I am a total beginner concerning Forex trading. I recently became aware that there is no software fee for Forex mirror trading at c2. But also, there are several websites offering Forex mirror trading with no subscription fee. Totally "free."
Obviously, the "free" Forex mirror sites and their vendors are making substantial profits on commission agreements. Presumably, subscribers pay for this one way or another.
In addition, I have not yet determined if these "free" Forex mirror systems are even practical to use from the USA. Most of their cooperating brokers are not USA licensed. Users for those brokers which are USA licensed, seem to report heavy slippage.
Aside from slippage, what else might I be paying with a "free" Forex mirror system? They seem to add at least a 0.5% "commission" and often 1%. Are things different with MBtrading?
I.e., when I pay $50 to $100 monthly for a c2 system mirrored at MBtrading–am I perhaps paying something similar in hidden costs when I use a "free" Forex mirror system? Or are the "free" systems actually much cheaper to mirror, but only more questionable in quality? Thank you anyone.
Please excuse my ignorance about Forex. One of the benefits of Collective2, in my opinion, is the ability to trade in genres I do not fully understand. I am trying to understand Forex just enough so that I can choose a good system to mirror.
My surfing seems to indicate the following partial answers to my Forex questions. I would be pleased to hear a reply from anyone with Forex experience. Am I on the right track?
1. I telephoned the support desk of a US-based supplier of “free” forex mirror trading. With them, there is a volume-based software fee, plus an added spread to pay system vendors. The support person said that, as a ballpark figure, if I choose systems that do not have unusual trading volumes, then with a $10,000 balance per system, the added software + spread fees will probably be about $50 monthly. (Very approximately.)
I neglected to ask further, but presumably, since all “free” Forex mirroring fees are volume-based, then with $20,000 the added overhead could be about $100, with $30,000 about $150, etc. I.e., unlike with Collective2 systems, you cannot reduce overhead by increasing the allocation.
However I was also told that with a total value for linked accounts of about $50,000, there might be a volume discount. By the way, the support person also said that to control the allocation sizes, it is a good idea to have a separate account for each mirrored Forex system–and that since fees are volume-based, with no monthly minimum (for them) multiple accounts do not increase overhead.
2. I might be confused… but… I think the forex support person also said the software component of his above ballpark overhead is $100 per 1 million pips. In comparison, C2-compatible software component is $1 per minilot meaning ““10,000 currency units traded per round-turn.”” So a minilot sounds like 20,000 pips. (?) If so, that’s $50 per 1 million pips software fee with c2 Forex systems, about 1/2 the cost. (?)
I am not sure what to make of this, and this does not include relative “spreads.” But, I am just guessing that “maybe” the added software and spread overhead with c2 systems is 1/2 as much. (?)
3. At any rate, here are my tentative conclusions.
a) “Free” mirror systems certainly are not “free.” I believe their equivalent of a c2 “subscription fee” might be anywhere from $25/month to $100/month on a $10,000 balance.
b) I suspect the total overhead for a c2 system with a $50 monthly fee may be similar to a 'free" system at a balance level of either $10,000 or $20,000. Unless there is a substantial volume discount with the “free” system, it may become at least twice the cost of the $50 c2 system for a balance of $50,000 or more.
c) Perhaps the only way to verify this is to do some mirror trading using c2 and also using “free” systems. Compare the different ratios of overhead / volume.
d) It may not be feasible to trade most Forex systems with less than $5,000. And it seems generally recommended to use at least $10,000 per system. My reading and my common sense also tell me that Forex beginners should especially avoid using “leverage.” And especially do substantial surfing until they understand the risks and problems.
e) The above overhead figures do not include basic trading costs. And as you know, if total overhead is $12,500 annually, this is at least 10% of a $10,000 principle assuming a consistent 50% annual growth rate, which I believe is at the highest range of realistic optimism. Trading overhead should not be above 10% annually, except when experimenting it might be 20% annually. Ideally, in my opinion, overhead should be kept well below 5%.
f) When looking at performance history, try to be looking at the history for your country and broker. Otherwise, try at least to choose systems with a long average holding period. Otherwise slippage could be substantial.
At any rate, I have found some c2 Forex systems that I like, that are affordable and that via MBtrading probably will compare well in total overhead to so-called “free” mirror systems. In addition, the “free” mirror websites, that I have found, do not have any screening device nearly as good as the c2 Grid. In addition, while c2 has its flaws, the accuracy of information on “free” mirror sites will be equally flawed at best, and sometimes much worse. Buyer beware.
