Risk Disclaimer:

There is a substantial risk of loss in futures and forex trading. Online trading of stocks and options is extremely risky. Assume you will lose money. Don’t trade with money you cannot afford to lose.

Performance Disclaimer:

About the results you see on this website, any other website with the ‘stockalchemist.net’ domain, or other websites of hyperlinks found on this website:

Past results are not necessarily indicative of future results.

All performance reports you see here must be regarded as hypothetical. This is because, although all trades you see here originate in a live brokerage account, there are several factors that may contribute to discrepancies between a brokerage statement and a Collective2 (C2) track record. No single real-life brokerage account looks exactly like a trade record you see on C2. For example, although C2 uses live AutoTrader fills whenever possible, it is not a guarantee that a single account has AutoTraded all signals since the system started; and some systems, particularly those that are new, have no live AutoTraders at all, which means they must rely on simulated executions that do their best to estimate realistic trading conditions.

Since all trades at The Stock Alchemist originate from live brokerage accounts, why doesn’t a C2 track record just reflect the exact fills from the live brokerage account from which the trades originated?

The reason for this is that it would be virtually impossible for the strategy manager and a strategy subscriber to have the same fills on a trade. Why? Because it’s impossible for a trade to execute at the same time and with the same fill in both accounts. The trade must first fill in the strategy manager’s live account before it is transmitted to subscribers. This is the primary reason why we have to refer to C2 track records are ‘hypothetical.’ Although the technology that sends a trade to strategy subscribers (Broker-Transmit) generally happens in mere seconds, certain market conditions can extend that delay or prevent the transmission entirely. That delay can cause discrepancies in execution and fill price. At times, the trade may not fill at all in an AutoTrader account. For example, if the strategy manager is shorting hard-to-borrow shares, there may not be enough shares available for an AutoTrader account. This is not the only scenario which could adversely affect or delay a trade.

Also, C2 gives AutoTraders the ability to “personalize” and exert control over AutoTrading even when they trade using a live brokerage account. So, C2 AutoTrade can be used in a completely hands-free manner (turn it on and let it trade) or, alternately, a subscriber can exert a lot of control on a trade-by-trade basis (for example, setting your own stop-losses, taking profits early, closing losing trades early, making trades bigger or smaller on the fly, etc.)

So this means that some transactions (manual adjustments by subscribers outside the trading system, personally-customized stop losses, synchronization trades, etc.) are not displayed in the common C2 Model Account trading record that you see, because they are specific to each individual AutoTrader account. This is yet another reason why, even if a system has live AutoTraders, our results must still be regarded as “hypothetical” – the results you see posted do not match any specific real-life account. Results are marked to market. Results based on simulated or hypothetical performance results have certain inherent limitations. Unlike the results shown via brokerage statement’s performance record, these results do not accurately mirror actual trading. Also, because a strategy manager’s trades are not directly executed in a subscriber’s account, the results that make up a C2 track record may have under-or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated or hypothetical trading programs in general are also subject to the fact that they can only be viewed in hindsight. As such no representation is being made that any account will or is likely to achieve profits or losses similar to those being shown.

In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program, which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

Material assumptions and methods used when calculating results

The following are material assumptions used when calculating any hypothetical monthly results that appear on our web site.

• Profits are reinvested. We assume profits (when there are profits) are reinvested in the trading strategy.
• Starting investment size. For any trading strategy on our site, hypothetical results are based on the assumption that you invested the starting amount shown on the strategy’s performance chart. In some cases, nominal dollar amounts on the equity chart have been re-scaled downward to make current go-forward trading sizes more manageable. In these cases, it may not have been possible to trade the strategy historically at the equity levels shown on the chart, and a higher minimum capital was required in the past.
• All fees are included. When calculating cumulative returns, we try to estimate and include all the fees a typical trader incurs when AutoTrading using AutoTrade technology. This includes the subscription cost of the strategy, plus any per-trade AutoTrade fees, plus estimated broker commissions if any.
• “Max Drawdown” Calculation Method. We calculate the Max Drawdown statistic as follows. Our computer software looks at the equity chart of the system in question and finds the largest percentage amount that the equity chart ever declines from a local “peak” to a subsequent point in time (thus this is formally called “Maximum Peak to Valley Drawdown.”) While this is useful information when evaluating trading systems, you should keep in mind that past performance does not guarantee future results. Therefore, future drawdowns may be larger than the historical maximum drawdowns you see here.