I noticed Jules recent comments about reasonable monthly subscriptions fees for a system and I thought I’d comment.
Generally, if someone is utilizing a subsidized data package through their broker, they can charge less on the monthly rate. In my case, it costs $106 per month just for data. That doesn’t account for what I will need to pay for the platform, which could be as high as $1500.
The main difference I see in fee schedules on the site, is that of infrastructure. If your entire system is a VBA or program that can take manually inputted data, then naturally since you don’t have the overhead you can charge less. When the infrastructure needs are expensive, like with Persistent, a fee that high is reasonable.
No one considers that collective2 takes 30%. So if I charged, $50 per month, I’d only keep 35. This isn’t worth it when the infrastructure, ie: data, automation, and sheer time, are taken into account. I might get a thousand subscribers at $1/month, but that still isn’t worth it if I don’t perform well. They’ll just leave.
Basically, I’m saying that the timing systems can be priced less, especially just working on daily EOD data. If you’re working in real time, then you should fully expect to pay the vendor for his time, as well as for his overhead, which I think is a fact overlooked here.
Of course a timing system that takes a few minutes at the end of the day is going to be cheap. Same goes maybe for value or fundamental systems with longer time horizons.
I know it personally takes me a good two hours each day to setup the programs, not including time spent watching the program. That kind of hassel I would hope you would want to pay up for, assuming you are subscribed to an intraday system you’re comfortable with.
I guess that’s my point. $50/month from 5 people isn’t exactly profitable for me. $100 is closer, but even then and in the end, I’m still looking to attract the right subsriber base.
For some vendors it’s personal, but I guess I believe some on C2 haven’t noticed the pricing difference, or what the reasoning is behind it. That’s just how I look at it.
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As a subscriber, I can tell you that I’m not gonna pay based on the vendor’s costs and needs. I’m gonna pay based on my budget and the results that the system will give me. That being said, when looking at a system here on C2, my main concern is whether it will continue to perform as it has in the past. Like Matthew said once, if a system is consistently making me 10% per month, I’ll gladly pay $250 a month or whatever. The problem comes when that system wipes out 30% of my account AND I have to pay the vendor $500 for his trouble. The fee itself is generally a minor issue. Unless they want to charge $1500 a month, but that’s only because I have a small account and it wouldn’t be worth it. If I were trading $1M, I’d gladly pay that too, if the results are good.
Have a look at http://www.autumngold.com/ what people pay for consistent 10% per year. With the same disclaimer “Past performance doesn’t guarantee…” blah-blah-blah.
When you shop something you should know market price and not what you thing is “fair” price for you. Wanna clear audited long term history? Sure. You can have it, for ~100K minimum entry ticket with a lot of limitation for withdrawing of your capital back. Plus management fee, plus incentive fee. However disclaimer is the same as on C2 “Past performance doesn’t guarantee…”. Wanna have it? You must pay for it.
Eu
Beau,
Honestly I don’t understand your concern. Just include your expenses to your system price. There is nothing related to C2.
Eu
I didn’t look at your link in much detail, but for 10% a year I’d rather buy a bond, zero risk and forget about it. Maybe I won’t get 10%, but I know of at least ~8% bonds. Fair price is a product of supply and demand. I’m part of the demand. My basic reasoning is, for example: “This system makes 50% a year. I have $100K. It will make me some $4K a month. I won’t pay more than 10-20% of that in fee.” Beyond that, I don’t care if the vendor needs a team of 20 developers with top-of-the-line workstations, a supercomputer for calculations, and a direct line to the exchange. That’s for him to worry about.
I’d rather buy a bond, zero risk and forget about it.
LEH had AAA bonds. It was nearly zero risk. Ask guys who bought it.
Fair price is a product of supply and demand.
I agree with the point. You have full right to pay whatever you want, a system vendor has full right to ask whatever he/she wants.
However it’s better if both parties at least have some idea about average market price in the industry area for the kind of service. Would not you agree with it? Just to have some idea about prices in area where you shop.
I don’t care if the vendor needs a team of 20 developers with top-of-the-line workstations, a supercomputer for calculations, and a direct line to the exchange. That’s for him to worry about.
Agree. simply it should be included in price.
Eu
Well, nothing is 100% risk-free. Not the best system, not bonds, not a savings account, not the mattress, lol. But if I buy government bonds or the like, they’re definitely more risk-free than any system. Plus I wouldn’t have to worry about commissions, system fees, or how the system is doing.
I agree that vendors can price the system whatever they want. Hopefully, their expectations and mine will overlap.
Overall, I think that the prices on C2 are reasonable. $50 to $300 per month is a good range, and I think most systems fall in that area. The only situation when a smaller fee becomes more important is when I want to subscribe to a system to see it at work. Does the vendor use stops? Profit targets? Is he communicative about signals? When I read his commentary, does he sound like a knowledgeable and intelligent person? Those things you can’t know by looking at the stats. I will pay $50 just to see that for a month, probably not $500. Free trials that are long enough to get that insight are great.
Diego
Basically I agree with what ironcito wrote about this. For example, suppose I would consider subscribing to your QID/QLD system (assuming it was still available). According to C2, starting with $100k you made about $50k profit after slippage and commissions in 19 months. Suppose I were to trade this. I have less than 20k and I still want to diversify, so I would use maximal 10k. In 19 months that would translate to about 5K profit, which is about $263 per month. However, because my account is much smaller than 100k, the commissions will probably be a larger proportion of my profits than C2 assumes. With Gen 3 autotrading the commissions will be much higher, and with Gen1 autrading there will be more slippage. In addition to that I have to pay autotrade fee. So even if I knew for sure that your performance would continue in the next 19 months it would not be a trivial decision if you ask $150 per month.
In reality there is a serious risk that the system will not continue its performance. On top of this there is a risk that the vendor, although he promisses not to make daytrades, suddenly violates this and thus freezes my account for 3 months (this happened to me).
Do you care about this? Probably not, because you still have your expenses. But in the same way I don’t care about your expenses. I will only subscribe if there is a reasonable chance that it will be profitable for me. Note that there is always the possibility not to trade at all. In the discussion about C2 ratings we saw that this “null strategy” beats 70% of the vendors.
This brings me to another point: It is hard to see any correlation between the performance of C2 systems and the fee they ask. Why would I subscribe to a $300 system if I get the same profit / risk ratio with a $30 system?
Nevertheless, you may of course ask what you want. I am only one person. People with more capital may accept different price tags.
Basically I agree with what ironcito wrote about this. For example, suppose I would consider subscribing to your QID/QLD system (assuming it was still available). According to C2, starting with $100k you made about $50k profit after slippage and commissions in 19 months. Suppose I were to trade this. I have less than 20k and I still want to diversify, so I would use maximal 10k. In 19 months that would translate to about 5K profit, which is about $263 per month. However, because my account is much smaller than 100k, the commissions will probably be a larger proportion of my profits than C2 assumes. With Gen 3 autotrading the commissions will be much higher, and with Gen1 autrading there will be more slippage. In addition to that I have to pay autotrade fee. So even if I knew for sure that your performance would continue in the next 19 months it would not be a trivial decision if you ask $150 per month.
In reality there is a serious risk that the system will not continue its performance. On top of this there is a risk that the vendor, although he promisses not to make daytrades, suddenly violates this and thus freezes my account for 3 months (this happened to me).
Do you care about this? Probably not, because you still have your expenses. But in the same way I don’t care about your expenses. I will only subscribe if there is a reasonable chance that it will be profitable for me. Note that there is always the possibility not to trade at all. In the discussion about C2 ratings we saw that this “null strategy” beats 70% of the vendors.
This brings me to another point: It is hard to see any correlation between the performance of C2 systems and the fee they ask. Why would I subscribe to a $300 system if I get the same profit / risk ratio with a $30 system?
Nevertheless, you may of course ask what you want. I am only one person. People with more capital may accept different price tags.
Sorry, I did not intend to post this twice. Seems to be some glitch in the forum software. After the preview I went back to edit the post, and then I posted it but got an empty white screen. So I went back again, posted again, but…
Something most traders don’t seem to fathom, is they could make a lot of money (more than seeking 10% annual returns) by just making wise choices.
—Stop paying interest on credit cards. Pay off your balance each month
—Pay down all your debts
—Stop owning homes or apartments that have twice as many bedrooms as occupants.
—Stop loading up on premium things you rarely use. They say there are 2 happy days in the life of a boat owner. The day they buy it and the day they get rid of it. Campers, expensive vacations, rec vehicles, several homes, $15,000 sound and video systems. ESPECIALLY when paid for with borrowed money. And only used once a month.
Spend your money on what you use. Why do people buy a cheap mattress, when they spend 7 hours a day trying to sleep on it? Why do they spend 3 hours a day on a 4 year old cheap, slow computer? Why do they watch 90 minutes of TV daily on a $300 Walmart TV, but have a $9000 ATV they haven’t used in 6 months?
Instead, they come onto C2 with a $4000 account and hope to retire next year. Ain’t gonna happen.
I have met people living on $35K a year, who have better cashflow than people making $100K. it is amazing what a $50K annual mortgage payment and $10K real estate taxes in California do to your income.
I remember many years ago at a major SW company. In the midst of multiyear MASSIVE layoffs, a coworker went out and bought a $70K car on a middling salary because she said “I am worth it.” A few months later, she was laid off. Personally, I LIKE driving Camries/Civics/etc… They last forever and are exceptional in almost every way.
People who impress me, live on 60% of their salaries, put 18% into 401Ks, thousands into retirement and the rest into savings and investments.
So so true. Love the bit about boat owners.
I know… sigh
Whatever happened to "it is not how much you make, but how much you keep. And these same people have $38,000 in a 0.31% checking account for 8 years, while trying to figure how to get an extra 1% on a $5000 CD…
Hope and Stupidity spring eternal…
what an excellent post.
Cheers,
Rich
Good Point!
Ross, made such a good point, no one wants to talk about the topic. Anyway, I guess I’m saying automation isn’t cheap.
It all comes down to whether it is a business or a hobby. If the system vendor is running a business then he/she needs to do the homework:
- verify that the system is consistently profitable
- understand the demand versus price
- understand his/her expenses
- determine whether the business is substantially profitable and whether it (at least) pays for the labor involved
If it is a hobby then profitability is not the motivating factor.
Now the problem at C2 is that demand versus price is not accessible.
As for subscribers whining about system price being too high. Vote with your feet! System providers can charge whatever they want with the understanding they may not have any subscribers as a result. Supply versus demand as always.
The thing is people want to be sold dreams. They want to hear that they can make a million dollars with little initial cost. The proof is in all the flourishing internet marketing scams.
C2 is about selling dreams. People come to see equity curves that reach the sky in months. Reality? Not. But there are plenty of system vendors willing to sell the dream. After they have thrown themselves on a skewer then there are more willing to do the same, over and over again.
Steve,
C2 is about selling dreams.
I would say it’s unfair to C2. C2 is more like OTC market for subscribers. Low initial expenses, 30-50% moves (well… plus/minus), but it involves higher risk. I gave a link to CTAs. It’s easy to compare and see the difference.
I would not agree with your/Ross point that C2’s subscribers are stupid lemmings that are following for equity curves. Most people that I crossed at C2 as subscribers/potential subscribers are intelligent and smart people.
Regarding Ross post, the “wisdom” is cheap and useless as Ross “systems”. Anybody with half of brain cell would understand that trading uses money as instrument and the instrument should be debt free.
Eu
P.S. Otherwise as it was said. Supply and demand works good enough.
I agree with both Steve and Eu. The subscriber base does look for equity curves that compound at astronomical rates, and they are intelligent, thoughtful people. The two are not necessarily at odds with each other. Subscribers just have unreal expectations.
If a vendor really could compound at 100s or 1000s of percent per year, he wouldn’t be here. Either the strategy takes advantage of C2s inability to accurately compute transaction costs (slippage and commission), or the overleveraging will eventually lead to a meltdown.
There are plenty of tradeable strategies at C2 that can make the subscriber a handsome return for a relatively low risk, but I’d bet those are some of the lowest subscribed to systems on C2.
