No predictions, control risk

Using C2 API one is able to download any type of data related to particular trading system: equity, trades, signals, system stats etc. I was playing a lot with the data available trying to predict future systems behavior. Results were really discouraging, quality of predictions was really low. Finally I've decided to throw out prediction phase, and use the assumption that the system can break anytime after subscription started. With such approach the only thing which can be controlled by investor is the risk. Risk of the loss that system can cause to invested capital.

Well known that investing in portfolio of the uncorrelated instruments lower the risk  compare to the single instrument investment. So subscribing to the number of systems, not for single one can make investor's life easier. This number depends on the capital size (more systems, higher total fees, increased leverage) and on the market situation (C2 can have number of high-correlated perspective systems in the same time).

Other way to lower the risk is to use C2 scaling feature appropriately. Risk of loss for any particular system can be calculated from the C2 data. Then it can be adjusted to investor's bearable level with the scaling.

These two statements are baselines of the approach I used to develop my test portfolios, though these portfolios aim to achieve different investment goals.

DISCLAIMER: I am not a financial adviser and I do not offer trading advice or recommendation. The content of this blog is for informational purposes only. The posts on this blog should not be considered as recommendation to trade any financial instruments or join any services. Trading in general is speculative and involves substantial risk of loss. It is your responsibility to be fully aware of the inherent risks before beginning of trading or before joining any services. The information in this blog is provided AS IS. Authors accept no liability for your usage of the information, or for any losses or damages that may result from your use of  the information. The information is not an invitation to make any investment nor to join any service. The information should not be relied upon in relation to any investment decision. The past performance of any share, future contract, options, trading system or service does not guarantee the future performance.