa ranking) as well. I think that you are drawing attention to a valid issue.
Pedro Pannon is drawing attention to it. I’m just putting my own quotes back into context for the Euros spin doctors.
OK, well, it’s a worthwhile topic, as is the “broken” Sharpe ratio issue (is there a way to calculate VAR?). Please rip into my new system when you have a chance so I can make it better. Thanks.
Both Pedro and Kathryn argue that draw downs should be small in comparison to respectively the account value or the reward. This was also my opinion a few months ago. Recently I’m more inclined to appreciate draw downs… More precisely, what I appreciate is that the system shows the ability to recover graciously from draw downs, like nothing happened. E.g. see the equity curve of Tango. But you can’t know that unless there were several serious draw downs.
IMO a system that has experienced several draw downs but recovered all of them can have less ‘risk’ than a system that never had a draw down. The latter (always very young) system has the risk that the vendor panics after the first losses, changes the whole system, and never recovers.
Of course, it also depends on the size and the variation of the draw downs, and the total return. But if I trade a system that had 5 draw downs of 30% and all recovered them + made a profit of 30% on top of that each time, then a new draw down of 30% is something I can live with. On the other hand, if a system never had a draw down and then has a draw down of 30% right after I subscribed, then I would be worried.
What also matters for me is the risk that I will end with a debt. With long stock or option systems you can’t lose more than what you invested and then a draw down is much less threatening (at least to me) than with futures or forex.
BTW, Kathryn, I didn’t say that Hawk-fx was ‘good’, I said that it is still profitable. Whether it is good, depends on your definition of ‘good’.
In addition, drawdowns are much less of an issue if you allocate your capital across multiple systems. Especially if you diversify across multiple instruments (forex, smallcaps, index futures etc.), you’re unlikely to see a drawdown happen in all systems at the same time. As a result your overall drawdown will likely be much smaller than the individual systems’ drawdowns. Needless to say that you do need sufficient capital to do this with the more expensive or capital-intensive systems.
About my 20% DD limit, well, I had to draw the line and that’s where I did it. It wasn’t because QTips had 20.5% DD, that system went flat for 6 weeks (thus inconsistent grow) and it trades 4 different futures that is just too many for my taste, as stated in the criterias.Thus it didn’t make the list.
True, 20% is arbitrary, but it can be much less for other people. I assume bigger your capital, less DD you are willing to put up with. It is easy to allow 40% DD on a few thousands bucks that is your playmoney and your stomach will cringe when you risk 100K capital.
Now I have to thank Sam because I did find a few better systems than I expected. That’s why we have this thread and discussion. But the 3 best ones are still not good for me to subscribe: Oiltrader holds positions way too long, and the other two’s annual gains were not sufficient for me.
Personally I trade futures, so even a good Forex system like Kathryn’s wouldn’t excite me. (Keep up the good work, yours is one of the best promises so far!) Also I don’t trade gold, stocks, options etc.
There are a few decent future daytrading systems (ATDow, Starfinder, Big Cat) but there daily average is either not so big or they trade too many instruments. Thus the search continues…
So I keep browsing every few weeks, and if I see a startup I keep an eye on it. I will post it when I find a new exciting system, I promise.
Also, I don’t see many other statisfied subscribers posting here, but that could be because they don’t want to mess with something good going on…
If I read your post I can’t avoid the conclusion that part of you problem is caused by quite arbitrary restrictions that you apply, like
- holds positions way too long
- Also I don’t trade gold, stocks, options etc.
- they trade too many instruments
Also, I don’t see why it so bad that a system goes flat for 6 weeks. And I think your demands are unnecessary restrictive, in that you require that the system can be traded with a small capital and a big capital. That is too restrictive, because you have either a small capital or a big capital, not both. For example, you say
"I assume bigger your capital, less DD you are willing to put up with. It is easy to allow 40% DD on a few thousands bucks that is your playmoney …"
Since you require small DDs, this suggest that you have a big capital. If that is true, then and why do you want a system that can also be traded with a small capital, and why do you not want many instruments? If it is not true, i.e. if you have a small capital, then why do you not allow DDs of 40%?
> Personally I trade futures, so even a good Forex system like Kathryn’s wouldn’t excite me.
You also missed a great Forex system. I understand you don’t trade
Forex, but it doesn’t make the system any less impressive.
As a trader, or as a potential subscriber, I go where the money is.
Let’s say I was a NDX/NQ trader and that market went flat (let’s
just pretend), but my same method is making 100%/year in the
Forex. Am I going to say to myself: “I’m an index trader! I will
not trade that stinking Forex!” Hmmm…doesn’t sound smart to
me. Good traders tend to be a bit flexible. Money is money.
But, hey: to each his own.
Re: " It wasn’t because QTips had 20.5% DD, that system went flat for 6 weeks (thus inconsistent grow) and it trades 4 different futures that is just too many for my taste, as stated in the criterias.Thus it didn’t make the list."
Not to pick on QTips but one thing that I didn’t see mentioned that raises a big red flag for me about QTips is the providers other past systems, mainly Q-TIPS.
Q-TIPS (active from 9/2005 to 4/2006) rose to above $300k and then crashed and burned below the original $100k (77% DD). I don’t know if there is a technical (non-trading) explanation for what happened; I did not see any posted in the system description area or message board for that system.
Maybe it is just me but I would want to know what happened with that system and why it won’t happen again with the current system before I would ever sign up with a provider with that history. That’s the kind of the thing you can’t get from just filtering on systems with numerical criteria.
> Q-TIPS (active from 9/2005 to 4/2006) rose to above $300k and then crashed and burned…
Valid concern. It would seem to be a very different system in that
the previous version lost big on options. I don’t see the current version
trading options.
> that system went flat for 6 weeks (thus inconsistent grow)…
With all due respect, many very good systems have flat or losing
months (OK, a month and a half). A little tiny bit of patience is a virtue. Indeed, setting sights too high is the reason many overly hedonistic traders here have crashed and burned. The idea that a system will
be great during all market phases is a mental trap that can lead to
disaster. This is exactly the thinking that destroyed many "great"
systems in May-June. It’s like thinking you can go “all in” on every
hand, all the the time, in poker.
I understand your wanting to define your trading criteria. I myself have no interest in trading stocks or forex; I am a futures trader. But I do agree with the others that trashing prospective systems because they trade too many vehicles or hold too long.
More instruments is diversity. Being long and short simultaneously in uncorrelated futures is WHERE a futures trader should go. Holding only S&Ps is great until the DAY OF JUDGEMENT comes. That is what killed a lot of good systems starting in mid May. For my personal trading, I would kill for a few futures systems that traded across the board.
Longer is better, frankly. People who jump in and out pay much higher slippage, commissions and other costs.
The problem is, you will wait, and then find what you want. And then 3 months after you get in, it will stop working. You need to have SOME flexibility.
Jules, you make good points. Thinking about it, my criterias are probably too restrictive, but hey, we all have our own style/expectations.
The problem of going flat for a few weeks is this:
You still pay subscription fees and commissions, thus it is a net loss month for a subscriber. Also it breaks the faith in the system. But I agree, a flat month is still better than a losing one.
You are also right about big capital vs. small capital, they are looking for different systems. I assume that most C2 would be subscribers are in the small, medium range category, after all, with big capital one can just use a hedgefund. I could be wrong though…
Maybe I have been around for too long, but a few months ago there were a bunch of new, promising systems, almost 1-2 every week. True, most of them got burnt quick, but they were keep coming. Now that is all gone… As Alexa shows, C2’s traffic is down considerably, thus less new systems are coming in…
About instument diversification:
If it is stocks, I agree, more is the better. forex is also good with more instrument.My problem with too many vehicles is this:
How do you set up your trading permissions when a system trades stocks,futures,options, and specially when in very different quantities??
I can also evaluate a system much easier if it trades only a few instrument. I also assume that the vendor can concentrate better on a few than on many…
> As Alexa shows, C2’s traffic is down considerably, thus less new systems are coming in…
I’m not sure that’s true. Less traffic means…less traffic, not fewer new
systems. FWIW, the decline started back in March:
http://www.alexa.com/data/details/traffic_details?&range=1y&size=large&compare_sites=&y=r&url=collective2.com#top
> I can also evaluate a system much easier if it trades only a few instrument. I also assume that the vendor can concentrate better on a few than on many…
One of the best you missed was an automated TradeStation Forex
system. Why would trading several currencies through an automated
system be a bad thing in and of itself? The vendor doesn’t need to
"concentrate better" on a few. He can easily monitor a larger basket.
Personally I don’t like forex, too much dependence on politics.
But if you have a few good systems you think I missed, please don’t hold back and share them with us…
Even better, if you have been actually subscribing to some and share your experiences.
In my opinion, the way C2 is set up encourages traders to do stupid things in an attempt to get attention, in other words it screws up peoples minds, and that is what it is " a mind game ".
Simplify, focus on what counts, a steady equity curve.
Let the subscribers use whatever money management they are comfortable with. Let the traders focus on steady upward equity curve.
I have wondered often, how many good systems may have been lost because venders tried to get attention with high leverage.
When you see so many others doing it, you know most of the focus of potential subscribers will be with the high flyers untill they crash only to be replaced with some new high flyers and so on.
Does this bring in more money to C2 ? And if so how long till word gets out and C2 crashes.
> I have wondered often, how many good systems may have been lost because venders tried to get attention with high leverage.
>When you see so many others doing it, you know most of the focus of potential subscribers will be with the high flyers untill they crash only to be replaced with some new high flyers and so on.
> Does this bring in more money to C2 ? And if so how long till word gets out and C2 crashes.
Exactly. If C2 would reward lower risk trading in the rankings all would benefit long term. Most of all C2 would benefit with a strong subscriber
and vendor base.
>If C2 would reward lower risk trading in the rankings all would benefit long term. Most of all C2 would benefit with a strong subscriber and vendor base.
This would be the solution, but only if the reward is significant.
