Introduction to collective2

Introduction

Collective2 is a marketplace for trading strategies. It hosts several hundred strategies on many kinds of financial instruments : stocks, ETFs, futures, options, forex. For each of them, you can visualize the hypothetical returns, maximum drawdown, trades history and other useful informations regarding the performance and risks. Once you subscribe to a strategy, you can either choose to trade it manually, or let Collective2 automatically trade it in your broker’s account. Yet another opportunity is to use a simulated broker account, managed by Collective2.

Most strategies are priced between $50 and $200 per month. If you have a small account, this may eat out a significant part of your profits, so you’ll have to focus on one or two strategies.

Let’s explore Collective2’s website !

Collective2 dashboard

This is your entry point to the website. It show the strategies you subscribed to, their open and daily PNL. You can choose to display the strategy’s model PNL, you account PNL or both. It’s possible to get a breakdown by trades using the small arrow for each strategy.

Orders sent by the strategies are displayed in real-time, as you can see for the “OPN W888” strategy below.

Note that you shouldn’t put too much trust in the PNL computed for your account : first, it often works on delayed data. Then, the supposedly daily PNL is often actually the open PNL. I strongly advise you to login to your broker account instead of relying on this one !

Also, I’m forced to login at least once a day. In this case, all trade signals for the day are displayed again, and you have to close them one by one in order to de-clutter the screen. That’s really annoying !

Browsing strategies

You have two ways to browse the Collective2 strategies : though the “leaderboard” or through the “grid“. They’re actually rather different, so let’s explore them !

Leaderboard

This view is actually a subset of all available strategies. It uses an undisclosed algorithm to show you only what Collective2 considers as top quality strategies. To qualify, a strategy must of course have a great performance, but also not be too recent and have a reasonable drawdown.

One annoying thing is that when you sort the strategies by performance, it displays some strategies using annual performance, while other show cumulative (apparently for strategy younger than one year). This makes it hard to compare returns.

Collective2's leaderboard

The grid

This is basically a huge table containing all strategies, split between many pages for readability. You can use any criteria for sorting : minimal performance, maximum drawdown, age of the strategy, Sharpe ratio, asset class…

It’s much less readable than the Leaderboard (maybe it was sub-contracted to the same UI designer working for Omaraha 🙂 ) but contains all strategies. The way I use it is to select the desired asset class first, then a minimal strategy age. I then sort by annual return and then click on the second column to open the strategy screen.

Collective2's strategies grid

Strategy screen

I’ll break down the detailed strategy screen for you, using Simplicity Trading as an example.

Top of the screen

At the top of the screen, you’ll see basic informations about the strategy : who created it, which asset class(es) it trades, when it was started, when it last traded.

Then comes what interests us all : the PNL and trading statistics. If the strategy is less than one year old, you’ll see the cumulated return, otherwise the average yearly return.

The winning trades percent and profit factor allow you to see how consistent and profitable the strategy is, while the max drawdown helps you estimate how effective the risk management is.

Also, you’ll visualize the PNL for each month and the total for each year.

Simplicity Trading's performance

Below is the matching equity curve

Simplicity Trading's equity curve

On the right of the screen, the combo box allows you to select which broker you want to use. This will apply the matching fees and update the hypothetical performance seen on the left.

Then there are more statistics, some of which are already present on the left table.

Simplicity Trading's summary statistics

Trade record tab

You may be able to see the open positions; however the strategy’s creator may choose to delay them. However, even if they’re not shown, the PNL is always up-to-date. That’s why you sometimes see a moving equity curve on a strategy which seemingly has no position.

Then all closed positions are displayed. One important information here is the drawdown for each trade; I tend to stay away from strategies with large drawdowns, as I’m not so crazy about financial roller-coasters ! I don’t want to subscribe to a strategy that has the habit of sitting on unrealized losses.

Simplicity Trading's trade record

Statistics tab

It’s basically more of the same.

Description tab

Here you’ll find the strategy description, if the creator took the time to fill it. If it’s blank, I consider it a red flag. Moreover, I like knowing if the strategy is systematic or discretionary, it’s timeframe…

An example of a useful strategy description

Reviews tab

May be present if Collective2 subscribers took the time to write a review. I usually don’t find them extremely useful.

Forum

Ah, Collective2’s forum… Just like on nearly any other website, you’ll find just about anything there. People report bugs, strategy creators advertise their systems, trolls… well, troll. I usually browse through the postings once a week, mostly reading those about strategies. Matthew Klein (Collective2’s founder) acts as a moderator on the forum, although he sometimes acts a bit too late.

You can access the forum by clicking on the middle icon, inside the group of icons at the upper right corner of your screen. From there you can also access :

  • the Collective2 resources (blog, webinars, help…)
  • the strategies reviews (using the star icon)
  • your inbox, which I mostly use to ask questions to strategy creators
  • your account, showing you the state of your subscriptions

Support

I’ve been in touch with Collective2’s support many times, mostly to report bugs on the website after updates, but also for questions regarding subscriptions. They’re usually very responsive and helpful, which is a pleasant surprise.

 

 

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