Matthew:
Could you give more choice for the business model? For example:
1. $a per week/mont/quater
2. $b per profitbale trade
3. $c per trade with at least 20% profit
4. $d per trade with at least 20% profit, $e per trade wit at least 50% profit, $f per trade with at least 100% per trade $g per trade with at least 200% profit
5. let subscriber to choose from 1, 2,3,4.
If C2 can put these ideas to the sytem, I think more people will be interested.
This is not a reply but an additional/alternative suggestion.
Essentially Dav’es c,d,e,f,g could be condensed to a more simple X% of profits. Probably simpler to compute, explain etc.
As I mentioned to Matthew on sign-up, I would prefer to simply charge a percentage of new net profits by month/quarter etc. I think it’s a fair deal for for both sides and it’s not all that hard to calculate. However, it does mean that equity has to be calculated based on closed trades vs. open equity only. This also is not hard. At the end of any period (week, month, quarter etc.) new net profits from closed trades are added up and the fee calculated accordingly.
I also think this is better than charging for profitable trades vs no charge for losing trades because some systems work on trading off several small losers for one or two much larger winners and the profit-per-trade model doesn’t work for such systems even they do quite well.
Along those lines. although I signed up for profitable quarters, I never asked if this means open or closed profits, which could be a big difference especially with a longer-term system. Charging for open profit trades would be inaccurate because it changes all the time and it becomes arbitary on the date of calculation what the fee would be and then if those open profits are not cashed in, the developer might have to refund a fee later which seems way too combersome. So I assume it is based on closed trades, right? Which means that longer-term systems making good returns might only collect a fee every other quarter (in my quarterly option) if the intermediate quarter shows losses on closed trades only (so no fee even though there are many open profits) and then just collects a fee the second quarter which might show a large net gain. So a percentage of closed profits seems a much better basis vs. profitable period per se. The period then just serves as the date at which that percentage is calculated.
I think the charge based on percentage of closed profit is very hard to work out. For future, it might be easier, for stock, it is really hard.
1. Different subscribers have different account size. C2 account is 100K. You have no idea how much subscriber can earn based on your trading signal.
2. Trading signal could not be completely realized in real situation. For exampke, you buy XYZ stock at 18.5 (bid 18.45, ask 18,5), first subscriber might get at 18.5, the 2nd might also get at 18.5, the 3rd, 4th, 5th, … 20th subscriber might not get filled at all. Then how will you work out?
So you must have a trade off.
I think a charge for profitability of the system of at least 20% PER MONTH (a number you can choose, i would like to loffer 12%) (or per year etc.) would be nice!
I think it is more attractive to subscribers than just profitability (that can be 1% and next month -7%)
Can you implement this in the near future?
One more suggestion:
Maybe the advisor could offer more than one subscribing method. Charge per trade OR per profitable month - and the subscriber can choose how he wants to pay.
Yes. That is what I suggest in 5. Please refer to my post.
"Subject: Re: Re: Re: Can C2 give people more choice?
Posted by: Heiko Zacharias
Date: 4/1/2005
One more suggestion:
Maybe the advisor could offer more than one subscribing method. Charge per trade OR per profitable month - and the subscriber can choose how he wants to pay. "
Actually this makes very much sense, and would be extremely attractive to me for one. I don’t care for the ambiguous charge per profitable trade, because as Dave Liu said one cannot mimic the trading signals exactly. And so a 5% profit for the system might be a loss for the subscriber who is charged!!! While having a decent enough percentage to define “profitable” would ensure all subscribers truly profit.
David,
I replied earlier but it didn’t post for some reason. Probably me.
You are right about different account sizes. I didn’t think it through. But the open vs closed profit issue is the same for either: just use the fill price recorded by C2. For longer term systems calculating by open equity is very tricky given how that one can swing.
I have changed mine from quarterly fee if profitable to a flat monthly rate. I don’t like the idea of charging per profitable trade, esp. since in my case the definition of trade is determined by rollovers (which add to nr trades), long open profit positions that can sometimes turn negative (even though overall portfolio is up) etc.
Still a percentage of net profits (closed trades) of any system on monthly/quarterly basis would be easy to calculate and seems one of the simplest and fairest options for all. If the fill prices are continuously off - since you deal with options in large quantities with sometimes small markets I can see this is an issue - then in your case you can simply adjust the percentage fee by 2.5% or something to reflect that and explain this to yr subscribers. Since my system - for example- trades less in a year than you do in a month this is not much of an issue for me!
I’m acutally not getting what you are saying. How can you charge by percentage when I’m sure most of us don’t have an 100,000 account. In fact, my account is about 7% of that. Should I be charged a percentage fee based on your 100,000 account? That is not one of the “simplest and fairest options for all.” I think it is fair to charge a fee for the achievement of a specified return or more. That is basically a charge per profitable trade where “profitable” is explicity defined in the terms of agreement. I personally would find that very attractive.
Well, as I said in another post to David Liu, I realised later that I hadn’t thought it through in terms of poeples’ different account values.
But you can’t charge a percentage of profits unless you agree on the position-size, otherwise it would indeed be a fair arrangement for all concerned.
My system is tracked here trading a $100,000 account. However, the software includes money-management inputs to position-size for any size account, although to be realistic trading futures you need at least $5,000 just to trade 1 eurodollar system. $25,000 is much better so you can have a small portfolio. Portfolios work better.
So my system is not designed for someone with a $7000 account and you wouldn’t be a subscriber. That still doesn’t answer how I would deal with subscribers of either $25,000 or $100,000.
I am here at C2 mainly to showcase a third-party-tracked track record, not to solicit subscribers. But since I am ‘here’ and entering the trades, I am quite happy to have subscribers, although in practical terms for the client’s account, it would be better to send emails to each subscriber based on their account size. There is no way - using a futures portfolio system like mine - that a $100,000 account should be traded in the same way as a $20,0000 account.
And of course a $108.00 charge per month for a $100,000 account is quite small, whereas for a $7,000 account it represents $1296.00 per annum or almost 20% of the account value even before commission costs. So I don’t think there is a simple one-size-fits-all solution except for the developer to charge $25.00 a month or something.
This works for the client, but without MANY clients, it is hardly worth it for the developer. The principle of charging a percentage of profits is one that is the best for all involved but it is very hard to set up in a public situation like this. CTA’s usually charge 10-30% profits but they are CTA’s who have invested in setting up their own professional operation and are responsible for attracting clients, whereas here it is different.
If you have only $7,000 then I recommend - if you don’t mind - first deciding to what extent this is true ‘risk capital’ (i.e. can you afford to lose it or not). If you can, then find a good option system here, risk about $500.00 a trade and then hope that the account grows rapidly.
Goofitz is obviously doing very well although the track record is only for a month or two. But with so many trades and 90% profitable, he is obviously a very good trader! There are others I think with longer track records trading stocks and options and if they continue to perform well you could double your money in a year or less which is not shabby! You also need to know if you can handle intra-day order placements or if you need end of day. Or maybe C2’s robot service would do you fine. Pick a service, set it up on automatic and then kick back.
One general tip: don’t get involved with each movement of the money hour by hour day by day. To do so invites too much emotional involvement in any position which is wearing and affects your judgement. If you want to trade, learn how to trade. If you want to run a system, then let that system make the decisions and step away from that aspect of it.
Or if you don’t want to lose it, perhaps a mutual fund trading program is better.
If you have only $7,000, I would either trade Stocks/ETF’s/Mutual Funds or ideally a mini-forex account.
A lot of firms (eg., www.fxcm.com) allows you to open a mini-forex account for $300, though I would start with atleast what you have now. It is very easy to double your money in 1-12 months in mini-forex trading. There are no commissions involved, though small roll-over charges apply if you carry a position overnight.
Once the account grows to $100,000, I would consider trading a system that diversifies its trades through the major asset classes (stocks, bonds, currencies and commodities). You can easily compound 100% returns/year even with this relatively tiny portfolio because this portfolio is well diversified to withstand economic shocks and quite insensitive to various market factors.
I would also look at the payoff structure of the portfolio, profit factor and expectancy, for judging a system. There are some messages in the Midas Value BB, which outlines how to find a good trading system.
A lot of systems offer a free trial period before charging the subscribers. The profits during this initial trial period trades would be more than enough to pay for the first month subscription and the subsequent months profits would more than pay for the additional months subscription.
rgds, Pal
Midas Long-Term Value
Midas Short-Term Value
It looks like this suggestion did not get Matthew’s attention yet.
People, please reply to this message to get Matthew’s attention.
You do have my attention. I swear. I note all the suggestions made on this forum, and I really, truly appreciate them.
But companies need to prioritize projects. I wish I could make everything happen at once, but I need to choose which upgrades to work on first. Adding more business models to the site is certainly a good idea, and one I will work on, but it’s not an immediate project. In the immediate term, I’d much rather work on speeding up the site, getting more users, improving the system ‘search’ feature, etc.
So I’m not ignoring this discussion. It’s a good one, and I will return to it soon enough. But I can’t immediately act upon it.
Finally, sometimes I don’t comment on these discussions because I don’t want to shut them down. Often, when the site administrator adds his two cents, it seems like the discussion should end. I’d rather let it continue, especially when I don’t have much of an opinion…
MK
Thanks for the insightful suggestions, PAL and Ashley. 
I don’t know much about mini-forex or forex trading however, so I’m not sure how I would go about doing that. The 7,000 is risk capital though, provided I keep my job, so I think I could definately trade options (which I’ve been doing on paper for the past 8 months).
