C2 strategies comments
- Thread starter bbpp
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If you have insight into their approaches, it would be interesting to follow.
Mr Money Tree:
https://collective2.com/details/104368227
This is a counter trend strategy.
If you track its trade record, all its trades were placed at the opposite direction with market, that is, on an up day, it short; and on a down day, it buy.
The developer bet on market trend change, so he is trying to catch overbought or oversold condition.
We all know the words " follow trend", that is because the probability that trend continues is higher than trend changes. So counter trend strategies usually do not work well.
However, a weak market trend situation is suitable for a counter trend strategy. Because when market trend is weak, you can often see market retreat from trend direction.
When I was a developer at collective2, my approach was follow trend. This approach works well in a strong trend situation, but is bad in a weak trend situation.
Now look at Mr Money Tree: when it performed good in Aug, Sep, Oct, Nov 2016, my strategy was bad in the same period. After Nov, 2016, He was doing bad while I turned round.
So the fact is, we had 4 month weak trend market in Aug, Sep, Oct, Nov, 2016 . That is probably due to uncertainty about election outcome, and that situation is not likely to continue.
So Mr Money Tree's future performance depends on whether market has a weak trend for a relatively long time.
From my experiences, that situation is rare.
So I don't expect Mr Money Tree will do good in the futures.
https://collective2.com/details/104368227
This is a counter trend strategy.
If you track its trade record, all its trades were placed at the opposite direction with market, that is, on an up day, it short; and on a down day, it buy.
The developer bet on market trend change, so he is trying to catch overbought or oversold condition.
We all know the words " follow trend", that is because the probability that trend continues is higher than trend changes. So counter trend strategies usually do not work well.
However, a weak market trend situation is suitable for a counter trend strategy. Because when market trend is weak, you can often see market retreat from trend direction.
When I was a developer at collective2, my approach was follow trend. This approach works well in a strong trend situation, but is bad in a weak trend situation.
Now look at Mr Money Tree: when it performed good in Aug, Sep, Oct, Nov 2016, my strategy was bad in the same period. After Nov, 2016, He was doing bad while I turned round.
So the fact is, we had 4 month weak trend market in Aug, Sep, Oct, Nov, 2016 . That is probably due to uncertainty about election outcome, and that situation is not likely to continue.
So Mr Money Tree's future performance depends on whether market has a weak trend for a relatively long time.
From my experiences, that situation is rare.
So I don't expect Mr Money Tree will do good in the futures.
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R Options:
https://collective2.com/details/102125034
The main approach for this strategy is to short OTM options.
For most people , shorting OTM to take option premium is a market neutral strategy. That is, usually people don't try to time market, or predict market direction.
But most people get 20%-40% annual profit from this strategy.
R options make much more than most people do, because the developer has very good market timing ability. During market big down days , I see he simply stop shorting option. Sometimes he bought QQQ instead, the other times he simply stop trading for a few weeks.
So his above average profit came from his excellent market timing ability.
If he can keep up his market timing performance, and avoid making big mistake in money management, I see no reason why he can't do good in the future.
https://collective2.com/details/102125034
The main approach for this strategy is to short OTM options.
For most people , shorting OTM to take option premium is a market neutral strategy. That is, usually people don't try to time market, or predict market direction.
But most people get 20%-40% annual profit from this strategy.
R options make much more than most people do, because the developer has very good market timing ability. During market big down days , I see he simply stop shorting option. Sometimes he bought QQQ instead, the other times he simply stop trading for a few weeks.
So his above average profit came from his excellent market timing ability.
If he can keep up his market timing performance, and avoid making big mistake in money management, I see no reason why he can't do good in the future.
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What I don't get is, why he doesn't short calls, after all his timing is pretty good. Or he could go long puts or short QQQ. Maybe his account doesn't let him have naked calls...
I too looked at some of the strategies there, not to follow, but simply to get a sense of the types of trades people put on, and especially to get a feel for stats, like win rate, average win, average loss, etc.
One of the things I noticed was that so many of the profitable strategies had really bad drawdowns. Now this isn't your typical account DD where you might have 5 or 6 losers in a row, this was on 1 trade! So really, it was more like a really bad R:R ratio. Simply put, for many strategies that maybe had an average win of $100-$200, there were many cases where the trade could have been down by as much as $500 or $1000 at one point. This means there is hoping and praying going on for the trade to turn around.
Now if this was an anomaly that was factored into the trading plan then fine, but often times, the losses were much smaller (why sometimes is a small loss taken while other times the loser is held?). So here you have trades with perhaps a high win rate for small profits (everyone loves to see 80% win rate), small to medium sized losses, and yet a good number of those small profit wins had the trade down by many multiples of the average win size.
In my opinion, this is a recipe for disaster. If a person can show they've been doing this for over 5 years through various market conditions then fine, but generally, many of these strategies have only months of data, so we all know where that ends up.
In the end, I didn't think there was a single day/swing trading strategy there that I would have thought had a real edge for the long term. More money is made from the monthly fees than the strategy. I'm not sure of the exact numbers or how they work, but I would bet that with only 20 or 30 followers at $100 per month, you're making more from that than any trading. And if the account blows up, it doesn't matter, your subscription fees have been collected, and you can just start all over again.
Perhaps what its good for is an example of what not to do.
Many times traders know the probability is high enough to avoid something, but not high enough to do something.
For example, he may think the probability of a big correction is high enough to let him sideline, but not high enough to short call or buy put. Because when he sideline, if he predicts wrong, he doesn't lose anything.
VIX DayTrader 1:
https://collective2.com/details/98408819
This strategy at some point was hottest strategy in Collective2.
I think its subscribers at some point was more than 200. And the developer had stopped accepting subscribers because too many subscribers drained liquidity and caused bad fills. later he build another strategy. So the two strategies trade the same way, but slight different instruments:
VIX DayTrader 1 trade VXX and XIV;
VIX DayTrader 2 trade UVXY and SVXY.
This is a daytrading strategy and I thought it has real edge and can sustain good performance in the future, at least it is the most likely strategy in C2 to sustain good performance.( I know where is his edge, but I won't disclose)
But the latest 2 months it got bad performance .
And I found the developer deviated from his original approach.
The reason, to my best guess, could be that recently XIV at some occasions didn't trade syn with market. Many times market is up but XIV is down. That may confuse the developer and cause him to change his approach, trying to adjust to the changing situation.
But I think only his original approach can stand up to the test of time.
Besides, his exit method leaves some room to improve.
I mean he always buy at open and sell at close. If he always hold position until near market close, he may get big hit on big down days. That means his exit strategy has some flaw.However, if he can keep his original method, his strategy still can return to good performance.
So I think his future performance depends on whether he can return to his original approach.
If not, I am not sure he can sustain his past performance.
And if he can improve his exit strategy, he can significantly further improve his performance.
https://collective2.com/details/98408819
This strategy at some point was hottest strategy in Collective2.
I think its subscribers at some point was more than 200. And the developer had stopped accepting subscribers because too many subscribers drained liquidity and caused bad fills. later he build another strategy. So the two strategies trade the same way, but slight different instruments:
VIX DayTrader 1 trade VXX and XIV;
VIX DayTrader 2 trade UVXY and SVXY.
This is a daytrading strategy and I thought it has real edge and can sustain good performance in the future, at least it is the most likely strategy in C2 to sustain good performance.( I know where is his edge, but I won't disclose)
But the latest 2 months it got bad performance .
And I found the developer deviated from his original approach.
The reason, to my best guess, could be that recently XIV at some occasions didn't trade syn with market. Many times market is up but XIV is down. That may confuse the developer and cause him to change his approach, trying to adjust to the changing situation.
But I think only his original approach can stand up to the test of time.
Besides, his exit method leaves some room to improve.
I mean he always buy at open and sell at close. If he always hold position until near market close, he may get big hit on big down days. That means his exit strategy has some flaw.However, if he can keep his original method, his strategy still can return to good performance.
So I think his future performance depends on whether he can return to his original approach.
If not, I am not sure he can sustain his past performance.
And if he can improve his exit strategy, he can significantly further improve his performance.
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