Vendors not able to take the heat

I am surprized by the current angry responses by vendors to valid observations. Well, maybe I shouldn’t be surprized, after all we are talking money here, but still…

One of the best things about trading that it is rather black and white. You either make money or you don’t. If you don’t, of course you can always blame it on the weather or fills or whatever, but on the long run, you should take responsibilities for your trades/actions.

So why the angry responses? That is for sure not very professional, and in both cases (let’s not name names Craig and Mario) the criticism was valid. My advice is if you really want to get subscribers or keep them you should better change your attitude, because those responses are just bad advertisements.

Oh, and making money also would help… :slight_smile:


I don’t think I have answered with angry responses but with simply reality.

English is not my first language and my english is poor, you have to understand it.

I assure you I trying to respond to all questions with maximum calm because I usually do it in my daily work with others traders.

I’d like to point you out that no one subscriber has posted questions on pubblic forum.


True, your response was not angry, just rude a bit, my bad. But you first had the attitude of “if you don’t like the system, don’t subscribe to it”, which is certainly true, but you were actually talking to a possible subscriber, so you might want to tone it down a bit.

Second, the person actually liked your system, except the paying method, nevertheless you were advising him to go to another forum. I think his criticism/question belonged to your forum, not somewhere else. And we really don’t care what you do somewhere else, we can only judge by what you show here. So if you want subscribers, I think you have to tailor your system/subscription to the subscribers’ taste and not the other way around…

Just a little constructive criticism, I hope you don’t mind… :slight_smile:

humm…I don’t agree :slight_smile:

People who really subscribed to my systems knew their cost and contacted me out of public forum to ask me info.

For me those post spoke about c2 “per profitable trade” business model in generic way and was offtopic. IMHO

For me those post spoke about c2 “per profitable trade” business model in generic way and was offtopic.

With all due respect, I don’t think it was off-topic. He was infact discussing your “per profitable trade” business model. This business model actually doesn’t make sense to me. No system/method can guarantee that it can be profitable. Hence, in general, the whole “per profitable trade” business model does not make sense. It might, if the cost of the fee/month or fee/quarter exceeds $2k because of credit card limitations, but there is no system at C2 that is worth that much at present.

This just reflects your lack of a coherent pricing policy. I appreciate your attempts to base the price of your systems on a sound theoretcial model, but it is still far from perfect and one should be greatful to others for pointing it out. This is not meant to criticize your particular model, but the all system vendors pricing structure in general, who seem to set the price on whim.

ps: if one wants to avoid public discussions in a private forum, they should make that forum only for “private” use, not for public use. One can’t have both ways, i.e, make it open to public and then restrict it to private use of subscribers, i.e, one can’t have their cake and eat it too.

I agree with you the “per profitable trade” model is not perfect, but it is the only one closer (not the same I know) to percent of monthly net profit.

And again, the right forum to post this discussion is here and not in any system forum.

Ok. This infact calls for a modification of the business model: Charge $'s only for profitable periods based on Week or Month or Quarter to one that is based on percent of weekly or monthly or quarterly net profit.

As such, the fee/trade does not suit me when the fee/month or fee/quarter seems to do the job quite adequately and all other business models seem to fail the test of an objective criteria to evaluate systems.

The charge as a percent of weekly or monthly or quarterly net profit is something I might like to investigate and pass it on to MK for his review and cosideration.

ps: hedge funds typical average is 25% of profits above a high watermark each month.

Charging a percentage of profits, is just not practical. No one trade the same acount size and this is not fair to charge percentage of profits based on a 100K account when you have subscribers trading with a 10K account.

There will not be a reliable way for C2 to determine the account size of subscribers. Even if C2 somehow can see the account size, a subscriber might only use a small percentage of his account to trade a specific system.


- Fanus

Interesting discussion. I think there should be two threads distinguished. In the first thread, some people, including me, discussed the general fee structure. I agree with Mario that his system’s forum was perhaps not the proper place to have this general discussion - although it applied to his system too.

But in the second thread, Randy, which I perceive as a respected member, was really interested in the system, and the response of Mario was unfriendly (in my perception).

I can understand that the English language skills of Mario play a role here, and readers should take this into account. However, Mario, you also used a lot of bold and exclamation marks, and this has nothing to do with language. It gave me the impression that you were agitated. If you say you were not, I want to believe you, but then I suggest not to use such signs in the future. Better use smileys to express your calm and friendly mood :slight_smile:

Mario, you also gave examples of how many % profit one would have with various account values. To me this gave the impression of a cheap way too lure naive subscribers, since you didn’t mention anything about possible risks. Of course you have the right to advertise your system by emphasizing the positive points, but then we (subscribers) have the right to discuss some points critically. Otherwise, C2 would be just a place to advertise systems. C2 is much more than that, in my view.


"No one trade the same acount size and this is not fair to charge percentage of profits based on a 100K account when you have subscribers trading with a 10K account."

Having a 10K account, I agree that it is not fair, but this is true for all fee structures that are possible. They all ask the same price to every subscriber. Within this limitation, I would still consider it better to base the price on the total profit of the $100K C2 account (thus including losing trades), then only on the number of profitable trades (implicitly assuming that the %Win, Average profit and Average loss are constant).

According to Mario, MK said that it is ‘just not possible’. But what is not possible? Perhaps MK meant that it is not possible to base it on the subscriber’s profit, but I don’t see why it would be impossible to base it on the C2 profit. And even if it were impossible: The present fee structure of Mario is not possible either, and he corrects that by refunding outside C2. I assume that he could as well base the refunds on the % profit in the C2 account, instead of the number of losing trades therein.



But the C2 account is not fixed to 100K. If a system is profitable, it constantly increases. For example, some systems are over million already. If a system charge 10% of profits and it return 20% a year, then a subscriber gets charged 10% of 200K, which is 20K. How many subscribers will one get who is willing to pay 20K subscription fees a year? Especially if you have a 10K account.

In my opinion, the only way this will really work is when the percentage is based on the subscriber’s profits and I just don’t see any practical way for C2 to determine that.

I also think a subscription model like that will make many vendors trade even more aggressively and throw risk management overboard, as the more profit you can make, the more money you will get from subscribers. And what about systems which trade 500K shares of stock which only have volume of 100K? How does this profit gets calculated?

But of course, this is just my opinion. Obviously other people feel differently. If MK does implement a subscription model like that, I would hope he just add it to the current ones and do not remove the current ones, as I will not use such a model for any of my systems.


- Fanus

You are correct of course it is not practical as such at C2. But, it just might be in the “white label” program, where the brokers handle the clients money and trades for them using autotrade.

In this case, the subscribers account value is known (although only to the broker) and the percentage of profits can be calculated accordingly.

It would also be nice if a mechanism can be devised to transfer a portion of those profits to the system vendor, say 10% of profits from that program, in lieu of just the subscription fee which may actually be too low compared to the subscribers real account value and actual profits accrued from it.

ps: actually, thinking further on this, the scaling factor used in the auto-trade settings would indicate the size of the subscriber/clients account, and the profits can be calculated accordingly using a suitable algorithm.

Nothing will prevent someone from setting the smallest scale possible and manually enter larger positions. And what about subscribers not using auto-trade?

- Fanus

As I understand in the “white label” program, one must use the auto-trade, not manual-trade, though it gets quite complicated when the broker trades from several systems simultaneously for different or same symbols; but I’m not sure whether that is allowed, i.e., can’t white label several systems simultaneously in one account. Subscribers not using auto-trade has to use other existing subscription models.


I forgot the increasing value of the C2 account. But this can easily be adjusted: Compute the % profit of the C2 account in the last month, and apply it to a $100K account. Then take from this the percentage that the vendor wants.

For example, if the system increased from $300K to $400K this is 33%. Applied to $100K this is $33K. Then the vendor’s 30% of this is $10K. (I agree that probably no one here would pay that, but my point is that it can be done).

With respect to the realism factor, it could be a possibility to multiply the outcome with this: A realism factor of 50% would lead to $5K in the above example. But a real disadvantage of this for MK is that people will become even more emotional about the realism factor, because now it determines how much they will pay or receive.

But I totally agree with you in that I don’t like profit-dependent fees in general, because they encourage the vendor to take risk. My point is that it can be done in a better way than paying for the profitable trades. (I think you understood this)

The idea of the scaling factor has been suggested earlier, but it was argued there that a subscriber can easily set the scaling factor to 1% and then make the trades manually with 100%.


Pal is right,

But no known and respectable hedge fund will try to do 30/50/100 % or more at times per month. And most hedge funds use the high water mark rules.

Lets take 3 examples, not necessarily stupid ones :

- I subscribe to 1 vendor that on average trades 5 lots per shot per 100K. Lets assume now he is slighlty negative for the choosen period. Now he starts to add to his positions 30/40/80 lots or so to try top recoup his losses. How would you figure out what is due if charged on a percentage ? Should the buyer assume the same risk just to be able to eventually pay the vendor ?

- Lets go further. If one month the signals generate 10k losses. No fees and OK. The second month the signals generate 10k profits.

What are then my fees ? 2500.- because there was one profitable month and 0 during the loosing month ? That is good…for the vendors only but not really fair for the buyer. Simply because the high water mark rule was not applied.

- Why should the buyers be almost “obliged” to trade the signals to generate the eventual profits-

- It seems to me that we are signals vendors, not money managers (CTA). By selling the signals the vendors have no responsibility for the execution or the executed price.Managing money means the trading manager enter the trades at his discretion (leverage) in the client’s account. There is quite a big difference between the 2 situations.

How to solve these problems that will happen on a regular basis ?

I dont have the answer. May be some vendors have ideas !


The reason that C2 doesn’t allow system vendors to charge subscribers a “percent-of-profits” formula is that several attorneys have explained to us this may raise red flags with U.S. government regulators. If we allow this business model, system vendors may (possibly) cross the line from publishing to money-management, which requires registration.

We are still looking into it, but it’s not clear such a business model would pass regulatory scrutiny.

Wait a second, (smile)

You are right that some systems are at over a million, but their leverage helped, by definition. And what about if I, as a signal buyer, decides to do the trades on a lower leverage, or at times with a higher leverage if I choose another vendor ?

And what about the high water mark formula mentionned earlier but also the equalization formula, taking in account new money or withdrawals.

And do you truly believe that at C2 you have so many buyers able to put the 100 K you mentionned ? I have no subscriber yet, but 3 times I was asked how could anyone do what I do with 10 or 20 K.

I simply answered that they could not do it without a minimum of 60 to 80 K but they will have by definition higher swings ! And I reffered them to sellers that I think are good and where they could trade 1 lot per 10 K.


Ok ok I agree, but then you oblige subscribers to have an autotrade account somewhere. In 90 % of the cases in the universe of signal sellers, the autotrade is only an option. Meaning that most signals buyers execute or dont execute the signals…elsewhere. How can you then keep control if the subscriber is trading 1 or 50 lots/10 or 5000 shares per signal and at Your reported price ?