OK Index, I got it now, thanks! Yes, it would decrease as a percentage, although all I’ve been concentrating on is net profit per day/week, so I wasn’t so worried about the cost of the profits.
Letting the profits run and cutting losses short. Isn’t that the ticket for every trading method? 
I am currently working on figuring out how to know (in the program) when I should let a position run and when I should cut short the loss. Right now, I can sort of do that intuitively – but getting that intuition onto paper and then into program code is the trick, isn’t it?
I appreciate your help – thanks!
"it would decrease as a percentage, although all I’ve been concentrating on is net profit per day/week, so I wasn’t so worried about the cost of the profits. "
slippage and commissions are a MAJOR part of the net profit equation. Few scalpers here succeed, and costs of doing business tend to weigh them down. They also tend to have bad statistics.
Ignoring it will likely cause you to join the heap.
Further Bryan, look under yout equity curve. Click the RF + Comm (realism plus commission). You will see what trading costs are doing to your system. Look at the blue line compared to the green line.
Bryan -
Your question: "Why not just trade it yourself to make your money? "
I’ll give you my answer: I have sold subscriptions to signals on C2 and another well known site. I also trade (with real money) all the signals I have ever sold. I always looked at it as like this: if the system does well, I win twice - first with my own money and second with subscriber fees. If I do bad, I lose with my money, but still get some subscriber fees, although not for long if performance is bad for long. So, as long as there isn’t a volume/liquidity issue with having lots of subscribers, it can only help me financially (but never as much as trading it with my own money).
Emotionally, that’s another story, especially if you have irate/upset subscribers, or if you alter your system or trading style to accomodate them (I once had a great system that could show 30% DD, but people liked much worse overall results with only 15% DD - go figure - but I hated it, and knew it would fail in the long run, so I refused to trade that way, and lost subscribers - I did not feel right leading the sheep to slaughter).
My advice: Aim for a system that YOU feel comfortable trading, and then trade it with your own money. Once it makes money, C2 people will find it. If you try from the start to build a system just for subscribers, you will probably fail. This site is littered with systems that were obviously never traded with real money, but likely had subs until the inevitable crash.
“If you try from the start to build a system just for subscribers, you will probably fail”.
This is a very interesting comment which I believe could well be true. I have for some time been working on a system just for subscribers but one of the conditions is that it has stops and targets for every position and is completely systematic and can send trades via the TS C2 tray so that I have no involvement whatsoever and don’t have to sit watching it as I know for a fact I won’t be able to trade it myself.
Several of my systems were traded with real money and a couple I did end up changing to accommodate subscribers, the interesting thing is when they subsequently failed I was no longer trading my own money with them, coincidence? Probably not.
Yes, I forget that commissions are not deducted from hypothetical trade amounts here. But they are on my trading platform, NinjaTrader. So I see what my ‘true’ hypothetical loss/gain is in my own account. I can’t control the C2 slippage, etc. so I don’t bother with those figures as closely as my own records.
Maybe I’m not scalping – my profit targets are generally about 8 to 12 ticks depending on the instrument I’m trading. I trade on tick charts, and have adjusted the granularity to a point where I get the number of setups that I am comfortable trading in a day, which is generally about 4 to 10 possible trades per instrument per day.
Anyhow… I’m still not quite sure that I want the added stress of having subscribers. I think I would rather teach people from the knowledge and experience I have learned how to trade better themselves than to just feed them signals. I don’t know… we’ll see in a few months how my system does. Then I’ll decide if I want to take on subscribers or not. Maybe it will be a moot point by then. 
I might add, if one builds a system that pleases subscribers, it is quite possible that it has better characteristics - less drawdown, more reliable, etc.
I would therefore say it is a valuable exercise. trading a wild system for oneself is possibly self-defeating.
“I might add, if one builds a system that pleases subscribers, it is quite possible that it has better characteristics - less drawdown, more reliable, etc”.
You would have thought so but I think you’d be surprised, and therein lies the problem, because the systems that people seem to flock to on here are not necessarily those that make money in the long run, most popular does not equal most successful or robust. There are some great systems on here that in the long run over months and years will probably make good money but if the have a losing month or two they are suddenly considered to be broken, or their 20% annual growth is seen as lousy which is baffling to me. It seems if you offer people what is best for them I guarantee you they won’t want it, but then if you give them what they want and it fails who is at fault? It sounds bad but this is where the tipping point between system developer (for oneself) and vendor (for fees) becomes defined and can be an unwanted distraction. I could develop a system that wins 90% of the time taking small profits with a wide stop and take a lot of subs for a very long ride, eventually it will fail when the big loss comes but does that make me an irresponsible vendor or an entrepreneurial businessman supplying the demand at a profit regardless of the moral price?
"does that make me an irresponsible vendor or an entrepreneurial businessman supplying the demand at a profit regardless of the moral price?"
That’s exactly my own dilemma. Is my system “good” for other people to trade from? It’s the ethical question that I’m concerned with. Let’s look at the grander scheme of things: My mission here on earth is not to take other people’s money for my own benefit, it’s to serve and to help others be able to be successful on their own merits. I’m not completely altruistic, in that I need money myself to survive (and OK, I like praise for a job well done ;-), but ultimately – what’s important in life? To get as much pleasure and wealth and stuff as you can accumulate?
OK, I’m jumping over the edge into philosophy now… sorry about that.
Bryan
"My mission here on earth is not to take other people’s money for my own benefit, it’s to serve and to help others be able to be successful on their own merits."
You can be assured that is not what subs are not looking for! They are very fickle and not very loyal.
But the major problem with systems on C2, is that almost none of the systems work. Even when people think they do. I keep banging this drum, but people do not realize this is the best summary of what is happening here.
Out of 500 systems that are active at any time, a few must be on top by pure probability. THESE are the systems that subs flock to, and their own vendors believe work. 2 months later, almost all the “successful” ones inevitably fail, because they never worked in the first place; they were only lucky.
Then the subs update their My Analyst pages, and flock to new “good” systems. And out of frustration, the vendors and subs slowly trickle away from C2 and new ones replace them…
"Out of 500 systems that are active at any time, a few must be on top by pure probability. THESE are the systems that subs flock to, and their own vendors believe work."
I understand your point that it’s just statistics/probability that they’re there but I don’t believe it’s as clear cut as that, as amongst the top systems at any time there are often ones that truly are successful long term and are likely to remain so, but the problem is they tend to get overlooked as they don’t match the subs criteria for a good system.
The ones they flock to are the ones that invariably have a higher win percentage, smoother equity curve with few drawdowns and far greater risk. You could have a perfectly good system on that list making ‘just’ 10% pa (a very reasonable return with most of your life ahead of you) but chances are it won’t get a single subscriber.
So I think it’s false to say they just pick the current top systems. For example if on the top system list there is a system with a 80% win rate and one with a 40% win rate which do you think they would pick?
80% of course because they think that makes it better, yet the 40% system likely has a more sustainable equity curve and makes more money with less risk and drawdown in the long run than the 80% system.
Look at a system like Interlink Trading, he’s been going 2 1/2 years, still annualizing 100% with a 25% drawdown trading futures, APD 0.43, Sharpe 1.9, not bad, but wait a minute he only wins 35% of his trades, how does he make money, because his avg win is nearly 3 times his avg loss, and what has it achieved; 2,600 views, 99 followers, 5 comments, no sub reviews.
Now look at Positive Forex, 86% winners, the subs flocked like flies on shit, an incredible 28,000 views, tracked by 421 with 22 comments and numerous sub reviews, and what happened, what will always happen with those systems yet no amount of warnings will stop someone determined to lose their money.
Interlink had 5 down months in a row this year, so doubtless most would say ‘it’s broken’ but a take a look at that equity curve built over 2 1/2yrs, does that look broken to you? But people would rather go with a Positive Forex system with it’s perfect curve and high win %, and when they do quite frankly they get what they deserve.
Apologies for the rant, this is far longer than I intended, I’m not aiming any of this at you it’s a general comment overall, but I’m fed up of reading stupid comments from people saying ‘it wins less than 50%, I could do better tossing a coin’ thinking that win % is all that matters, they are utterly clueless, and that’s where we come back to the issue discussed earlier, one then starts to think, fine if that’s what they want, that’s what I’ll give them, design a high win % system that gives them what they’re looking for and generates plenty of sub fees knowing full well that in the long run it will blow up. It’s very very tempting.
Wow!
A post worth reading. Good solid reasoning Jon - which btw is not always used by those trying to make money.
Gilbert
Interesting, I’m sure some subscribers do head for the high win% systems, but I’m sure most realize about average win/lose ratio.
As a subscriber, I AM drawn to systems that have a relatively smooth equity curve though. It is just not easy to trade a system that can lose a big chunk of your capital right off the bat.
And whatever anyone says about systems running for a long time, the fact is that the markets change, and can stay changed for a long time, perhaps even forever. Systems can and will break. Remember all those “breakout” systems that worked so well in the 90’s, and then just stopped working for years? Systems with large or extended drawdown periods can keep you hanging on despite the fact they are actually broken.
As far as interlink goes, I think an additional problem is the charging. They charge $200 per trade. I’m sure that’s good value if you have $600k equity, but if you’re trying to scale it 1/10th, as I’m sure most people would, $200 per trade doesn’t work so well.
“And whatever anyone says about systems running for a long time, the fact is that the markets change, and can stay changed for a long time, perhaps even forever.”
"As far as interlink goes, I think an additional problem is the charging. They charge $200 per trade. I’m sure that’s good value if you have $600k equity, but if you’re trying to scale it 1/10th, as I’m sure most people would, $200 per trade doesn’t work so well."
Both very fair points, I agree markets do change and whatever edge a system believes it is exploiting may have evaporated, a robust well designed system should evolve to counteract this if it’s possible without compromising it’s profitability and appeal.
I also agree for a small account the fee for Interlink would be prohibitive, it seems to be a system that is scaleable for much larger sums which is precisely what makes me believe it is more sustainable in real world trading.
"As a subscriber, I AM drawn to systems that have a relatively smooth equity curve though. It is just not easy to trade a system that can lose a big chunk of your capital right off the bat."
When you look at the window that displays the equity curve at a system home page. . .what you want is an uptrend more than a year and with compounded equity. Depending on the annual return, drawdowns will correlate - and with a good system lasting longer than a year, these may be barely perceptable in said window. This I think will be gold. When you zoom in look at the drawdown and see if it has been improved upon and what is currently average. High annual returns will make a comparison to the indexes difficult, but this must be analyzed, too.
If a system has a difficult period that is somewhat prolonged, it is easy to analyze what market condition it experienced and whether these will happen frequently over time. If it is temporal, then by not subscribing you will miss out on the strong gain periods.
If you want a 5% drawdown, relatively smooth uptrending curve with decent annual average if you look hard you MAY find an acceptable system - but chances are it will be less than 6 months and because of the parameters you have constrained it with - - it will implode. Just keep in mind that these were YOUR parameters and a direct result of what in time you will find is what is to be expected.
In other words, that dream system if here will be known to all and probably will soon move onto a bigger arena. It is your analysis that is in err, imho by most.
Regards,
Gilbert
[LINKSYSTEM_31082140]
Well, Mr. Index, I agree with your assertions. People want instant success and high returns with little risk. So of course, the latest booming system will catch everyone’s eye and attract subscribers. I must admit that when I first discovered C2 a year ago, I was clueless as well – frustrated by my own failure at trading options, I was looking for something to make up all my lost fortune quickly.
Thankfully, I never subscribed to anything and decided instead to create my own trading system that I could put my knowledge and experience into and have it do the trading and leave my emotions out of it. I don’t plan on making money by bilking subscribers – I plan on making it by trading my system. If subscribers want to join me along the way, fine, as long as it’s a viable system for long-term growth.
Interlink has been losing money for 6 months. It no longer works. It likely will never work, for a LONG time period, again. I consider that an EXAMPLE of what I said, not an exception.
There are a ton of systems like this that have piled up over the years on C2. They rise for a while, people hop on, and then they invariably randomize. Why? Because the system did not work. It got attention as being one of the top few %, and then met its waterloo.
The truest proof i see here, is the constant stream of people who say "I subscribed, and then it stopped working. Why?" My answer is - "it never worked - it was only lucky."
I have never seen anyone disprove this theory that luck is responsible for most to almost all C2 systems that look good. But I have seen hordes of people piling in, and then complaining that it does not work.
I would say the number of longterm systems with true outperformance value on this site is far smaller than anyone could imagine.
People often bring up gurus and say "what about HIM? He has outperformed for 10 years!" But even efficient market hypothesis expects a few systems/methods/gurus to outperform for extended periods of time.
"if system developers here have such a great system, why bother putting it on C2? Why not just trade it yourself to make your money?"
There are a lot of qualifiers in answering that question and there is no one universal answer, either. Different reasons for different vendors; some based on where you are in life (age and financial success), some based on recognition (fame), and other factors.
I can answer the question only as it applies to me, at this time in my life. My reason for putting it on C2 (and in contests) is because it would give me personal satisfaction in “proving” the system to the outside world, without the use of my brokerage statements. In short, I’d do it for the same reason many would climb a mountain - because it’s there.
I’m not interested in subscriber money, so the system might remain closed to subscribers. I’m only interested in the publicly-accessible track record, and the opportunity to compete with the “big boys” and say "I did it…"
Another reason is because, well, this will likely be the last large-scale Unix programming project I do. Sadly enough, I’m becoming more of an analyst and less of a programmer (by choice). I suspect that in a few years my cognitive powers will be greatly diminished, compared to where they stand today (and today I consider myself not as sharp as 10 years ago). Still, the old-timer with his old-world Unix ways (and C/C++ code) beating the young whipper-snappers that use Windows GUI tools to create their trading system… the portrayal alone is reason for me to do it!
"If you try from the start to build a system just for subscribers, you will probably fail. This site is littered with systems that were obviously never traded with real money, but likely had subs until the inevitable crash."
I understand the nature of what you’re saying, and agree. There is another twist to this, however (from another point of view). Building a sustainable system for subscribers requires control of total quantity traded (as in a pool). Similar to what brokerage houses do for pools of customers… make the trade, see how much of it actually fills, and apportion the fills to subscribers in equal percentages. You can’t do that on C2, obviously. Therein lies the problem. Another gap to bridge.
Does anyone know if Extreme-OS makes any money? The chart is realitively straight up and has been for a while. So I’m just curious to its +'s and-'s.
Craig
